One of my blog readers emailed me over the weekend to ask whether they should buy a 2 bed terrace or a 3 bed terrace in Watford. They were sure they wanted a freehold rather than leasehold property but weren’t sure whether to go for 2 or 3 bedrooms.
The first question to ask before looking at which option is better is “Are you looking for better yield or capital growth?”
The answer to this question could well help make a decision on which type of property is better for you.
Property Investment in Watford
The average asking price for a 3 bedroom terrace today is around £353,000 compared to a 2 bed terrace which is £307,000. The average rent for a 3 bedroom terrace is £1,315 per month whereas the average rent for a 2 bed house is £1,170. This means your average yield on a 3 bed terrace is 4.4% whereas the yield on a 2 bed terrace is 4.6% and if yield is your priority then perhaps buying a 2 bed terrace is a better option for you.
Just looking at the last 30 days I can see that twenty nine 2bed houses went on to the market in Watford and 18 of those are now sold subject to contract. That’s 62% SOLD! In comparison forty two 3 bed terraces went onto the market and just 17 of those have sold.  That’s still 40% SOLD but what it shows us is there either seems to be more of a demand for the 2 bed terraces or perhaps the 2 bed properties are simply more affordable for investors and 1st time buyers alike.
If you are looking for growth then I think the area you buy in is key. Whether the property has 2 or 3 bedrooms in a good area may well not affect the potential for growth but each area must be assessed individually.
There are of course lots of things to consider when purchasing a buy to let property. If you would like a second opinion on what to buy next then I’d love to hear from you.