Commercial property for investors on Spennymoor High Street

Looking on Rightmove today I've noticed something a little different out there for the investor-

31 High Street, County Durham

http://www.rightmove.co.uk/commercial-property-for-sale/property-50598655.html

It's a commercial property with a current, national and long-standing tenant and a guide price in auction of £80,000. There is potential here and we can look directly at actual returns because we already know what the tenant is paying per month in rent.

Commercial property is a different beast to residential property so you need to do your research and ensure that you instruct a solicitor that really understands the ins and outs of commercial property transactions. And the mortgage market is also wildly different for commercial transactions so you'll need to ensure that all of your research is carried out before you commit to buy at auction.

The agent shows the following description-

Retail

Full Description

Tenure: Freehold

This lot is for sale by auction as lot 70 on 6th July 2015.

Freehold Shop Investment

- Let to Shoe Zone Ltd on a new 5 year lease expiring in 2020 
- Tenant in occupation for many years 
- Town centre location 
- No VAT applicable 
- Current Rent Reserved

£9,000 pa
SIX WEEK COMPLETION AVAILABLE

So we know it's freehold, we know the rent and that's there's a six week completion available.

Now it's time for the figures. The gross annual rental return, based on the guide price is 11.25%, which can always be seen as a good return - especially with the guarantee of a five year tenancy from the current tenants.

A property with the potential to rent out immediately in Spennymoor

New to the market this week is a recently built property near to Green Lane. It's on Watson Park and is being marketed by Robinsons-

Watson Park, Spennymoor

http://www.rightmove.co.uk/property-for-sale/property-51877109.html

It's a two-bedroom terraced house and has an asking price of a very strange £90,500. Why the estate agent has picked a price of just £500 over a property portal threshold is completely beyond me, but that's their decision.

They describe the property as -

"We offer to the market this recently constructed TWO BEDROOM MID-LINK property which is offered to the market in immaculate decorative order throughout. An ideal purchase for the FIRST TIME BUYER."

As a quite new property, and judging from the photographs, the chances that there is work to do in the property in minimal.

I think that the fact that the property is so new, you could be looking at an average rental return of between £400 and possibly pushing up to £500 per month. This equates to an gross annual rental return of between 5.3% and 6.6%, based in the asking price. This is a good solid return for an investor, with the property more than likely to still be covered by a new build guarantee.

Durham Road in Spennymoor always has strong demand from tenants

Although it's for sale by auction, so it's a little difficult to determine the actual selling price, this property on Durham Road definitely has investment potential-

DURHAM ROAD, SPENNYMOOR, SPENNYMOOR DISTRICT

http://www.rightmove.co.uk/property-for-sale/property-51785729.html

It's showing on Rightmove as offers over £49,950 and is being marketed by Dowen. The actual price will be determined by how the auction goes plus there's a buyers premium when you've bought the property - although the amount of this wasn't stated on the Rightmove listing. And the confusion continues a little further as, although the property on showed as uploaded in the last 3 days, the listing also states that the auction took place in 4th June. I'll attempt to clear up the confusion and post my findings on here.

In any case, the benefits of buying in Durham Road are evident, no matter what the property, as long as the price is right.  Durham Road always has a good demand for rental as it's good for transport links and close enough to the town centre. The only downside is the recent rise in attendances for Spennymoor Town football club and the parking issues this sometimes causes. But once a fortnight for a couple of hours through the football season isn't a major hardship.

The agent describes it as-

"A spacious THREE BEDROOMED end terrace property which has the benefit of TWO RECEPTION ROOMS and OFF STREET PARKING."

Although it appears to need some work to bring it up to modern rental demands, it is an end-terrace and it has the off street parking, so I'd suggest that when it has been modernised, it could a he ive a rental return in the region of between £425 and £500 per month.

This is where is usually give a rental return figure, but this one is a little more difficult than usual given the fact that the property is at auction and there is this unspecified buyers premium to consider.

I'll base the figures in £60,000 to cover these factors and the renovation costs. It works out as a possible gross rental return of between 8.2% and 10% per annum. A quite healthy return for your money.

As I've said before, I'll try to find out some more facts about the sale, the auction and the buyers premium and when I do I'll put a short post on here to confirm the details.