Last week, I spoke with two of my landlords who asked me if the number of bedrooms in a property had any relationship to the return they could get. I did some research and followed up their query – I was actually quite surprised with the results...
Currently in Oxford, the average rent for a one bedroom property is around £925 per month with an average value of £195,000. This means an approximate return/yield of 5.6% per year. The average rent for a two bedroom property is £1250 per month with the average value being £279,948, which gives a return/yield of 5.3% per year. When I looked at the three bedroom properties, the yield/return changed quite drastically. The average rent being asked for is £1447 per month but the average value is £345,000, which would give a potential return/yield of only 4.3% per year. Four bedroom properties achieve a poor return/yield of only 4.1% per year, as average rents are £1893 per month but the average value is £550,000.
There is merit in both housing types. The averages suggest that 1 and 2 bedroom investments make the best returns overall and I would go along with this, but there is also alot to be said of larger homes, especially family homes, which can offer longer term stability and lower maintenance cost for the property. Two of the many factors to consider before buying for investment.
If you would like any advice on choosing properties, come and see me at my offices on Woodin's Way, Paradise Street. Alternatively, and for the most up to date property and investment advice, please visit my property blog at: http://theoxfordpropertyblog.blogspot.co.uk/
I am available on 01865 812110 or email me at firstname.lastname@example.org and I will get straight back to you.