As I am sure you are aware,
one the best things about my job as an agent is helping Warrington landlords
with their strategic portfolio management. Gone are the days of making money by
buying any old Warrington property to rent out or sell on. Nowadays, property
investment is both an art and science. The art is your gut reaction to a
property, but with the power of the internet and the way the Warrington
property market has gone in the last 11 years, science must also play its part
on a property’s future viability for investment.
Many metrics most property
professionals (including myself) use when deciding the viability of a rental
property is what properties are selling for, the average rent, the yield and an
average value per square foot.
However, another metric I
like to use is the average rent per square foot. The reason
being is that is a great way to judge a property from the point of view of the
tenant ... what space they get for their money. Now of course, location (location, location
in a Phil and Kirstie style) has a huge influencing factor when it
comes to rents (and hence rent per square foot). Like people buying a property,
tenants also have that balancing act between better/worse location, more vs.
less money and size of accommodation (bigger and more rooms equalling more
money) and where they live (location) verses making ends meet.
Interestingly, I know there
are a lot of you in Warrington who like to see my statistics on the Warrington
property market, so before I talk about the rental figures per square foot, I
wanted to share the £ per square foot on the values. In Warrington, the current
AVERAGE figures are being achieved (and I
must stress, these are average figures, so there will an enormous range in
these figures), but on average, properties in Warrington, split down by
type are achieving …
·
Warrington
Detached Property - £239 / sq ft
·
Warrington Semi
Detached Property - £207 / sq ft
·
Warrington
Terraced Property - £169 / sq ft
·
Warrington
Apartments - £204 / sq ft
So, the rental figures:
The extent of space you get
for your rent is replicated in the space you get for your money when buying a
property. The average size of rental property in the Warrington area is 807.3
sq ft (interesting when compared to the national average of 792.1 sq ft)
This means the average rent
per square foot currently being
achieved on a Warrington
rental property is £9.58 per sq ft per annum
So, what we can deduce from
this? Well the devil is always in
detail!
Whilst I was able to quote the
average overall figure and the fact my research showed it was quite clear from
data that there is relationship
between the average £ per sq ft figures on property values and average £ per sq
ft on rental figures as a property grows in size. However, something quite
intriguing happens to those figures, in terms of what the property will sell
for and what it will rent for, when we change and increase the size of the
property.
My research showed that doubling the size of any Warrington property
doesn’t mean you will double the value of it … in either value or rent. This is
because the marginal value increases diminish as the size of the property increases. In layman’s
terms … Subject to a few assumptions, double the size of the house doesn’t mean
double the value … what really happens is a doubling of the size gives only an approximately
40% to 65% uplift in value, but here
comes the even more fascinating part … when it came to the rental figures,
double the size of the house meant only 20% to 45% in increase in rent.
In a future article, I will be
discussing the actual added value an extension can bring ... but in the
meantime, in an overall and sweeping statement, most of the time it makes sense
to extend if you are going to live in the property as long as the extension is
proportionate to the property, but if you are going to rent it out ... possibly not.
Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.
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