Potential double figure return on an 8 bed in prime Hyde Park

 

http://www.rightmove.co.uk/property-for-sale/property-49861048.html

This is a very interesting house in a very popular student area, just off the park itself in Hyde Park.  It’s currently a 6 bed and is occupied by the owner and his family, but it has an HMO license for 6 people.  To maximise it's value, I think it would need converting to an 8 bed and upgrading.  In that area, if it were a high spec then you’d be looking at £89pppw, or £37,000 per annum – possibly even more.

The cellars have already been dug out, although the cellar at the front of the house would need digging out a bit deeper, and both would then need tanking.  It would also need a dormer putting on the rear of the property and a new bathroom on the first floor and Jack and Jill bathrooms in the cellar and the attic.  Whilst the kitchen is modern, it would be too small for 8 people so I’d suggest opening up the existing living room and dining room into an open plan living kitchen area (it's plenty big enough), and putting the 8th bedroom into the existing kitchen.

So I'd suggest the carrying out the following works:

Tank out the basement, replace the existing door into the basement room with a window, re-format the layout to include two bedrooms and a bathroom, 

On the ground floor, knock through between the existing living room and dining room and install a new kitchen.  Re-configure the rear extension, removing the existing toilet and kitchen and converting to a bedroom and corridor to the basement.

Put in a Jack and Jill bathroom in the basement and attic, a new bathroom on the first floor and put a dormer in at the rear of the house to make the rear bedroom bigger.

Strip the house throughout, re-plaster and re-decorate, re-carpet and replace all the internal doors, 

 

The house is on the market for £330,000, and I’m not sure how negotiable the vendor will be due to it being prime location, but its been on the market since May so you may be able to get it for nearer £300,000.  

I would suggest that the works I've outlined above would be in the region of £50,000, so with a rent roll of £37,000 you'd be looking at a decent return of 10.5%, and be left with a great house in a fantastic location.

Potential for 10% return in Headingley, with more down the line!

http://www.rightmove.co.uk/property-for-sale/property-50015416.html

This 7 bed on Estcourt Terrace has just been refurbished, and from the sound of it was done late and largely missed the boat for the 15/16 academic year. 

Looking at the layout and pictures, it looks in good condition and I see no reason why you shouldn't be able to get £79pppw for next year which would bring in a rent of just under £29,000 so nearly 10% as it stands at the moment if you were to pay full asking price.

I think there is potential at some point in the future to convert the basment and put extra bedrooms down there, or put the kitchen and lounge in the basement and convert the existing lounge and kitchen to additional bedrooms.  So you could possibly get a 9 bed out of it, which at the same rent of £79 would bring you in around £37,000 per annum. 

There's no rush to do this though - as I've said above you could continue as a 7 bed and bring in 10%, and then in 4 or 5 years time when the house needs modernising again, add the additional rooms then.

5 bed available in a fantastic location on Brudenell View

http://www.rightmove.co.uk/property-for-sale/property-52362749.html

I was talking to a fellow Leeds student letting agent last weekend and we were discussing the current state of the market in Headingley and Hyde Park.  He commented that anything with Brudenell in the name was guaranteed to be let almost without perspective tenants even wanting to arrange a viewing!  Which brings me onto my next investment opportunity.

This 5 bed on Brudenell View is on for just under £250,000 with a current rental yield of £18,200 (or £70pppw).  On the face of it that's not a great return, but it has definite potential to achieve more.  Just a basic tidy up, and I reckon we'd be able to push that £70pppw upto something nearer £75pppw which would bring the yield upto 8% on a purchase price of £250,000.

However there is potential to dig out the cellar at the front and then re-jig the layout with either two bedrooms in the basement, or the kitchen and living room in the basement and two bedrooms on the ground floor, put a dormer on one of the attic bedrooms and refurbish the whole house to a high standard.  This would probably cost around £30,000 - £40,000 but you'd now have a 6 bed renting for around £85pppw, so a gross rent of £26,520 per annum or around 9.5% return.

And as my learned friend said, you might not even have to do any viewings on it to get it let each year.....

