If you’re in the office or can’t turn the sound up then feel free to read the story below……
“This question pops up quite often when discussing the local market with investors and the answer often comes down to opinion. Sometimes we agree and sometimes we don’t! I was discussing this subject again today and thought I’d do a bit more research and give some actual figures rather than simply passing opinion.
To try and get an answer to the question I jumped onto Rightmove and searched by lowest price for the 5 cheapest purpose built flats and 5 cheapest flats that weren’t originally flats but had been converted into flats. Here’s what I found……
Based on a search of 1 bed flats only. The average price for cheapest 5 purpose built flat advertised as available on the market is £189,500. The average price of the cheapest 5 converted flats is £195,380. So the purchase price for a converted flat is slightly higher at the cheap end of the market.
The average yield for the purpose built flats is 5.3% whereas the average for the flat conversions is 5.5% so the yield for converted flats appears slightly higher.
So based on a lowest price search your best option may well be to buy a flat that isn’t purpose built. Added to that you are much less likely to incur high service charges on this type of property making your net yield potentially better than the purpose built flats.
On the flip side of that many of the converted flats seem to be a little more run down, need a bit of TLC and hence the total spend would probably be a little higher than the purchase price.
There are pros and cons for each type of flat.
At this end of the market I believe you have to assess each property as they come. Do they need any further investment to bring up to a decent rentable standard, are there any hefty service charges and bear in mind the older Victorian conversions tend to need a bit more maintenance than a newer build property.
The figures above show that the purpose built flat at the cheapest end of the market is not the best buy however that is just one slice of the market and there are plenty of other factors to consider.
If you’re looking at flats in Watford and want to make sure you get it right then why not give me a call and I’d be happy to discuss your situation and what’s right for you.”