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  • Buy-to-Let

    BTL and returns

    Hello All,

    i wondered what your thoughts would be...

    I bought my first property for £95,000 and have a £510 a month return on it. I’m looking for my second and can’t seem to find  a similar property within a similar location and  quality. I have found one at £110,000 and the return is likely to be the same....

    Is this to to be expected having purchased my first property over 2 years ago and is this still a good return?

    I’m new to this and have no one around me to ask advice off so really needed some experienced input.

    Thanks in advance

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    If you bought 2 years ago clearly there been capital growth in the meantime which has pushed up the prices, so well done on making £15,000 in 2 years! Yield wise its relatively common for rents to remain the same as there are usually other buy to let properties with a high turnover of tenants which will keep a lid on rent rises. This may change if/when people bail out of buy to let given the recent tax changes/ fears around Corbyn etc but who knows. It depends where your properties are situated and what your investment goal is i.e. capital growth or income.

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    Mortgage broker and property investor.

    http://www.goldmanread.co.uk


    There are multiple reasons why there could be a price differential . You could have made 15K or you could have underpaid 2 years and got a good deal when the market price should have been 100K and the one you are looking at could be  on at an inflated hopeful price and it could eventually be sold at 100K .

    To find out you have to look at many factors .

    One crude method is to look at the sold prices on rightmove for the respective streets and work out what other similar properties have been sold for .

    Look on the epc register and see if the footprint is  the same for both properties. They may look the same from outside but one may have been extended . One maybe in top notch condition one might be a bit of a hovel. Its easy to spend 10K on a property. 

    Your 95K one may have been priced wrong by the agent so vendor expectation may have just accepted that .

    Or it might have been a motivated vendor desperate to sell . The 110K one may not be so  motivated so is chancing his arm at that price knowing full well that 103K is nearer the true value.

    So many reasons possible for the differential . Check the house price index for that area . Was it 8% pa to take it from 95K to 110K . Thats 16% in 2yrs which is v good . If it was only 2% pa though then something else will explain the 15K difference

    So dig deeper to ascertain the true value and then work out what you will be prepared to pay for it .

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


    This is a really helpful post JC to all of us on here -its pleasing to see that there are some good guys out there with such wisdom.

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