X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Property Yields

    Are 20% returns realistic and achievable?

    Hi All

    New member here!

    I have approximately 200k to invest and looking at various options. For property, I thought I would ask here to get a rounded opinion. I am looking for cashflow over capital growth. I have a well paying job but would like to build-up another income stream.

    Is it realistic to be able to get 20% annual return on investment from property and if so, which type? I assume single let's would get you a max for 8-10%. Refurbs could work but I'd prefer something less hands on.

    Your thoughts would be really appreciated.

    Thanks!
    Phil
    0
    0

    Hi Phil,

    I don't think 20% returns are realistic, but they are achievable.

    We have a recent discussion on this here >>> What is a realistic ROI on property?

    Always worth mentioning that, with higher returns, comes higher risk.  You need to ask yourself .... Are you experienced enough to mitigate that risk?  Do you want the extra hassle?  

    If you want to be less "hands on" , then the returns will definitely be far lower.

    This thread may also assist:

    Which property type offers the best potential ... 

    ​Hope that helps for starters?

    0
    0

    We have HMOs delivering gross yields in excess off 20% but once you factor in management fees etc the net yield would be mid to late teens.

    So I don't think you will achieve your 20% yield goal with HMOs, unless you are hands on

    0
    0

    Rooms In Cardiff info@highyield.property | Guaranteed RentSingle Let Management £50/month |Cardiff HMO Management | Cardiff Letting Agents & Property Managers | Delivering Double Digit Net Returns

    Rent Smart Wales Agent Licence Number: LR-37010-29907

    The Property Ombudsman: E1405 

    ICO: #ZA276375

    We operate Client Money Protection

    Hi guys

    Thanks for the responses. Appreciate it!

    I understand HMOs are typically best for higher returns but trying to get a rough picture on what to expect. I know it varies by location, property type, room size, etc. But just ballpark figures to start.

    Managed HMO = 15-18%?
    Managed single let 3 bed = 8-10%?

    I'm more inclined to start with a single let but also willing to put time in to learn about the specific regulations around HMOs but want to see if the returns far outweigh single lets.

    Thanks again!

    Phil
    0
    0

    Phil,

    I've been contacted by an agent with a property that is on the open market for £65K in one of my investment areas.

    Without PP rent achievable is £950 per month

    With PP permission for HMO £1350 per month

    Paying the open market asking price would deliver gross yield of 17.5% to 25% so you may net your desired 20% yield or not far off. If you get a lower asking price agreed its certainly achievable.

    0
    0

    Rooms In Cardiff info@highyield.property | Guaranteed RentSingle Let Management £50/month |Cardiff HMO Management | Cardiff Letting Agents & Property Managers | Delivering Double Digit Net Returns

    Rent Smart Wales Agent Licence Number: LR-37010-29907

    The Property Ombudsman: E1405 

    ICO: #ZA276375

    We operate Client Money Protection


    Hello High Yield Property, am I understanding correctly that you rent out a 65k property for £950 pcm? I'm assuming this is an HMO then not a single let? What would net rental look like after all costs? I'm just trying to understand as these figures sound crazy high! Thank you

    0
    0

    For refurbs the magic number is 20% but it’s getting harder to achieve this especially in the current market (at least in the south east).
    1
    0

    It seems like it is taking longer for properties to sell and lenders are making it much harder to borrow - down valuations, PRA, Stress Tests, etc....

    0
    0

    Not if the £ drops further & property prices weaken because of....

    0
    0

    Yes 20% return is not a problem for a single let

    You can do much better though

    Buy a 100K unit @ 75% LTV so 25K down ( plus costs / fees etc )

    Rent for 600 pcm = 7200 pa   ( 29% gross  return)

    Price goes up 3% pa = 3000 1st year ( 12% gross return

    ROI gross on your 25K is 41% ( minus costs / fees etc )

    And thats before we even start talking abut buying BMV or adding value

    Good Luck

    0
    0

    Jonathan Clarke. http://www.buytoletmk.com

    I just had a quick look on my last purchase and I am returning  just under 20% on capital invested

    But I did buy with a Tenant so I used the currant rent if I had a New Tenant I would have achieved around 28% on a market rent

    0
    0

    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.