Monday 11 January 2016

BUY-TO-LET DEAL OF THE WEEK: '5' bed house in Chichester, £284,950, 6.3% yield

chichester house

'5' bed mid-terrace house in Chichester
Listed for sale on 07/01/16 @ £284,950
Rent = £1,500pcm
Yield = 6.3%
Something a little different to start the year off. Some people comment that they wouldn't invest in Chichester because property prices are so high it makes the yield too low. I've written about this in the past, agreeing that if income is your main requirement Chichester may indeed not be the right area for you to invest in. What Chichester is great for however is its proven track record for long-term capital growth, outpacing other local areas and the UK as a whole.

So, when I spotted this 'five' bedroom mid-terrace house, available for £284,950 with tenants in situ paying £1,500pcm I thought this could prove it is possible to get a great yield in Chichester (6.3% in this case).

On further inspection, it is actually a four bedroom house with the lounge downstairs being utilised as a fifth bedroom. Still, a four bedroom house for that price is pretty decent value. The issue I have with this is when you turn the monthly rent (£1,500pcm) into the annual rent. With a standard single let you simply multiple by 12. In this case however, with the property being run as a 'HMO' (House of Multiple Occupancy), it's not as simple as that. If renting to students (the advert suggests it's well positioned near the University) you often don't get a 12 month contract. There's also more tenant turnover and wear and tear on the property to factor in, and sometimes you, the landlord, will take responsibility for the utility bills, offering tenants an 'all-inclusive' rent.

It would take a conversation with the selling agents to dig down further into the numbers (as well as viewing the condition of the property as there are no internal photos) to see whether the attractive looking 6.3% yield from a seemingly well-priced freehold house in Chichester is really as tempting as it first appears.

For those who are specifically looking for a HMO in Chichester this property could be an excellent purchase.

It is on the market with Hancock and Partners and full details can be found on Rightmove via the following link:

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