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  • Property-a-holics

    6.7% annual yield - good return in Liverpool?

    I have just now on-boarded my first BTL property in Liverpool - residential, semi-detached, let out as a single unit.

    My calculated gross annual yield is 6.7%. I was wondering whether this is above or below current trend in Liverpool (L4, L5) area?

    Thanks

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    Maybe this might help you decide if you are getting a good yield?

    https://www.totallymoney.com/buy-to-let-yield-map/

    What are your aspirations? what do YOU consider to be a decent yield for your hard work?

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    My investment strategy is based on long term investment principle. The key requirement I have to this property/investment is to be at least self-sufficient and self-contained - cover its own costs (interest-only mortgage repayments, license, insurance, accounting software/services, regular service maintenance, etc.) and ideally generate income to repay loan capital).

    It would be good to hear out those who invest in Liverpool letting out properties as single-let units in L1-L8 area. What do you guys achieve at the moment in terms of gross yield?   

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    I'm a London (east) based investor and I usually work on ROI rather than yield. At the moment, I'm getting around 6% ROI (before tax) and that suits my needs. It might not be great compared to what others are getting, but it is a figure I am comfortable with. I could get more if I went down the airbnb/SA route, but that would involve more work than I am prepared to handle at the moment. I could also increase it if I went with ex local properties rather then purpose built, but once again that is not something I'd be keen to invest in.

    The point I'm trying to make is that whilst it is great to know what others are getting, don't use it too much as a yard stick for your own investment. if you're returns are lower but you put in less work or you attract a better calibre of tenant then that is something that cannot be measured when working out your yields.

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    I say to most people I advise in my consultancy, that they are best buying within an hours drive of where they live, unless the opportunity is too stonking a good one to miss. If things go bad, you'll soon resent a long schlep to go and fix whatever has gone wrong - and things always go wrong at some point, especially if an agent is not a good one and does not do his job right.

    There are two parts, of course, to making money in property - rental income and capital growth. Cap growth may be lower in future as we are, I believe, now in a long term low inflation/deflation world and all things being equal, this will impact on capital growth of housing too.

    I would ask, what factors are there happening in Liverpool over the longer term, (I'm assuming you want to buy and hold for a time), that will drive up rental incomes in the city and also house prices. Do the work - look at regeneration impacts, future supply and any risks of oversupply, all the stuff that drives income and growth. It's a chunk of work. Then decide.

    David Lawrenson

    https://www.LettingFocus.com

    One to one independent advice for investors in residential assets

    Author of books for landlords and tenants


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    I'm in Liverpool. 6.7 yield is respectable. If it is yield, and not ROI. As long as you don't fall foul of the MANY cowboy trades in Liverpool, you'll be ok. I'm just doing remedial work for an investor, on a 3 bed in L9. VERY bad builder/cowboy/gangster. Had her off for 6k at least ! On a 9k job. Sigh. I see it all the time. Good luck. Liverpool is a fab city.

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    I believe 6.7% is fair in terms of yield I use to look for 8%+ but now I use R.O.I as my measure for the properties. I personally won't get anything below 25% R.O.I

    But it varies on the person, someones personal circumstances may mean they want a higher or less yield/R.O.I. If you're happy with it then go for it, but there will always be better out there.
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    If I dont achieve 8% I dont buy

    Its just not worth me commiting to a purchase for less

    The costs now to but are high now Stamp Duty Purchase fees Valaution fees and Mortage fees are all much higher now

    I find If I add them all together your first years rent is gone


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.