average yields are closer to 3%, before interests go back up!

chucknorris

ukcarper wrote: »

Is average yield the yield on market value of house or the yield on the price the landlord actually paid for property.

The gross yield (in industry) usually refers to the rent/value of property, that doesn't necessarily prevent others from calculating a yield to suit their own purposes of course, so that could be based on anything.

ukcarper

chucknorris wrote: »

The gross yield (in industry) usually refers to the rent/value of property, that doesn't necessarily prevent others from calculating a yield to suit their own purposes of course, so that could be based on anything.

So if that is the yield quoted by OP I wonder how many landlords are only getting 3%.

getmore4less

The key measures are the entry yield and exit yield.

Coupled to the current HPI.

That is the measures that control the time to flip.

In may cases the entry yields may be low but the exit yield for the current owner still ok due to a significant CGT bill on exit.

chucknorris

ukcarper wrote: »

So if that is the yield quoted by OP I wonder how many landlords are only getting 3%.

Well I am only getting 3.8%, but that is because values have surged recently, so I wish I could say that I was only getting 2.8%. Because values would have surged even further, if they had I probably would sell up. So lower yields aren't necessarily a bad thing, of course it is a different story if someone has little equity (due to buying recently or mewing).

ukcarper

chucknorris wrote: »

Well I am only getting 3.8%, but that is because values have surged recently, so I wish I could say that I was only getting 2.8%. Because values would have surged even further, if they had I probably would sell up. So lower yields aren't necessarily a bad thing, of course it is a different story if someone has little equity (due to buying recently or mewing).

I know a couple of landlords both in it for long term. One is getting £850 a month but his mortgage is about £400 a month his current gross yield would be about 4.25%. I don't think a fall to 3% would put him in trouble.

chucknorris

ukcarper wrote: »

I know a couple of landlords both in it for long term. One is getting £850 a month but his mortgage is about £400 a month his current gross yield would be about 4.25%. I don't think a fall to 3% would put him in trouble.

It wouldn't hurt us at all, our rental income is about £150k/year but our mortgage interest is less than £7k. But what is relevant of course is, could we get a higher return with the equity invested elsewhere? At the moment the answer is no.


EDIT: As well as testing the comparative profitability of existing investments it is also to do with the profitability of future property investment, anyone that has been in the market for some time should be in a very good position.

ukcarper

chucknorris wrote: »

It wouldn't hurt us at all, our rental income is about £150k/year but our mortgage interest is less than £7k. But what is relevant of course is, could we get a higher return with the equity invested elsewhere? At the moment the answer is no.


EDIT: As well as testing the comparative profitability of existing investments it is also to do with the profitability of future property investment, anyone that has been in the market for some time should be in a very good position.

Yes I can see that the person I know is fairly young and is happy to leave it for long term.

cells

NorthFin wrote: »

when interest rates correct back to more normal levels?

they are normal levels now, they were abnormally high ten years ago

cells

Generali wrote: »

Gross or net yield?
Also, how do you account for depreciation of the house? (land appreciates but houses depreciate).

Inner London typical of lower end flats is about 5% return on the value of the flat

caronoel

cells wrote: »

Inner London typical of lower end flats is about 5% return on the value of the flat

Certainly that has been my personal experience, and that's before any house price inflation