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Investment yield minimum
kmmr
Posts: 1,373 Forumite
Hi,
I am contemplating selling my London flat (with tenant) aimed at another investment buyer. It's not really a FTB type area as its all rentals, so I think the price will largely be driven by the overall yield of the flat.
So I was wondering what other landlords on here think is an acceptable rental yield. At the very upper end I think is achievable the return is around 4%, and at the lower end it would be up to 6%. Do you think that is enough for a London property?
The rental is well over £1000 a month, so expenses won't make a big dent in the yield. The price range I am looking at is very wide as I see places advertised for crazy money, but they do seem to be selling.
Thanks in advance.
I am contemplating selling my London flat (with tenant) aimed at another investment buyer. It's not really a FTB type area as its all rentals, so I think the price will largely be driven by the overall yield of the flat.
So I was wondering what other landlords on here think is an acceptable rental yield. At the very upper end I think is achievable the return is around 4%, and at the lower end it would be up to 6%. Do you think that is enough for a London property?
The rental is well over £1000 a month, so expenses won't make a big dent in the yield. The price range I am looking at is very wide as I see places advertised for crazy money, but they do seem to be selling.
Thanks in advance.
0
Comments
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4% investment yield? you can get more than that from a 5 year bond, risk free. and no getting phone calls at 1am from irate tenants because the toilet is blocked, either.0
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Mr_Thrifty wrote: »4% investment yield? you can get more than that from a 5 year bond, risk free. and no getting phone calls at 1am from irate tenants because the toilet is blocked, either.
True, but that's not 100% comparable as you can get a (potential) leveraged return from your investment property as well.
And what is 'risk free' these days anyway!
Anyway, 4% assumes a crazy selling price (which I think is unachieveable), 6% a reasonable price, and 8% at a pretty low price. What, for you, would be the tipping point do you think?0 -
I don't know the inner London market but 4% does seem low whereas 6% is oft quoted these days as being "realistic". That said, sectors of the London market does still seem to holding on to capital appreciation so never forget that in the mixMr_Thrifty wrote: »4% investment yield? you can get more than that from a 5 year bond, risk free. and no getting phone calls at 1am from irate tenants because the toilet is blocked, either.
as for comparing to an straight cash based investment product such simple analogies do not always work unless you are assuming it is a cash buyer - anyone with a mortgage would not have the cash lump sum to invest at 4% to generate a £1000pcm cash return so the analogy does not work for them, remember it is the tenant paying off the mortgage not the LL and therefore the gorss yeild based on the total property value is based on a cash sum the LL did not invest in the first place0
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