Unless you get phenomenally lucky, you cannot have your cake
and eat it! There’s a general rule that the better the area you buy in (say Beaulieu
Park etc etc), the lower the return you’ll get. This is because you’ll
have to pay more to buy property in a nice area, and the amount of rent you’ll
get doesn’t rise at the same level. Buying in a less plush area (Melbourne etc)
doesn’t mean a property won’t rent, but it does have a bearing on the type of
tenant you are likely to attract.
Different landlords value different things – some prefer to
accept a modest yield (the monthly return) on their rental investment, in
return for more certainty regarding tenant quality. Others are simply more
interested in high returns. Before you start out, it’s a good idea to be honest
about what would work, or more importantly what wouldn’t work for you. This
will then enable you to filter much more easily..
Better Area, Lower Return
The most expensive 3 bed houses are in Great Baddow area of
Chelmsford
Because you pay more for these to start off with, the return
is never as good. Some landlords prefer this because of the ‘comfort factor’ of
owning in these areas. Paying around £350k to £375k gets you a 3 bed detached
house, which will let for £1250 per month, a lowish yield of 4.1%
Middling Area, Average Return
Chelmsford has some Victorian Terraced properties near the centre,
taking in places like the terraced streets off either side of New London Road
(such as Queen Street and Lower Anchor Street) areas to name but a few. This is
staple rental territory - there’s always good demand here from private tenants.
Three bed terraced houses can be bought for £230,000 to £250,000 and with rents
of £925 per month (depending on condition) , that’s a nice yield of around 4.6%
Cheaper Area, Higher Return
If you want your money to work as hard as it can, you need
to get into some of the less expensive areas of town. Much of the Melbourne
area falls into this category, together with areas like Noakes Avenue and
Rothmans Avenue. I know someone who has bought a 3 bed semi house in the
Melbourne area for around £180,000 recently. Done up, it should rent for the
early £900 a month, giving a yield of the very early 6%’s
