A landlord who’s recently become quite an avid reader of our blog sent us a message over Facebook asking us which semi-detached house should be buy in East Dulwich? He was thinking whether he should buy a 2 or 3 bedroom terraced house (end-terrace included), which he then wants to rent out to tenants. Put simply he was asking which would make for a better investment, so I simply asked him, what was he looking for from his possible investment, capital growth or great yields? In this particular case the landlord was more interested in yields for the time being.
Nevertheless this question set in motion my great love for research and I got at it. I found that the average asking price right now for a 3 terraced house is £740,000 whereas its £672,000 for a 2 bed terraced house in East Dulwich. The average asking rent for a 2 bedroom terraced house currently is around £1700 pcm, a 3 bedroom terraced house on the other hand is £2000 pcm.
So in regards to yields the findings are quite interesting. The yield for 3 bedroom terraced houses in East Dulwich is 3.2% and for a 2 bedroom terraced house the yield is 3.0%.
When I presented these figures to him he did seem quite satisfied and based on figures provided a 3 bedroom terraced house contemporarily has a better yield. More importantly I also reminded him that a 3 bedroom terraced house is a lot more marketable to families and sharers when it comes to selling and renting. For a landlord this means that they are able to benefit from a lower void period and thus have the ability of being able to sell much easier in the future. However that’s not to deny that 2 bedroom terrace houses aren’t marketable either.