buy-to-let apartment to add to her growing buy-to-let portfolio. It seems that there are plenty of one bedroom apartments and studio apartments available under 70k in the centre of Sheffield and with a big student population there is a ready market of tenants. This probably explains why a good one bedroom apartment will let for over £500 a month.
Smaller rental apartments have higher rental yields
Generally when it comes to rental yields, the smaller the rental property the higher the rental yield. So by buying a studio apartment a landlord stands to pay less and thereby tie up less of their vital capital and secondly secure a higher rental yield. However, generally I would never consider buying a studio apartment. I would always pay more for a one bedroom or two bedroom apartment. Why pay more and get a lower rental yield. Surely this does not make sense for someone who has always emphasised the importance of income and rental yield when evaluating which buy-to-let property to buy. The reason is the all important re-sale market.
Re-sale market is key
If you think of who you will eventually sell to when a landlord crystalizes their buy-to-let investment. What you don't want is to have is the choice of only a collection of yield hungry landlords all desperate to drive down your price and maximise their rental yield. Instead, you will get a much better price for your property and endure far less haggling from a bevvy of buyers that fall in love with your buy to let and want it as their first home. Most first time buyers of the type you want as a buyer will always look to save a little more and buy a one or two bed apartment. There are exceptions to this rule.
The exceptions and when to buy a studio apartment
There are two exceptions that I can think of when buying a studio apartment makes sense. Firstly, in London. People in London will buy anything and pay a fortune for even a rabbit hutch or cupboard so normal rules don't apply. In a property boom, first time buyers desperate to get on the property ladder and not miss out will look to buy a studio otherwise most will save up the extra and buy themselves a one or two bed rather than being stuck with a 1 room apartment (not good for impressing a potential partner with and pulling!). Therefore, as a property investor I would always tend to avoid a studio apartment and spend a little more cash and invest in a one bed.
Landlord insurance - trusted brokers - professional rates