A poor student investment!

http://www.rightmove.co.uk/property-for-sale/property-52715185.html

As regular readers to the Leeds Student Property Blog will know, I try and pick the best opportunities that come to the market and suggest ways in which an investor can maximise yields, often by adding rooms or refurbishing to a high standard.

This month, I've come up with something slightly different - a property that you should not invest in.

I'm often approached by landlords who've bought a student house in Leeds and are looking for an agent to manage it for them.  On many occasions, they've unfortunately bought the wrong house or in the wrong area (or even worse, both).

This for me is a classic example.  It's advertised as a being let to three people, with the potential to let it to four.  The advert goes onto describe it as having four double bedrooms.  It's on for £189,500 with Purplebricks.

Now, Hessle Road is a great location - very sought after by students due to its proximity to Brudenell Road, the Hyde Park Picture House, Sainsburys and the 15 minute walk into University.  But these houses are two bed properties, which on this occasion someone has shoe horned four bedrooms into.

If it were my house, I'd make both bedrooms en-suite and remove the bathroom on the ground floor making the living area bigger.  If done at a high spec, you'd probably get £100 per room per week, so £10,400 per annum.  So at the asking price that'd be a 5.5% return, which for the general residential market isn't bad - but as student landlords, we're looking for double digit yield. Right?

Safe, ready made investment near Leeds Uni

http://www.rightmove.co.uk/property-for-sale/property-40162896.html

This apartment in Kelso Heights is on the market with Manning Stainton for £118,999.  We manage three apartments in the block, and because of their proximity to Leeds Uni and the Business School they let very easily each year for £72 per person per week.

It's currently a 2 bed, but it could be quite easily converted to a 3 bed by turning the living room into the third bedroom, and converting the kitchen into a kitchen living area.  It's a little tight, but one of the apartments we manage has this exact layout and we let it each year without any problem to a group of three for £72 pppw or £11,232.

One slight word of caution.  My understanding of the block is that the apartments are not mortgageable - something to do with the structure of the building, so if you need mortgage funding then make sure you ask that question first!

So, whilst not my usual 'refurb to a high standard' property suggestions, it's a very safe investment for those who perhaps don't have the funds available for the bigger student houses that involve the accompanying £50,000+ refurbs to get the yields up over the magic 10% mark.

A safe bet on the Headingley/Hyde Park border.

http://www.rightmove.co.uk/property-for-sale/property-53055622.html

This 7 bed house on Richmond Avenue on the Headingley/Hyde Park border has been refurbished to a very high standard.  The location is good - it's on the edge of Hyde Park, so around 20-25 minutes walk to both Uni's, but is also handily placed for any students from Leeds Becketts based up at the Headingley Campus.  We do get groups with some based at Headingley and the rest based at the city campus, so this would be perfect for them.

I've been round the house with one of our landlords who was interested in buying it, and as I said earlier it has been done up to a high standard.  It's currently let at £94.50 per person per week including the bills which to be honest I think is a little low.  On the basis that we charge £15pppw for our bills inclusive package, the rent on this is around £80pppw, or £29,120 per annum which is too cheap.  I would be confident of getting £89pppw or £32,396 per annum.  If you were to pay full asking price, which at the moment is the absolute minimum you will pay, then that's a return of 8.75%.

For central Headingley and Hyde Park this seems about the norm at the moment.  Whether this will change after the new stamp duty rates come in, who knows?  The student property market in Leeds is on fire just now, and whilst I'm sure that the impending stamp duty increases are playing a big part in that, it was very strong before George Osbourne's autumn statement, so I don't see it dying a death come April 1st.

8.75% is an attractive return, particularly for those used to returns from single lets, or the rental returns from the South.  So it's a great house in a good location offering a good return, and I'd be happy for one of our landlords to buy it so that I could manage it because it would rent very easily each year.  However, from my previous posts you'll know that I prefer to add value where possible, and when that happens, you should be looking for returns in excess of 10% every time.  Last summer we refurbished around 15 properties for our landlords, and each one is now enjoying double digit return on investment.  So whilst it's a bit more hassle (mainly for us, not you!), I'd always recommend that route.

Another cracker in Woodhouse!

This property on Lucas Street in Woodhouse has just come to the market with Mannings for £170,000.

It's currently let as a 5 bed until this summer, but I think there's potential for a conversion to a 6 bed over the summer, with a September start for next year's tenants.

Woodhouse, as I've said previously in this blog, is becoming more popular as the trend is definately for students to live as close to the centre of Leeds as possible, where they not only go to Uni but also socialise nowadays.  This combined with a crack down by the police to reduce crime has made the area more popular than ever.  And for the students it still represents value for money as rents, whilst creeping up, are still 10% cheaper than central Headingley or Hyde Park.

Anyway back to the house on Lucas Street.  You'll need to put another bedroom in the basement, get rid of the separate bathroom and install a Jack and Jill bathroom between the two bedrooms.  The kitchen is a bit pokey at the moment, so I would convert that into a utility room and turn the dining room into the main kitchen.

On the first floor, you'll need to pinch a bit of the bathroom back into the single room which shouldn't be a problem as it's quite big.  On the top floor, you can either leave as is, or install another Jack and Jill to make three bathrooms in total.

The house is generally in pretty good condition so a quick redecorate throughout, and replace the carpets and I think that's all it needs.  Shouldn't cost above £25,000 for the lot, so with costs of purchase, lets say £200,000 all in.  You should get a minimum of £79 per person per week, so that's £24,648 per annum and a cracking 12% yield!

But remember, you've a little under 6 weeks to try and complete before the dreaded stamp duty rise at the beginning of April, but even with the extra £5,400 if you miss it, it's still a fantastic investment.

Potential 13% ROI in Woodhouse

http://www.rightmove.co.uk/property-for-sale/property-52334899.html

This 5 bed on Burchett Terrace in Woodhouse is on the market for £160,000, and is currently empty.  It has fantastic potential for developing into a good quality 6 bed, which if done to a high enough standard would rent for around £79pppw, or £24,648 per annum.

The basement is already converted so just needs some alterations to convert it into two decent sized bedrooms with Jack and Jill bathroom.  The rest of the house really doesn't need any structural change, just a complete refurb with a new kitchen and bathroom, get rid of the dreaded wood chip wall paper and replaster where necessary, LED lights in the communal areas, re-decorate throughout and new carpets and furniture. 

I reckon you could easily do all this for £25,000, so if you paid asking (which is becoming more of a challenge lately!) then with a total outlay of £185,000 that's a fantastic return of over 13%.