One of the best things about my job as an agent is helping Medway landlords with their strategic portfolio management. Gone are the days of making money by buying any old Medway 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 Medway 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 this 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 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 a better/worse location, size of accommodation and where they live verses making ends meet.
I know there are a lot of you in Medway who like to see my statistics on the Medway 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 Gillingham for example, 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 Gillingham, split down by type are achieving: · Gilligham Detached Property - £312 / sq ft · Gilligham Semi Detached Property - £299 / sq ft · Gilligham Terraced Property - £262 / sq ft · Gilligham Apartments - £278 / sq ft 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 Medway area is 747.6 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 Gillingham rental property is £15.34 per sq ft per annum So, what we can deduce from this? Well the devil is always in the detail. My research showed it was quite clear from the data that there is a relationship between the average £ per sq ft figure on property values the 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 Medway 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 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 a 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. One place for more information is my Medway Property Market blog. If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Medway property market together with regular postings on what I consider the best buy to let deals in Medway, then it is well worth reading. You can also email me at email@example.com