Sixty-eight of the sixty-nine properties that looked like deals this week were not deals. None of them failed because they needed work. They failed on price against rent.
This is the part of sourcing nobody puts in a brochure, so here is the week in full.
What the week actually looked like
I swept 2,101 live listings across the North East. Of those, 312 came on since Monday. I put 69 of them through the numbers our clients buy to:
- 8% gross yield minimum
- 15% return on capital minimum
- £250 a month left after mortgage, management, insurance and maintenance
- and the house has to be ready to let as it stands
Sixty-eight failed. The pattern is always the same: vendors are asking more than the rents in their own streets support, and the gap is usually somewhere between £10,000 and £30,000. Not a gap that a bit of haggling closes.
The one that got through, and why I still dropped it
A three-bedroom terrace in Sunderland, finished inside, asking £109,000. At the £1,150 a month it was advertised at, it cleared every number comfortably.
Then I checked the rent properly.
The five nearest lettings at £1,150 were in Humbledon. The streets around the house itself let at £750 to £850. On the real figure, the asking price is about £32,000 above what the numbers will carry. Two streets away, the same house is a different deal entirely.
The lesson, because it costs people real money
A rent figure is not a fact until you know which street it came from. A house that only works on the best rent in its postcode is not a deal, it is a hope.
So every rent I use is checked twice: against the nearest comparable lettings, and against the whole mile around them. Then I take the lower of the two. It will occasionally tell me a house works when it does not, but it will never tell me a house works when it plainly does not.
The same lesson applies to the sale evidence
Sizes matter as much as addresses. Until this week the comparables engine matched sales by street and type but not by floor area, which meant a two-bedroom house two-thirds the size of the subject could set its value. Fixing that moved one Sunderland asking price from “49% above market” to “34% above market” — still above, but honest.
On the North East’s mixed streets, where a refurbished and an unrefurbished version of the same terrace can sell a year apart for double, the spread has to be shown, not hidden behind a median. On six of the fourteen properties still on my desk this week, the spread is wide enough that Fontaine would want a written agent valuation before they would touch it.
What I am working on now
Two houses that do stack, and both are waiting on a rent confirmation rather than a viewing:
- A two-bedroom terrace in west Newcastle with the tightest comparables I have seen this month, and 14 comparable sales behind the valuation.
- A house in Northumberland that is genuinely turnkey, where the only open question is what it would let for.
If you are looking to buy this year, tell me the area and the budget and I will tell you what is achievable there. If it is not achievable, I will say so rather than send you something to fill the silence.
I charge a sourcing fee that we agree in writing before I introduce anything. No commission from agents, no markup, and if a purchase does not complete you do not pay.
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