expected yield?

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

  • expected yield?

    Hello

    I am completely new to property investing, but am now looking at it as I have about 150K in bank earning practically nothing on interest.

    I am going to buy property for the long term (10years appprox). It is the rental income that appeals to me as money earns nothing in bank these days. My question is - What is an acceptable rental yield? - 5%, 6%? I know there are plently of downsides (voids, bad tenants, upkeep etc)but as a rule of thumb what should I aim for?

    Thanks in advance

    Craig

  • #2
    If it is a cash purchase, your yield is your true return on your money. As a result you have more flexibility, and the choice to look at properties that many investors would not look at - possible higher capital growth but lower income.

    I personally aim for a minimum of 8% (prefer 10% plus) however that is because I buy with finance and therefore need to factor in possible rate rises. Some investors aim for 7%. As it is cash, your debt servicing is not an issue so you could go lower and as per comments above look at higher (potential) growth properties.

    Whatever you do, keep a healthy contingency in case you have voids or non paying tenants.
    Liability statement. My liability to you is not to exceed the amount you are paying for my recommendations or advice.

    I see a bright new future, where chickens can cross the road with no fear of having their motives questioned

    Comment


    • #3
      Many thanks for your help wickerman. much appreciated.

      Comment


      • #4
        You cannot go just on yield - every property is different. On the type of properties I have been looking at you also have to add in quite a 'margin of safety', which will put the 'apparent' yield up on purchase but the real yeild will be lower once your capital is used fixing it. Its not like buying NS&I bonds at RPI+1% which are yielding 6% or so. There are many things which maybe hidden when making a purchase and you can only control the risks of buying a badun to a certain extent as even if a surveyor gives it a clean bill of health.

        I believe any yield should be at least 8% if not more.

        Comment

        Latest Activity

        Collapse

        • Extremely anti-social and criminal tenant -Section 8
          BouwensPB
          I have an extremely anti-social and criminal tenant. My neighbours think she is possibly a sex worker and drugs abusing and dealing. She has made a witnessed and CCTV sited assault on one neighbour and has verbally abused others. 3 crimes have been reported and the local authority talk about making...
          26-07-2017, 16:09 PM
        • Reply to Extremely anti-social and criminal tenant -Section 8
          Galatea
          I have experienced far more dificult cases than that from my neighbour's tenants with my front window and my flat door window cracked.

          Make an offer she cannot refuse. Carrots work better.

          Local Authorities are slow moving because shortage of housing is a problem.
          27-07-2017, 22:25 PM
        • Burglary Damage - Who Pays?
          Pb21
          Our rented flat was broken into, in the process the Yale lock was broken and cost £100 to repair. The landlord is refusing to pay this on the basis we didn’t also lock the door with the mortice lock. We didn’t use the mortice lock as it wasn’t working although the landlord did not know this....
          25-07-2017, 11:40 AM
        • Reply to Burglary Damage - Who Pays?
          Galatea
          Since the Yale was broken it proves the tenants took responsible measures for the security: they locked the door.
          The yale is necessary for security. It is sufficient and safe to use in case of a fire because you could get out quickly operating the lock with the thump ie you don't want to be looking...
          27-07-2017, 22:13 PM
        • One tenant moving out and two remaining - who pays for the checkout/inventory?
          IoIo
          Q1 – Where is the rented property located (England / Wales / Scotland / N Ireland)? England

          Q2 – What type of Tenancy Agreement (TA) is this e.g. sole tenant / multiple tenant / room only? Three people all listed as the Tenant under the agreement

          Q3 – What date did current...
          26-07-2017, 16:38 PM
        • Reply to One tenant moving out and two remaining - who pays for the checkout/inventory?
          IoIo
          Thank you all for your comments. Very useful, informative and much appreciated.

          The tenants are "moving out" on the last day of the current tenancy i.e. at the end of the term. My understanding is that if they're all listed as the "Tenant" then if one gives notice it's...
          27-07-2017, 21:23 PM
        • This is a NO isn't it? Seems iffy to me, what do you think?
          Berlingogirl
          This is a NO isn't it? Seems iffy to me, what do you think? Any insights? My ad is on Gumtree.



          "Hello, I'm A***** a British America Business man, I have a business project in your area and I'll like to rent your apartment for the period of 6 month and I'll like to know...
          27-07-2017, 13:57 PM
        • Reply to This is a NO isn't it? Seems iffy to me, what do you think?
          Berlingogirl
          I'm trying to , jta, but I think he knows I know....
          27-07-2017, 20:16 PM
        • Reply to Extremely anti-social and criminal tenant -Section 8
          Wright76
          You are also aware you are now liable to pay her a penalty of up three times the deposit value?.

          My experience of a drug addict is that they will leave with a financial offering.

          Strike a deal taking into account your likely penalty and eviction costs and offer her an amount...
          27-07-2017, 19:10 PM
        • Reply to Extremely anti-social and criminal tenant -Section 8
          theartfullodger
          Check insurance for what you must do knowing what you do....
          27-07-2017, 19:00 PM
        Working...
        X