Going rate for suburban London buying yield

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    Going rate for suburban London buying yield

    1930s s/c front entrance 2-bed flat )3KB) above a shop. Purchase includes existing AST at current rent. 7% yield (before costs) on purchase price. About right? or cheap? Any ideas, please?

    tia

    #2
    What does your research indicate ?

    Comment


      #3
      There are many more questions you should be asking aside from simple straight yield.

      Where is the property? Is the area being developed?
      What is the market rent for the area on this type of property? Too high or too low?
      What is the price of the property? Is that too high or too low?
      What kind of Tenancy agreement is in place? Are you sure its AST and not Rent act?
      What kind of shop is it over? Is the shop currently operational? what kind of shop could be moved in there?
      Whats the demeanour of the current tenant? Have there been any problems in the past?
      Is there any work that needs doing to the property? Does it need modernising?
      Why is the current owner selling?

      After all of that and more, if you can get 7% in London, that's pretty decent.

      Comment


        #4
        Research indicates 5-7%

        -----

        Where is the property? I know, but not telling for the forum.

        Is the area being developed? No.

        What is the market rent for the area on this type of property? About the same

        Too high or too low? Average

        What is the price of the property? Price is the rent times yp (the yield worked backwards)

        Is that too high or too low? Average

        What kind of Tenancy agreement is in place? I said AST,

        Are you sure its AST and not Rent act? it is not Rent Act, I am sure,

        What kind of shop is it over? Not an anti-social use, eg not restaurant, cafe, dry cleaners, etc.

        Is the shop currently operational? Yes

        what kind of shop could be moved in there? Anything within A!

        Whats the demeanour of the current tenant? Well-behaved and reliable.

        Have there been any problems in the past? No

        Is there any work that needs doing to the property? No, good nick.

        Does it need modernising? No, regularly updated.

        Why is the current owner selling? Not selling, I am doing a valuation of the building.

        After all of that and more, if you can get 7% in London, that's pretty decent. I think so, but just wanted to check, thanks

        Comment


          #5
          Never ever rent above a shop.
          Not worth the pain.

          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            No location, no responses.

            Comment


              #7
              7% is a good gross rental yield for london area . The gross yield for £500K new flat in NW London about 4%

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                #8
                I think 7% is really good for suburban London but the area is so huge that it is difficult to advise. We are in outer London and can get gross yields of just over 6% on some less attractive ex-council flats (our normal yield is 3.5-4.5%) but the trade off can be that they don't always attract blue chip tenants. Some landlords are happy to accept tenants who, on paper, may perhaps not earn quite enough so do make sure that the tenant is a genuine one who has a decent payment history.

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