Friday, 10 July 2015

9% Yield on Nancy St in Darwen? Is it as good as it seems? Paul Ainsworth Lord reckons it's overpriced by £10k

 Things aren't always what they seem....

There are loads of great investment properties being offered in Darwen by local Estate Agents. But are they all as good as they seem, I hear you ask?

And that's a good question, and it's an important one!

Well let me show you one that 'in theory' should give a nice 9% however the reality is likely to be somewhat different. Let me explain....

A quick look on Zoopla shows a 'nice potential deal' here on Nancy Street in Darwen at a nifty £46,500

But is it a good deal really?

check the link here:

Nancy St Deal

Nancy St Darwen

Nancy St Darwen
Now I have been modest on my rental figure at only £350pcm, and based on the sale price of £46,500 it stacks up at a 9% yield.

And in order to get the £350pcm on this street it needs to be nice inside. So on this one it will need a spend - probably £5k minimum. Which means it would stand you at £51,500 reducing your yield down to 8%. Now this still looks like a good deal.

BUT there are other things to consider too (on this street).

Firstly, you may have noticed this property is being offered sale by an out of town agent - Bridgfords in Blackburn. (Not experts on the Darwen property market). So take this into account first.

Secondly, I know this is too much for a property on this street. A quick browse on sold prices on this street will tell you this. (In my opinion this property is overpriced by at least £10k)

Thirdly.... and this is where the local knowledge comes in handy....
It's not in one of the best areas of Darwen and certainly not very popular either.

Fourth.. properties on this and neighbouring streets are very tough to fill (if you want a decent tenant), and believe me I know!

To get this house filled reasonably quickly it needs to be nice and priced right.

So whilst this looks a pretty decent deal at 9% the reality is you would probably end up with 7% or less after you take into account a rent reduction or incentive to get interest.. and don't forget to factor in void periods. It would be a stroke of luck to get this rented quickly after your tenant has moved out.

So.. factoring in voids... expect a more realistic yield of around 5%pa

Now if you're happy with a 5% return shouldn't you be looking at nicer properties in better areas? I think so.

Hope you find my opinions and comments useful, and if you see anything of interest, can I ask you call me or drop me an email to discuss it first (it doesn't matter which agent it's up with). I'm always happy to offer my twopenneth worth....

You know where I am...

Ainsworth Lord Estates 
49 Market St Darwen
Tel 01254 760660

or call in for a coffee.... (we only do nice coffee)

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