Property yeld

ognum

Mallotum_X wrote: »

I think you have mis read that persons comment, it's to response to the quoted post they are discussing not the content of the post quoted.

Thank you for your comment but I do understand and stand by my comment.

ViolaLass

ognum wrote: »

Thank you for your comment but I do understand and stand by my comment.

Then I don't understand your point. I didn't disagree with any of the advice given, nor did I criticise it. I was criticising the OP for not reading it properly.

carlx

With BTL properties, i totally disregard anything below 6% annual yield. If you purchase a property and convert it to individual units for students or professionals then your yields will significantly increase, but so does the amount of work you put in, you will constantly be doing viewings.

Lower yields are often (but not always) better for landlords who want a less hands on approach, you can get a property in a more affluent area, higher monthly rents, but lower yields, often a better standard of tenant is found in those situations (not always)

So in brief, above 7% is good, below 6% isn't optimal. I hope it helps.

ognum

carlx wrote: »

With BTL properties, i totally disregard anything below 6% annual yield. If you purchase a property and convert it to individual units for students or professionals then your yields will significantly increase, but so does the amount of work you put in, you will constantly be doing viewings.

Lower yields are often (but not always) better for landlords who want a less hands on approach, you can get a property in a more affluent area, higher monthly rents, but lower yields, often a better standard of tenant is found in those situations (not always)

So in brief, above 7% is good, below 6% isn't optimal. I hope it helps.

This is interesting, I think it is entirely dependant on the area you want to invest in. My first thought would be to always invest in an area you know.

I have several buy to let properties, unlike many LL they are all fully owned by me, I have no mortgages, I am aware this is not a model many would agree with but it works for me.

All but one of my properties are in an expensive city, commutable to London with a high professional transient market with well paid jobs (Cambridge). I have properties in excellent locations that are geared toward the professional market and are well maintained.

My yield on these properties is around 4.5% but the capital growth on the properties is very very good. I plan to keep them all for 10-15 years and then review. I am happy with the yield and very happy with the capital growth.

I have one property away from this area, the yield is about 8% but the growth is nil. You take your money and make your choice!!!!

booksurr

ognum wrote: »

Thank you for your comment but I do understand and stand by my comment.

you have indeed misunderstood and should not stand by your comment

princeofpounds could have said like I have subsequently done: it depends!

instead princeofpounds chose to give a more contextual response showing some instances of factors which explain why it depends.

the OP brushed that response off "thanks" and then simply repeated the original question "average yield" without having taken on board anything pop had said

violalass merely pointed out that is what the OP has done, namely ignored the response and repeated the original question which is why I then emphasised the issue in #9 by posting the easy answer "it depends"!
Therefore your response to her is wrong

carlx

ognum wrote: »

This is interesting, I think it is entirely dependant on the area you want to invest in. My first thought would be to always invest in an area you know.

I have several buy to let properties, unlike many LL they are all fully owned by me, I have no mortgages, I am aware this is not a model many would agree with but it works for me.

All but one of my properties are in an expensive city, commutable to London with a high professional transient market with well paid jobs (Cambridge). I have properties in excellent locations that are geared toward the professional market and are well maintained.

My yield on these properties is around 4.5% but the capital growth on the properties is very very good. I plan to keep them all for 10-15 years and then review. I am happy with the yield and very happy with the capital growth.

I have one property away from this area, the yield is about 8% but the growth is nil. You take your money and make your choice!!!!

Ognum makes a valid point. My perspective is that because i require a BTL mortgage to finance my properties, then the higher the annual yield, the more of the mortgage i can pay off annually, reducing the mortgage term. My properties tend to be for the average worker in average area's, capital growth is lower than in more affluent area's, but as i said, my annual yields make up for it.

If like Ognum you wish to purchase in mre affluent and up and coming area's, banking more on capital growth rather than annual yields, then it is a good route to take, it does tie into what i mentioned about higher monthly rents at lower yields but of these two routes to take into becoming landlord, both have their merits and drawbacks - it is for you and your circumstances to judge which will benefit you and your family most.

theartfullodger

booksurr wrote: »

define "average LL" and we may be able to answer the question

it may be somewhere between 0 - 12 % depending

Surely between -20 & +25% depending....

Most years I make a profit from lettings: But not always,and even less always on each & every property. You only need an "interesting" tenant (or agent..) who doesn't pay for 6 months or an unexpected void or an unwanted big repair and...

The only way you know what the yield is is when you sell the place or you die: Until then any calculation is but (I exaggerate..) the raving guesses of some "get-rich-quick" seminar selling charlatan...

Cheers!

jjlandlord

theartfullodger wrote: »

Until then any calculation is but (I exaggerate..) the raving guesses of some "get-rich-quick" seminar selling charlatan...

No, it's not.
The key is to understand what each metric means and how to use them.

You need to decide whether to buy, where to buy and which type of property to buy. Then you need to decide whether to keep or sell the property.

As I said in my previous post, you need to have your numbers (and to understand them) before you can make an informed decision.

Then, even if the capital appreciation is expected to be good (which is a prediction, or guess depending how you see it), you still need the property to generate enough cash flow to pay for itself.

DRP

this thread is an example of exactly why we need to separate the 'Renting' forum from the 'Buying & Selling' foru... oh wait.....

Talc1234

it'smeinit wrote: »

Hi
I am trying to work out rental yield. Is this calculated on the price paid for a property or what it's now worth


Many thanks for any info

Yield is return on capital invested. Therefore for a wholly owned property gross yield would be annual income divided by market value of the property

If the property is BTL mortgaged then gross yield is more accurately calculated as income minus mortgage interest divided by equity held in the property

4.27% is a poor return taking into consideration of management / managing agent's costs (10-15% of income), Void periods (10% of income), maintenance etc. Professional landlords will aim for north of 8%, 12-15% is achievable with a student or DSS HMO