Buy to let - gross yield 9.2%
#2
I would say these days, about middle of the road. Prime commercial yields (for office/industrial) are about 6.6 - 7.25%. Residential is more risky.
If its lots of tenants and they are not professionals then for the return I would want double figures.
Also, remember likely rate rise this thursday
If its lots of tenants and they are not professionals then for the return I would want double figures.
Also, remember likely rate rise this thursday
#3
The properties already have tenants on an assured shorthold tenancy agreement but like you say perhaps it is risky given the uncertainty over int rates. However I'm looking at a good fixed rate deal (5.09) which my mortgage advisor is going to hold open until the end of November.
#4
I'm looking at 27.3% on mine
...but I suspect we're comparing apples with pears...
Mine is
Amount of income - allowances (wear'n'tear, mortgage interest, allowable expenses) - tax
divided by
Amount invested
So if it's a £100K house that I bought with £10K deposit, then 'amount invested' is only £10K, not £100K..
So you really invested £264K of your own money...over how many properties?
...but I suspect we're comparing apples with pears...
Mine is
Amount of income - allowances (wear'n'tear, mortgage interest, allowable expenses) - tax
divided by
Amount invested
So if it's a £100K house that I bought with £10K deposit, then 'amount invested' is only £10K, not £100K..
So you really invested £264K of your own money...over how many properties?
#5
Sorry I hadnt offset expenses (maintenance etc) - I was hoping that my accountant would find every possible way to do that for me.
£264k over 3 properties (2 flats in Leytonstone E11, 1 house in Basildon, Essex - yes I know!!)
£264k over 3 properties (2 flats in Leytonstone E11, 1 house in Basildon, Essex - yes I know!!)
#6
Scooby Regular
Join Date: Oct 2004
Location: London
Posts: 4,797
Likes: 0
Received 0 Likes
on
0 Posts
i would say that 9.2% is good, considering that the capital is pretty secure. i can't think of any other ways of getting that sort of return at the moment, that don't involve a greater risk of losing capital. in fact i wish i had done a b2l when i was looking into it a couple of years ago.
#7
if thats all expenses then thats not too bad we are working on if its a solid 10% return we buy it especially new industrial.
A piece of development land in central Derby has just gone for 2.1million apparently investors with serious money are getting desperate.
A piece of development land in central Derby has just gone for 2.1million apparently investors with serious money are getting desperate.
Trending Topics
#8
9.2% gross doesnt say anything
If you were looking at buy to let at the moment with the saturation of the rental market any return is good...... of course those people that got in years ago can make a killing with low capital in the house!!!
I have been looking to buy a couple more buy to lets at the moment but worked out that the net yields in Bristol were about 1-2% - yep and I'm a Chartered accountant!!!
Of course I dont want the yield to be that high anyway as I'd be paying tax (I've included 40% tax to get me to the 1-2%) but still its shabby
The primary reason people have gone into the market in the last few years is becuase of capital appreciation not rental yield - but then the ideal scenario is for the capital appreciation to be on a house you lived in for 2 years then rented - you then get to have 3 years of rental with appreciation free of Capital Gains Tax and on top of that you get £40k allowance...........
If you were to buy a house that you never lived in then youn are straight into CGT less of course the CGT allowance (currently £7900)
The typical 'Gross Yield' - which is defined as the income/the investment in the House (not the House Value!!!!) then my yield is typically 11-12%, but the net yield is far lower - plus you should really assume that you'll have some void periods - typically 1-2 months a year - some properties are worse - especially is you try and rent a property in last October onwards - may not get it rented until earl Jan!
Hope I've not bored everyone
I guess Gross yield is fairly irrelevant.... its the net yeild that counts - plus you have to look long term - remember in the long term price rises have been greatttttttttttt
I look at properties now in terms of what I can rent them for in relation to an 80-85% mortgage - if it makes sense and you have the deposit then you just do it!!! - but caution given the likely rising rates - now thats how recessions start
If you were looking at buy to let at the moment with the saturation of the rental market any return is good...... of course those people that got in years ago can make a killing with low capital in the house!!!
I have been looking to buy a couple more buy to lets at the moment but worked out that the net yields in Bristol were about 1-2% - yep and I'm a Chartered accountant!!!
Of course I dont want the yield to be that high anyway as I'd be paying tax (I've included 40% tax to get me to the 1-2%) but still its shabby
The primary reason people have gone into the market in the last few years is becuase of capital appreciation not rental yield - but then the ideal scenario is for the capital appreciation to be on a house you lived in for 2 years then rented - you then get to have 3 years of rental with appreciation free of Capital Gains Tax and on top of that you get £40k allowance...........
If you were to buy a house that you never lived in then youn are straight into CGT less of course the CGT allowance (currently £7900)
The typical 'Gross Yield' - which is defined as the income/the investment in the House (not the House Value!!!!) then my yield is typically 11-12%, but the net yield is far lower - plus you should really assume that you'll have some void periods - typically 1-2 months a year - some properties are worse - especially is you try and rent a property in last October onwards - may not get it rented until earl Jan!
Hope I've not bored everyone
I guess Gross yield is fairly irrelevant.... its the net yeild that counts - plus you have to look long term - remember in the long term price rises have been greatttttttttttt
I look at properties now in terms of what I can rent them for in relation to an 80-85% mortgage - if it makes sense and you have the deposit then you just do it!!! - but caution given the likely rising rates - now thats how recessions start
#11
I have those noddy FPC exams as well - but I' not a practicising Financial Advisor!!! - a computer system does that these days!!
Wish I had started buying houses to let ages ago - but people can say a lot of things retrospectively!!!
Wish I had started buying houses to let ages ago - but people can say a lot of things retrospectively!!!
#12
How are you working out your gross yield ? Have you taken all the variables into account ?
There is no way you can work this out accuately. Very simplistically, if you're happy with the return and the property then go with it.
Caveat Emptor. cant spell this but it means "buyer beware".
There is no way you can work this out accuately. Very simplistically, if you're happy with the return and the property then go with it.
Caveat Emptor. cant spell this but it means "buyer beware".
#13
Gross yeild is easy to calculate, even a child could do it
The Gross Yield - as defined in most buy to let publications is:
Gross Rental/value of investment in the property
So typically Gross Rental*12/investment.
Of course you may have void periods reducing this - but that is the only complication - along with maybe the tenant not paying up!!!
All costs are taking into account in getting at the net yield - this is were it can become more complicated
For most purposes these days people should look at Net Yield - If you can actually get a positive net yield NOW - especially in the South then you are doing very well - Net Yields in the South West are poor
The Gross Yield - as defined in most buy to let publications is:
Gross Rental/value of investment in the property
So typically Gross Rental*12/investment.
Of course you may have void periods reducing this - but that is the only complication - along with maybe the tenant not paying up!!!
All costs are taking into account in getting at the net yield - this is were it can become more complicated
For most purposes these days people should look at Net Yield - If you can actually get a positive net yield NOW - especially in the South then you are doing very well - Net Yields in the South West are poor
#14
Whats the ctriteria for a buy to let mortgage? How much deposiyt has to put down and how does the interest rate compare to ordinary residential mortages?Which companies are best for them?
Thread
Thread Starter
Forum
Replies
Last Post
Mattybr5@MB Developments
Full Cars Breaking For Spares
12
18 November 2015 07:03 AM