I have been asked a few times this month to help and advise on some more buy-to-let purchases under the &95,000 mark. What is noticeable online at the moment is a glut of property for sale in previously high rental areas, such as Plasmarl in the SA6 region. The temptation for investors growing their portfolios is to look at snapping up cheap property in areas like this. However the question has to be asked: why are there are so many on the market at the moment?

My thought is that there is an oversupply of rental accommodation in the SA6 area from the boom in the early 2000’s, and for various reasons, Landlords are looking to offload these properties. In my experience, although these properties are located well for various employment opportunities, the properties themselves are not appealing to young professionals anymore. Property in the Plasmarl area in particular are generally older terraced properties, and are increasingly in need of costly maintenance, and do suffer from big issues like damp.

It would seem that Landlords looking to decrease their portfolio size due to the tax changes, or just wanting to get out of the letting game due to increased legislation and lower profits, are picking their Plasmarl properties to off-load first.

So putting Plasmarl to one side, these properties could be worth some further investigation:

A 2 bedroom terraced house in Landor, SA5

All done and ready for a tenant to move into, rental income could be coming in within a month on this property. What is appealing is the standard of renovation, which would be sure to attract the attention of young professionals.

It's on the border of Brynhyfryd and Landor, close to Liberty Stadium and various employment with links to the City and M4. This would achieve in the region of &500pcm, and at a prospective purchase price of &85,000, brings in a yield of 7%.

I would question if there was any parking facilities (such as permit holders close by) here as it's on the main road. The parking issue may have an impact on long term growth and/or resale value, so along with not being able to add any capital value, this property would ideally suit an investor looking at more for rental income rather than capital growth.

Tip: Always confirm the parking arrangements if it’s not clear before booking a viewing! 

A 2 bedroom terraced house in Llansamlet, SA7

We’ve had great success on this estate recently, with property letting within a week or two. The Lon Enfys Estate is a quiet residential estate roughly 15 years old, with excellent links to the M4 and Llansamlet Enterprise Zone. This property offers excellent value for money accommodation for professionals - mainly couples, although we have also let to single professionals in this area, too.

This property would need just some light refurbishment, which we can help advise and source competitive quotes for. Rented for between &475-&495pcm, it brings in a yield close to 7%. 

Pearl House, Kingsway

Click here to view the brochure on Zoopla 

Admittedly, this one is outside of the parameters I was given. One of our own managed properties is currently on the market for offers around &109,995. The apartment is currently tenanted and achieving &650pcm, however, a similar flat we have also been managing has recently achieved &700pcm. What is different about this property is that it is one of only five that comes with allocated parking in the block.

If the redevelopment of the Kingsway and Business District is completed well, then a rental of &750pcm should be easily achieved. We’ve been managing this property since 2008, so have a full history of how to market it, who it appeals to, and what maintenance has occurred. 

I don't usually recommend flats due to the service charges, but looking at the figures and factoring in an expected uplift in the future rental income, this looks like it could be a good opportunity.

The drawback with flats is, as I've suggested, they will most certainly have ground rents and service charges to consider, and you may as well wipe them directly off the rental income (although you can offset them against tax - but we won't go into that for the sake of keeping this simple!).

The ground rent on Pearl House is &200p/annum, and the service charge is approximately &983.50 every six months - so basing the figures on &700pcm and a presumed purchase price of &105,000, the yield factoring in the above still comes in at a not-too-shabby 5.94%. Planning ahead, this could increase to 6.5% when let for &750pcm.

This apartment will always be attractive for professional sharers as it is still cheaper to share rent and bills than it is to rent a 1 bedroom flat on your own.

Even if these properties are not what quite what you are looking for, this should give you some insight into what questions you need to be thinking about when looking around.

Have you already got some investment properties in mind? Why not drop me an email with the brochure attached and I’d be more than happy to look over them for you and give you my thoughts! You can send them to [email protected].