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Buy to let: what's a basic calculation to work out if it's any good?
p1tse
Posts: 980 Forumite
my previous boss was looking buy to let.
say the property was £100k, he had a basic calculation to say if it's viable and at what rentable income.
so working off £100k as a house value, and maybe ignoring inflation and what the house price might be worth in later years. what would be an ideal rental income rate? i.e. lowest
have seen something with a guide price of near £100k, although there's an old man renting at the moment which is fixed, but he has been in there for 60 years.
say the property was £100k, he had a basic calculation to say if it's viable and at what rentable income.
so working off £100k as a house value, and maybe ignoring inflation and what the house price might be worth in later years. what would be an ideal rental income rate? i.e. lowest
have seen something with a guide price of near £100k, although there's an old man renting at the moment which is fixed, but he has been in there for 60 years.
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Comments
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I would aim for a gross rental yield of 10% as a starting point.0
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Which means £10,000 rental income per year before costs (maintenance, gas safety, letting agents etc) are taken out.
The net cost must be a lot better than putting the money in a national savings and investments bond or there is no reason to do it. Yes the property might go up in value, but it might also go down and it will definitely at some point require money spending on it for repairs and replacements.I'm an ARB-registered RIBA-chartered architect. However, no advice given over the internet can be truly relied upon since the person giving the advice hasn't actually got enough information to give it with confidence. Go and pay someone!0 -
If this old man is on a regulated tenancy be careful!! He has a right to live there until his dying day AND the rent is usually far lower than "market" rates.0
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i think it might be a regulated tenancy.
property is guide price £100k
but rent is £85/wk which is poor
up for auction, no internal viewings or disturbance to the person living there!
been living there since 1950!0 -
Is it possible the regulated tenancy agreement can pass on to his next-of-kin as well?0
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good point and if investigated further will find out.0
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