In keeping with last week's article regarding there being "lower rental returns" in Chichester, I thought I'd do something a little different this week and demonstrate that with a little creativity and hard work, you can in fact get very attractive yields in Chichester....10.5% in this case!!!
I mentioned two ways to boost the yield and this property would be an example of doing both - buying a run-down property and doing it up, whilst also turning it into a HMO (House of Multiple Occupancy).
This house is in a poor state, simple as that. BUT at 1,244 square feet for £275,000 that works out at just £221 per square foot (remember last week's article - "How useful is £ per square foot when buying property?" that showed the average cost in Chichester was £336 per square foot).
There are four bedrooms at the moment, but downstairs the lounge and dining area could be rejigged to create two more bedrooms along with a hallway to the kitchen, an additional bathroom and a communal area (the sun room). This would create six lettable bedrooms, all with natural light and all meeting the minimum bedroom size requirements. Spread over three floors, you'll need a HMO licence, which comes at both a cost and with certain requirements (e.g. interlinked smoke alarms to all rooms), but now is the perfect time to install them as part of a full refurbishment of the property.
That would create six lettable bedrooms, which could each achieve around £400pcm, producing a total income of £28,800pa. Based on the £275,000 asking price, that would provide a 10.5% yield. Unfortunately, being a HMO, this is where that headline figure starts to drop compared to the lower initial yield of a single let....
- You'll need to refurbish the property and furnish the rooms.
- You won't likely have 100% occupancy throughout the year and the risk is higher of non-paying tenants.
- Wear and tear, and therefore maintenance costs, are higher.
- You'll be responsible for the council tax and often will charge an 'all-inclusive' rent so will also pay the water, gas, electric, tv licence and broadband costs.
It's horses for courses; some prefer the easier to manage but lower yielding single lets, whilst others like to put in the work to turbo-charge their rental return. This property does go to show though that it is possible right here in 'low-yielding' Chichester.
It is on the market with Cubitt & West and full details can be found on Rightmove via the following link:
http://www.rightmove.co.uk/property-for-sale/property-39920097.html
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