Yields going forward

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Yields going forward

    As letting becomes more difficult with new restrictions and removal of subsidies and tax breaks,will opportunist landlords exit,sell properties and precipitate higher rents and yields?what is a good yield in these circumstances

    #2
    I'm not sure how other people calculate yields but for me I work out what I get back for the actual cash I put in rather than the value of the asset etc. For me right now yields are close to 25% pre-tax. I know that sounds ridiculously high but that is what I receive per annum based on my initial cash investment. If I based the yield on equity then it would be around 10%

    Comment


      #3
      Kape65,

      Well that's gearing. When you make a few % loss (on the total) you will lose 25% of your "actual cash I put in". Or when property prices slip by 1%. Nice mode of calculation when you imagine things can only ever go in one direction. But they won't.

      There are opportunists right now - but the only sensible ones are corporations. Not many other opportunists I can see right now - it may make sense later, especially for folk owning dozens of properties, but not for the 2-property landlord, or right now -- but what do I know as a non-employee of HMRC?

      Comment


        #4
        Originally posted by AndrewDod View Post
        Kape65,

        Well that's gearing. When you make a few % loss (on the total) you will lose 25% of your "actual cash I put in". Or when property prices slip by 1%. Nice mode of calculation when you imagine things can only ever go in one direction. But they won't.
        I agree. I survived the 2008 crash where my property values dropped near 80% and I still own a property bought in 2007 that is worth less than I paid for it. I am under no illusion as to the potential risks of BTL ownership that's why I haven't purchased any in the last 13 years.

        Comment


          #5
          Originally posted by Kape65 View Post

          I agree. I survived the 2008 crash where my property values dropped near 80% and I still own a property bought in 2007 that is worth less than I paid for it. I am under no illusion as to the potential risks of BTL ownership that's why I haven't purchased any in the last 13 years.
          Well if I calculate yields based on a raw "what I put in my in" my annual yields are over 50% (because properties bought 40 years ago now have an annual rent half their original purchase price even with no mortgage).

          I'm just not sure that is totally meaningful. Because I could have done something else with that original purchase capital, so the base cost (or in really the capital I am "missing" going forward) is a whole lot higher.

          Since ChrisDennison on another thread thinks all of my 6000 posts are not uplifting enough and compliant enough with bad government, I'll add that my 100% yields are truly thrilling.

          Comment


            #6
            I calculate my yields this way in order to see whether or not they are meaningful! As I'm in the market to divest all of my BTL properties it helps me see the benefits of other investment options (and I must say nothing else comes close to 25%). What is the point of calculating yield based on property value? If their is a spike in property prices then the yield goes down, doesn't seem particularly accurate to me.

            Comment


              #7
              AndrewDod thanks for alerting me to this post, nice reading for a change

              Kape65 you had some property the value of which dropped by 80%? Wowsers, where was that? Shittownistan?

              Comment


                #8
                I'm not so sure it was a regional thing, more a national thing. As nobody was able to buy you could say the properties were actually worthless. If you had to sell then you were screwed.

                Comment


                  #9
                  Originally posted by Kape65 View Post
                  I calculate my yields this way in order to see whether or not they are meaningful! As I'm in the market to divest all of my BTL properties it helps me see the benefits of other investment options (and I must say nothing else comes close to 25%). What is the point of calculating yield based on property value? If their is a spike in property prices then the yield goes down, doesn't seem particularly accurate to me.
                  There are flaws in most yield calculations.
                  I agree with your approach - how much am I earning for the money I'm putting in.
                  I base it on (post-tax) profit rather than income, though, so my return is lower than most people's calculations.

                  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


                    #10
                    The gross yield is taken as % of annual rent divided by the property market value .

                    http://www.liveyield.co.uk/blog/what-is-yield/

                    Comment


                      #11
                      This website shows the gross yield can be 4.4 % found in Scotland and only 3% found in London.

                      https://sevencapital.com/property-ne...ds-across-uk/#

                      Comment


                        #12
                        Originally posted by Gordon999 View Post
                        The gross yield is taken as % of annual rent divided by the property market value .
                        http://www.liveyield.co.uk/blog/what-is-yield/
                        That's true, but it's not a useful measure for comparing different investment returns.