Minimum 11% yield on Delph Mount in Woodhouse

 http://www.rightmove.co.uk/property-for-sale/property-34536114.html

According to a talk I recently attended at Unipol, Woodhouse is becoming more and more popular with students.  It carried the reputation of being more burglary prone than Hyde Park and Headingley, but apparently the police have done a lot of work in the area over the last 12 months which is paying dividends.  Having said that, the nearer to Hyde Park you are, the better - so anything in the Delphs, Cliff Mount, Inglewood Terrace is good and I'd even venture as far as Lucas Place/Street.  Anything further into Leeds still has the potential to stay un-let.

We manage a lot on those streets and they always go each year, nice and early for early to mid £70's per person per week.  And just as importantly for landlords, the house prices are a lot cheaper than in Hyde Park (and rents only slightly cheaper), so the potential for big yields is definitely there.

This one on with Diamond needs some updating and I'd alter the layout as well.  It currently has the kitchen and one bedroom in the basement with a second bedroom with a very badly designed shower room and a living room on the ground floor.  I'd put two bedrooms in the basement and a new kitchen and lounge on the ground floor.  I'd then put Jack and Jill bathrooms on each floor - each servicing two bedrooms.  The whole house needs stripping, skimming and decorating, and of course new carpets.  That little lot'll probably cost between £40,000 to £50,000 to do.

Done at a high spec, potentially you could get £79pppw which equates to just under £25,000 per annum gross rent.  As I touched on earlier, we let a 6 bed on the same street this year for £77pppw, so it is achievable.

So even if you paid full asking price (which I'm sure you'd never do!), with the refurb cost that's 11% return.

Leeds Student letting is high reward but high risk.

The council imposed their Article 4 direction in February 2012 meaning that no more houses in the majority of the city can be converted into Houses of Multiple Occupation without gaining planning permission first. 

This however, is not the issue. There is in fact an oversupply of student accommodation in Leeds, but of very varying quality with most students now preferring to pay a little more to live in modern refurbished houses and apartments rather than an old fashioned student house with wood chipped walls, draughty single glazed windows and avocado bathroom suites.

Today’s students have a higher expectation of quality in their accommodation.  Having probably spent their first year in one of the new wave of custom built, modern, en-suite student halls, they expect their second and third year properties to be of a similar standard.

Nowadays, wall mounted TV’s not only in the living room but in each bedroom are becoming more and more common.  Brush chrome fittings, dimmable LED lighting, leather sofas and USB plug sockets are becoming the norm.

Students will not pay £85 per person per week for a draughty old house, with mix and ‘not match’ second hand furniture that has come from a clearance sale, threadbare carpets and the famous wood chip wall paper.

Come the summer, there will be student properties that don’t let. This is where the issue of Article 4 will kick in and potentially hurt the student landlord population. Landlords with an existing student property will be very reluctant to rent to a family for a year if it means they lose their HMO status.

By putting a family in an existing HMO property, Article 4 rules mean you have changed the ‘use’ from a shared house (HMO) to a private dwelling. You would therefore need to apply to the Planning Department for planning permission if you wanted to put students in it for the next academic year. There is no guarantee you will get that planning permission, in fact it is likely you won’t.

One option is to drastically reduce your asking rent to the £70’s, even £60’s per week, making your Leeds student let the bargain of the week for cost-conscious students. You could consider throwing in some extras, like free Sky TV package, free wi-fi or even a cleaner?

However, you will always be chasing your rent downwards over the coming years, as each year your property finds it harder and harder to attract good tenants, and each year you end up with tenants who look after the property that little bit less.  In other words as your property reduces in quality, so will your tenants.

If however you are in the student rental game for the long term, then a better option would be to refurbish the property whilst it’s empty over summer.  You don’t have to go mad with the TV’s and all the other electronic wizardry we mentioned earlier (although to get top rent and to never have to worry about voids for the next 10 years, we would suggest you do).  Just get rid of the wood chip and have it re-skimmed and re-decorated throughout, fit new carpets or a new kitchen or bathroom.  Dress it properly like a show home and take some fabulous internal pictures which will help you market it for years to come.  

Then re-advertise late August or early September to overseas students or post grads, or to those under graduates who have left it late to get the best deals. It should go, and at a reasonable rent and just as importantly it’ll be looking great in November for when viewings start again for the next academic year.
 
Every landlord and every property is different, but if you are a Leeds landlord with student property, there are many options for you to consider. If you have an empty property and would like some advice on what could be done to make it more attractive to potential tenants then we're than happy to help. If you want a chat about your options, please give us a call.