I was chatting to a potential landlord the other week about, what she was trying to achieve with his investment e.g. the old debate about yield versus capital growth.
I wont debate the pro’s and con’s in this article but in her case she wanted yield, yield and more yield, with possibly some yield as well.
I came across this one and I think it’s a good example. Now anyone that knows Dundee will tell you that these properties are non standard construction, therefore difficult (at best) to mortgage and that capital appreciation isn’t strong. However, that is naturally reflected in the asking price of £75,000.
This one http://www.tspc.co.uk/details.asp?id=117832 is on with Blackadders. Now I haven’t been into the property but from the limited photographs it looks like its definitely going to need updating at the least.
However I know that houses like this will normally rent for around £540 pretty comfortably which is a gross yield of just under 8%. Now despite what I said about capital appreciation semi detached houses in that postcode have gone up 20% in the last five years.
I do accept that the non standard construction will put some people off and also that you would need to invest some money in this property, however I think that the longer term upside could be attractive.
