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Hi guys, I own a very compact studio Flat bought in 2013 for £36k cash, never had a mortgage on it due to difficulty finding a lender for a property valued under £50k.
The flat is in a fantastic area in a popular small commuter town in Scotland and currently returns £325/month (no ground rent, service charges or mortgage to deduct).
To you guys the numbers will sound good however the reality is I struggle to find a tenant that stays for longer than 5/6 months (due to the small size and the electric heating bills!)
This upheaval and the fact I can’t mortgage it has started to make me think about selling.
I’m thinking keep it and put GCH and dress it up to the nines in hope of persuading tenants to stay longer term and possibly get to the magic £50k value so I can pull some equity..
Or sell for £39k and buy a conventional 1 bed flat in the same town for £89k that returns £520/month with no ground rent/service charges and a mortgage of approx £300/month.
Cash flow would be £220 on the 1 bed flat v £325 on the studio however after 25 years the 1 bed flat would be paid off.
95% of people will say "Studios are bad investments" and for the most part that might be true.Whilst my portfolio is diverse, studios are still to this day offer by far the highest yield, x2 which I lease to LHA return over 10% net and I can push for more.Not sure why you would want to sell given the the yield you're quoting. Can you not add any value? include any of the bills, maybe internet? Or drop the rent to £295?Still a good return and you have no S/Charges etc which is one of the main sticking points. Not sure if a company loan would be bound by the 50K minimum, but I have seen some at £40k now, so worth seeing a broker, such as the one on here, or Aldermore direct.
Afternoon,I have a few questions;Would it be worth employing a management company to take the hassle of finding tenants away from you?
I know that this would eat into your profit a little but maybe it would make the income more regular, with less voids and issues for you?Why are the heating bills so high? Does the studio need some updating with regards to the economics etc?
As above, can you add value? If the heating bills are the main 'turn off,' could you raise the rent to cover it and offer 'free heating'?
Financial Consultant working with Property Tribes Financial Services.
Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - firstname.lastname@example.org
The headline yield looks good but that’s not your actual yield because after each tenant you have to tidy it, clean and repair things+void and the cost of relenting.
So what is your actual yield after you have deducted everything?
Ask yourself the same question once you’ve worked out the real yield.
Also, as a quick note, if the studio is over 30 square metres, we can find a lender.
Hi, unfortunately it’s about 25 sq metres, value in present condition £44k, could possibly get to £50k with a full refurb and GCH installed
I have one studio apartment in the city centre
It rents every year in Sept for a year Its done out to a high standard
It cost me £20k in 2000 and its gross rent now is £500 PCM
My yield is 30% and the value today is 95k
It's been a super little investment and the service charge is £23 a month.
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Those are great numbers, if only I had been born 10 years earlier! lol
It seems there is room for a studio in every portfolio, I just need to get it working better for me starting with GCH, refurb and more careful tenant selection
Tenant selection is important I find
If you sense its just a stepping stone for them maybe let them go
If you sense though they wont move on for a variety of reasons then take them on
I`ve had a few that lasted 3 or 4 years
Try the DSS market .
I get 557 for a single person over 35 yrs so 6.6% yield on what is now a 100K unit
Or I get 696 for a mum and baby so 8.3% yield
Jonathan Clarke. http://www.buytoletmk.com
Ive never went down the LHA route as most on here seem to be against the idea. I could get £349/month that way so maybe something to consider going forward