Which property gives you the best yield?

loll_l

tom9980 wrote: »

A pension has significant tax advantages over BTL and with the Government seemingly happy to increase the tax burdens on hated landlords you are putting your eggs in one basket is a very risky strategy when you will absolutely need to rely on this income in retirement.

The fact you haven't learnt you lesson from the first mistake is worrying and i say this as a Landlord.

I am not losing money on the first house - I am breaking even on monthly payments whilst still paying the mortgage off - certainly not a bad investment but could have been better!

loll_l

loll_l wrote: »

I'm looking to put down around a 20-25k deposit on a property to rent out.... I'm thinking along the lines of a 25 to 35 year mortgage, the property can be anywhere in the UK, and I'm looking for the best yield possible (highest rent to lowest mortgage payments).

I am a complete newbie to this so could do with some advice on which way to go. Some suggestions I have been given so far are:
- Buy a student house somewhere like Hull with as many bedrooms as you can
- Buy on the outskirts of London as the CBD is expanding all the time and the value of the property will shoot up
- Buy a flat by the river in Leeds as these are sought after and I will have no problem renting it out
- Buy a house in Sheffield City Centre as property there has a good yield
- Buy a property which can be converted into smaller flats

Does anyone have any suggestions for the best way to go? I suppose my main concern is not having the property occupied so I obviously don’t want to buy anywhere where the demand to rent is low.

I will remove the "complete newbie" bit from this post – it may be misleading as I already buy to let one house.... The truth is that I was not involved much in the first purchase (someone took care of most of it for me) due to my work commitments…. Which is why I consider myself a newbie

sparky130a

loll_l wrote: »

Ideally I'm looking for somewhere ready to rent yes... so I guess that rules out buying a big house and converting it into flats.

There will be a managing agent looking after the tenant(s) for me as I run my own business (self employed) and don’t have much spare time

You only have a 25-30K deposit and require a full term mortgage so where would money for this idea come from?

Pixie5740

loll_l wrote: »

I am not losing money on the first house - I am breaking even on monthly payments whilst still paying the mortgage off - certainly not a bad investment but could have been better!

Are you still breaking even when you take into account tax, letting agency management fees, insurance, etc?

loll_l

sparky130a wrote: »

You only have a 25-30K deposit and require a full term mortgage so where would money for this idea come from?

Another reason I don't plan to do this.... it was just in with a list of suggestions that have been given to me.... this one obviously not really suitable for me

loll_l

Pixie5740 wrote: »

Are you still breaking even when you take into account tax, letting agency management fees, insurance, etc?

Yes... I would say I'm making a very small profit each month (roughly breaking even) and the mortgage is also being paid off.... I'm lucky in that the house has been tenanted ever since I bought it 2 years ago.

I perhaps came across too naive in the opening post and now I just seem to be getting “are you sure you want to do this” type replies …. If anyone can look past the naivety and recommend any towns/cities where there’s a good yield that would be great.

Pixie5740

What do you consider to be a good yield?

sparky130a

loll_l wrote: »

I perhaps came across too naive in the opening post and now I just seem to be getting “are you sure you want to do this” type replies …. If anyone can look past the naivety and recommend any towns/cities where there’s a good yield that would be great.

And you still are. If we all had a magic answer to your question do you not think we'd action it ourselves?

Doozergirl

loll_l wrote: »

Yes... I would say I'm making a small profit each month and the mortgage is also being paid off.... I'm lucky in that the house has been tenanted ever since I bought it 2 years ago.

I perhaps came across too naive in the opening post and now I just seem to be getting “are you sure you want to do this” type replies …. If anyone can look past the naivety and recommend any towns/cities where there’s a good yield that would be great.

Arguably, you'd buy similar to what you have. What yield do you want?

Highest yield generally involves higher risk, more damage, lower quality of tenant, more involvement. And therefore, not such a high yield.

Pixie5740

If you have a deposit somewhere between £20k and £25k then you're looking at properties priced between £80k and £100k (assuming max 75% LTV). To generate a 6% gross rental yield (assuming you have no void periods) then you'll need a rental income of £400 to £500 pcm.

So that those figures rule out somewhere on the outskirts of London and probably most of the South East of England and several other large cities too.