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Old 09-10-2018, 07:38 PM   #1
dannygdesigns
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help with BTL property yield is it worth it?

Pretty much got my offer accepted on my second BTL property listing price 85k offer £77,500 rental income will be £475 max - giving it a yield of 7.35% ..

I was naive when getting my first, had not researched anything and had no idea of what yields were until now I seemed to of struck luck and 3 years down the line its done great however coming to my second property researching online about yields it says anything under 8% isn't great and most people won't touch it under 8 and this will be 7.35%

Can anyone give me any advice and do you think it is a decent deal to go for?

Estate agents recon it will have no problems renting out but they'll say that anyway to get the deal, its a 3 bed terraced only thing that put me off when going to look at it was the fact it had no rear garden, its on a court so has 1 allocated parking space in front of the property not sure how much this would bother potential tenants.
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Old 09-10-2018, 08:45 PM   #2
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The theoretical yield is all well and good - but how much net profit will you actually be making after taking off costs (mortgage, service charge, letting agent fees, ground rent, landlord license if needed and TAX) ?

The tax is the killer. Due to that (and other reasons) I’m getting out of BTL.


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Old 09-10-2018, 09:06 PM   #3
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whats the growth potential to?

im waiting for brexit to bite before buying another
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Old 09-10-2018, 09:49 PM   #4
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As FJ1000 says that is the theoretical max yield. You really need to consider the total of the other costs to you and how you could mitigate these as much as you can. Are you using a letting agent, they will charge c10-15%? Maintenance fees (gas safety, legionnaires etc.) and as it's an older property it may need more general maintenance. Also estate agents will tell you what you want to hear regarding tenants. Can you afford to have the place empty for a period and the consequences of that? Of course you can offset some of these things, but it all adds up. Tax is a killer. Depending on your income you will at least be paying 20%, 40% if a high earner. I think all those things are more important than the max yield you'll be getting. Sorry if that sounds tough, but it's the way of the world with being a landlord.
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Old 10-10-2018, 04:41 AM   #5
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As close to 10% as you can get. And try and buy 10% bmv
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Old 10-10-2018, 07:27 AM   #6
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Thanks guys, Yeah with total costs of everything else it probably wouldn't be making much net profit my other one gives me a few hundred net profit a month which is a better yield purchase price 78k and rent £560. But for my situation its not all about maximum return now its more of a pension pot when I'm older id like to have quite a few houses all paid for themselves so even if the houses aren't even making profit now its not too bad as long as there not losing me money but the extra little bit of spending money a month would be nice.

@pxr5 My other property is managed for 8% but this time I think I will do it myself and just get them to do the tenant find and legals to try keep costs down, I pay currently around £50 a month for someone to call up an electrician or plumber when there is an issue I am sure I can do that.

I can afford the place to be empty I always consider this when buying. Your completely right the yield is such an easy number to pluck up and everything else is much more important just want to make sure its not going to bite me in the backside going for a lower rental property.
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Old 10-10-2018, 07:35 AM   #7
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Quote:
Originally Posted by kingswood View Post
whats the growth potential to?

I'm waiting for brexit to bite before buying another
It was built in 2006 and went for £96,000 not sure if that helps to determine growth potential? one on the same street went for £83,000 in January 2018
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Old 10-10-2018, 08:39 AM   #8
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help with BTL property yield is it worth it?

I use upad to list properties to let up on Rightmove, Zoopla etc. £150ish and you do your own viewings; much better than paying a letting agent IMO. They can also do the credit check, inventory, EPC etc.


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Old 10-10-2018, 09:17 AM   #9
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Things that have put me off from buy to let is, getting the house trashed, tenants stop paying rent and refuse to move out.
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Old 10-10-2018, 10:57 AM   #10
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So far I've been lucky with my tenants who have lived in the property for the last 4 years. However with any investment there is always the risk / reward issue. The bigger the potential return the greater the risk it won't deliver.

You are absolutely right in that you should never invest in something you are not comfortable with
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Things that have put me off from buy to let is, getting the house trashed, tenants stop paying rent and refuse to move out.
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