Beggars can’t be choosers is a tired old saying. It’s trite, it’s worn, but for both tenants and landlords, it’s true.
If you’re a single unemployed person on benefits, and you’re looking for a place to live, really, you’ll be searching at the bottom of the pile.
Likewise, if you’re a wannabe landlord with limited funds, you’ll also find yourself scrounging through the refuse tip of properties.
So it’s useful that every year, major publications compile a list of the cheapest places in Britain to buy a pied a terre you can call your own.
Unsurprisingly, a development in Sunderland topped this year’s list, with the average property in Waterloo Walk going for a mere £14,600. That’s pocket change to most of our readers, but to you, it could be the start of a property empire.
On the surface it sounds like a terrible idea. It’s obviously a run down area, and the kind of tenants you’re likely to attract won’t be of the highest calibre. But as we said at the beginning – beggars can’t be choosers.
What’s it like?
It’s a dump, and it looks like the 1970s never ended. A five storey beige monolith with external walkways, where you can expect to be mugged by drug addled youths as you furtively dart back to your car (which is now on bricks).
What kind of tenants will I get?
Not professional working families, that’s for sure. We’d be very surprised to find out that any of the properties were not occupied by DSS recipients. Many of the windows are boarded up, and residents are often too scared to open the door.
What the hell happened?
Out of town landlords happened, and then the financial crash hit.
Originally built in the 1960s and 1970s, the development won multiple design awards and there was a waiting list to get in.
As recently as 2007, these flats and maisonettes were selling for around £30,000 each, with most being sold to London based buy-to-let landlords. A year later, those same landlords found that they were paying mortgages on debts that were several times more than the property was worth. They abandoned all pretense at maintenance, vetting, or being generally decent human beings, and allowed their essentially worthless properties to fall into disrepair.
Why are you recommending them?
Potentially, they’re desirable residences. There are gardens for kids to play in, and as it’s a privately owned (leasehold for sale only), gated community, you don’t need to worry about unsavory characters coming in from outside to trash the premises.
You can rent out a one bedroom unit for £60 per week, and your running expenses will be minimal. Gas safety checks aren’t required if you don’t have mains gas, and Sunderland’s landlord accreditation scheme is purely voluntary, so you can save a few quid there when compared to other cities such as Liverpool.
The fact that so many windows are boarded up in occupied flats indicates that the tenants aren’t too bothered by repairs not being carried out, so you can put off all maintenance indefinitely.
Even discounting the £1300 per year management fee, you’ll make back the purchase price of the property in under a decade. It’s basically free money.
In ten years you’ll have paid off the purchase price, and invested a minimal amount into property maintenance. And unless you’re very unlucky, the value of your property won’t have fallen any further. You may even be able to sell it at a profit.
Alternatively, you could buy a couple of units (or five or twenty), and transform them into somewhere nice, where people will actually want to live. Fix the windows as they’re broken, and work with the management company to get rid of problem tenants. Eventually the value of all the units will rise, quite simply because it won’t be a shithole any more.
Waterloo Walk won awards before it was ruined by absentee landlords and neglect. It could win them again.