                        Comparing an ISA with the returns on a property, for example.
                        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


                          #13
                          The main problem with using gross yield for a property investor is during a property price crash, your returns look better and better.
                          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


                            #14
                            No point over complicating it. Calculate yield however you want depending on what you want to try measure.

                            But life is too short man, just be careful not to take on too much risk and be well diversified. So many things can change and are variable. We have no idea really what will happen in the future to inflation, interest rates, taxes, rents, property values etc etc. All these things can go up and down within any particularly time frame.

                            Take things easy and understand history and take calculated risk whilst remaining diversified and having a lot of margin of safety. Life is for living.

                            Comment


                              #15
                              If my grandparents bought freehold for £10,500 in 1980 and the property now produces £18,000pa what's the yield?

                              Comment

                              Latest Activity

                              Collapse

                              • Some Newbie Interest Only Q's
                                by RedRanger
                                Hi,

                                Could someone help with a couple of newbie questions in regards to interest only BTL mortgages;

                                1) To achieve the most competitive rate throughout your mortgage term (e.g. 25 years) do you just keeping on remortgaging after each initial term is over? On a side note assuming...
                                30-09-2020, 18:53 PM
                              • Reply to Some Newbie Interest Only Q's
                                by gnvqsos
                                I would remortgage own home and finance house purchase thus.However given your lack of experience I would defer until having done some research.
                                01-10-2020, 05:14 AM
                              • Reply to Some Newbie Interest Only Q's
                                by BTL investor
                                Most of the information you want should be available on google but:-
                                1) Normally you would fix the mortgage for a set term i.e 3yrs, 5yrs etc then at the end of that you fix it again with which ever lender is offering the most competitive deal.
                                2) If you stay on after the initial 5yr fixed...
                                30-09-2020, 21:47 PM
                              • Reply to Some Newbie Interest Only Q's
                                by loanarranger
                                Hi RedRanger
                                whilst you might take out a long term mortgage you initially will decide on how long you want to have the first incentive facility, 2/3/5 year fixed, Discount , Tracker, at the end of the incentive period you will have assessed whether to have the loan revert to that lenders variable...
                                30-09-2020, 21:28 PM
                              • Reply to Some Newbie Interest Only Q's
                                by RedRanger
                                No I have never had a mortgage. I have been quite fortunate in that respect as I was given my current home by family and live mortgage free hence I know very little about mortgages....
                                30-09-2020, 20:52 PM
                              • Reply to Some Newbie Interest Only Q's
                                by BTL investor
                                Have you ever had any type of mortgage before?
                                30-09-2020, 19:26 PM
                              • Reply to Mortgage News
                                by loanarranger
                                is this going to be a trend going forward over the next few months??

                                Barclays is the second lender in 48 hours to announce of steps to manage what has become a nightmare in processing an increase in the number of mortgage applications for both purchases and Buy to Let. Below is an extract...
                                30-09-2020, 16:13 PM
                              • Mortgage News
                                by loanarranger
                                The following article has appeared in one of the Mortgage Trade journals reporting on views expressed by the Association of Mortgage Intermediaries an influential trade body within the mortgage industry.

                                "Mortgage rates are likely to rise in the first quarter of 2016 as lenders look...
                                23-12-2015, 19:43 PM
                              • Buying property with short lease with section 42 served
                                by Newbielandlord2015
                                Hi, seen lots of auction properties advertised which look like good deals sold with section 42 served with shorter leases; I assume if you're buying with a mortgage you could only buy them if lease length is 70 years or more as the lease extension process is done after the sale with all the potential...
                                27-09-2020, 18:22 PM
                              Working...
                              X