A potential landlord I was talking to asked if they should buy a one, two or three bed buy to let flat in Dundee.
The first question I asked was, what are they looking for from the investment – capital growth in the property or a good yield?
Answering this question will help you figure out which properties you should buy.
Before we get into the figures I am going to remove one of the options from the start, I really, really don’t like three bed flats. Unless you’re going down the HMO route I find them hard to let and they rarely seem to achieve a decent rent and in my experience suffer from longer voids.
So lets look at the other two options:
The current average asking price (according to Rightmove) of a 1 bed flat in Dundee is £60,000 today compared to £85,000 for a 2 bed. The 1 bed semi achieves an average rental price of £395 per month compared to £525 per month for a two bed.
That’s an average yield of 7.2% for the 1 bed against 6.8% for the 2 bed. So surely the 1 bed flat is the better bet? Well it does offer a better rate of return, but this is never the whole story. We also have to consider the capital growth, unfortunately I haven’t been able to extract separate statistics by the number of bedrooms but I can tell you that the price of flats have gone up on average over 35% over the last 10 years in Dundee.
Finally there is the occupancy rate e.g. how easy is each one to let, personally I like 2 bed flats because of the flexibility, if its two double bedrooms you can let to singles, families, couples and sharers so believe maximizing the your coverage of the market. That said there is always a steady demand for good quality one-bedroom flats to rent in Dundee.
Which one you favor is always going to be a combination of hard figures and plain old personal preference.
If you would like to discuss the above or have any other queries please don’t hesitate to contact me at nick.horan@belvoirlettings.com
