Buy to Lets - Yields

getmore4less

If looking for capital growth to suppliment the business then you have to factor entry and exit costs(that CGT will eat chunk).

If the business can't produce a positive cash flow over time a void or two will kill it.

10% return on investment is a good target with low interest rates you can gear towards that a bit easier than high rates..

carlx

I tend to not even both looking at rental properties with less than 7% yield, this allows me to factor in void periods, general costs etc which will bring it down to around5%.

Like many have said, high yield are usually lower class property in lower class areas inhabited by low (or no) income earners, reliance on housing benefit brings its own issues.

Alternatively you can go for a lower rental yield, higher monthly rents but higher property value. The issues with that are if you get a bad tenant in, rather than £20k-£30k of damage, a nice house in a nice area damaged property can easily reach 6 figures as the remedial works will cost more.

If you're hoping for capital growth, always factor in CGT as many people forget this.

rach_smith2006

Pixie5740 wrote: »

I wouldn't just look at what is considered a good rental yield. As a general rule of thumb, the higher the yield the higher the risk like in the example given by Argghhh. The higher yields tend to be at the lower end of the rental market where tenants are more likely to be in receipt of benefits and then your business becomes very dependent on the whims of the government.

HMO properties give higher yields as well but they require more managing so therefore more of your time or higher agent fees if you choose to use one. HMO also tend to have a higher churn of tenants.

Have you looked at any other less hassle investments as well as BTL?

Hi there

You mention investments with less hassle involved than BTL, any recommendations?

Thank you