PM SPV 67
Two Tenanted, One Bedroom Apartments
About this property
- An opportunity to invest in two converted, one bedroom apartments in Houghton Le Spring, Durham
- Both apartments are currently tenanted at £390 per calendar month, providing a total monthly gross income of £780
- The property sits on the main arterial route in the town, making it a popular choice for tenants throughout the investment and possible future investors at the point of sale
The property is a former end of terrace house, which has been converted to a one-bedroom apartment on each floor, and has been extensively extended. Both apartments have a similar layout with a fitted kitchen and spacious lounge/dining area and one double bedroom and bathroom. Entry can be gained to the ground floor apartment via the front of the house and for the first floor apartment there is a side entrance and off road parking is available to both units. Both properties are in good rentable condition and that is reflected in the rental income, secured at £390 per calendar month, per unit.
The property is located in the quaint town of Houghton Le Springs that sits directly between Durham and Sunderland, which can both be reached within a 25-minute drive. The property itself sits on High Street (A182), which is the main arterial route in the area and is a well-established road for shopping and leisure activities. Local amenities are almost right on the doorstep of the property including the biggest outlet shopping centre in the North East, Dalton Park, which can also be found within a 10-minute drive.
A RICS survey carried out on 11 October values the property at £83,000, which equates to the property being purchased at a discount of £19,000 (24%) to the market value.
The Royal Institute of Chartered Surveyors have predicted a 3% property price increase for the North East which is used in our projected return calculations. You can see more information on our blog post HERE but please remember that property prices can go down as well as up.
There is an additional ‘Acquisition cost’ (shown as 'Furniture cost') which represents a finance fee paid to PMF A Ltd, and property management disbursements (auction fee, inventory, checkout, inspection, visit). This structure can provide access to new routes of property sourcing at large discounts. In addition, a monthly Accounting Fee and Corporate Governance fee of £25 and £10 respectively has been factored into the rental yield calculation (this is shown as a 'Service Charge' cost and represents £420 of the total).
Please bear with us while we update the names of these fields. To confirm, the projected returns are net of these fees. There is no British Gas utility cover on this property, and the insurance cost of £262.61 reflects the landlord insurance, which is put in place on all investments and also now benefits from a rent recovery option in the unlikely instance that a tenant may withhold payment of rent.
About the area
The property sits within a 15-minute car journey to Durham University, which is a popular choice for students after topping a student quality of live survey in 2013. Furthermore, the University was recently named the best value for money in the country for students pursuing further education and the University continues to provide the best for its students, recently investing £60 million through The Durham Project, which aims to strengthen the facilities and opportunities open to the students. Given the numerous attractions, it comes with little surprise that the University has ranked in the top five universities in the UK for the past seven years from 2009-2016.
The region is also home to growing technology businesses such as Atom Bank, the first exclusively digital bank that has chosen the North East as the new headquarters for the company and aim to host 400 employees in the area by 2020. With a recent investment of £45 million from Spanish banking group, BBVA, it is improving the fintech opportunities for future generations and is already creating synergies with Durham University by giving students the opportunity to work for the company.
Following the previous Chancellor’s 2016 budget, there is a clear emphasis on narrowing the North and South divide by investing £20 million in the Northern Powerhouse schools to ensure a prosperous future for the next generation and to provide locals with the knowledge and confidence to explore the world of work. This plan coincides with projections by the government to improve the employment rate from 67.4% to 73% employment rate by 2030.
In addition to the interesting history and a thriving economy, Durham has some breath-taking scenery. Indeed the University itself was ranked the 3rd most attractive University in the UK. Renowned events, such as BRASS, the international brass festival, which is in its’ 10th year will also continue to attract visitors to the area.