Landlords: what's your NET rental yield?

chucknorris

Bettie wrote: »

I have to say my home insurance at less than £100 a year buildings and contents was the best money I have ever spent - after a robbery and the destruction of my property I was fully compensated, the damage alone was thousands. My landlords insurance is rather more expensive and buildings only but I can sleep safe knowing that any visitor having an accident on any of my properties will be covered.

It is like I said above, if you are not comfortable with the risk then insurance is a good product for you. Personally I am comfortable with the risk, if I end up losing out because of not having insurance, that's just life. We do have insurance on all of our 8 London investment properties, I am only self insuring our home.

bigadaj

chucknorris wrote: »

Agree with holiday but not property (my home) insurance, the downside could be too high with a holiday (i.e. your life), but property insurance just isn't value for me. You don't just pay for the risk, you also have to pay for the overheads and profit of both the insurer and the broker. I'd rather just pay for the risk and self insure, which I have done for 10 years now.

But house insurance is absolute peanuts, as I've stated previously. It's all personal choice but I've had many times my premiums back, and at less than £100 a year for buildings and contents insurance that looks like a cracking deal to me. So for 50 years that's £5k, not much of a house rebuilt for that!

chucknorris

bigadaj wrote: »

But house insurance is absolute peanuts, as I've stated previously. It's all personal choice but I've had many times my premiums back, and at less than £100 a year for buildings and contents insurance that looks like a cracking deal to me. So for 50 years that's £5k, not much of a house rebuilt for that!

It is about value, you also have to pay for the overheads and profit of both the insurer and broker.Therefore although certain individuals (like you) might gain, overall the expectation has to be that, all things being equal, most would end up paying for more than the risk. For the record my property insurance was £230 when I cancelled it about 10 years ago, and there have been no claimable events in that time. fair enough if losing your house would be to much for you to bear, but it really wouldn't be a problem for me.

If my house did burn down, it wouldn't be the end of the world. I have been looking for a good building plot for ages, and although my house is worth about £650k, the plot alone is worth at least £450k. I would hope to build an even better house for about £350k on the plot. Although at first glance that looks like I would be £150k worse off, the newly built house would be worth about £950k. In fact, if my plot was wide enough to build a double fronted house, I would seriously think about demolishing and rebuilding anyway.

EDIT: A few years ago a developer offered 4 of us (me and 3 neighbours) £600k each for our houses (as a parcel), at the time the houses were worth about £500k, but we refused their offer. They wanted to build retirement flats, all 4 plots are quite large.

masonic

chucknorris wrote: »

It is about value, you also have to pay for the overheads and profit of both the insurer and broker.Therefore although certain individuals (like you) might gain, overall the expectation has to be that, all things being equal, most would end up paying for more than the risk. For the record my property insurance was £230 when I cancelled it about 10 years ago, and there have been no claimable events in that time. fair enough if losing your house would be to much for you to bear, but it really wouldn't be a problem for me.

I agree with you in principle, but with the new customer incentives and cashback deals available I think those who make even a token effort to shop around can avoid contributing towards the overheads and profit margins of the providers. If I was paying anything near what the average punter pays I wouldn't bother.

jimjames

guitarman001 wrote: »

Oh right!! So basically you "insure yourself" - not through any scheme or anything. You just set aside the capital amount instead of paying some fee to an insurance company. Thanks!

The same as many do for other insurances such as pet insurance, income replacement insurance or god forbid PPI.


You need to weigh up the risks vs costs and it's clear when you hear some of the horror stories of those who are stranded abroad with no insurance that they aren't doing that assessment very well or don't even bother to think about it until the worst happens.

EdGasket

I've had well over £70K's worth of claims out of my house insurance (fire and subsidence); they are never going to be making a profit out of me unless I live to be 1000. Seems stupid not to insure the buildings at least.

TheTracker

EdGasket wrote: »

I've had well over £70K's worth of claims out of my house insurance (fire and subsidence); they are never going to be making a profit out of me unless I live to be 1000. Seems stupid not to insure the buildings at least.

All depends on relative value. If you have a £2-3m equity in a property portfolio of £200k rebuilds then it starts to look less stupid.

Anyway, I'm thoroughly not in the BTL camp. The £700k terraces either side of me rent for £2k. I make that a gross yield of 3.4%.

EdGasket

TheTracker wrote: »

All depends on relative value. If you have a £2-3m equity in a property portfolio of £200k rebuilds then it starts to look less stupid.

Anyway, I'm thoroughly not in the BTL camp. The £700k terraces either side of me rent for £2k. I make that a gross yield of 3.4%.

Eh? ....scratches head

TheTracker

I mean pain is relative. Assume a 1 in 3000 chance of claim per house per year in the UK.
Person A has all their wealth say £300k in a house. If it burns down (1:3000 chance) without insurance they suffer a £200k loss. Painful. Stupid not to insure.
Person B has £3m wealth in 10 houses each worth 300k. If one burns down (3:3000 chance) without insurance they suffer a £200k loss. Even though 10 times more likely, it is much less painful. Understandable not to insure. Telling this person they are stupid is naive.

Pincher

If you pay £500 per property on premium, that's £5,000 a year for ten properties. The typical claim is probably less. By the time the insurance company slapped on the excess, insist on using some cheapest quote moron called Kevin who tells you he is only a decorator, piles on the filler so the wall looks lumpy and disgusting, I wish I just got my own builder to do it.