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  • Property Yields

    I'll show you my yield if you show me yours!

    Hello tribes.

    I am interested to know how you calculate yield.

    In relation to net yield, my formula is gross to net rent ratio of 75-80% once you allow for:

    1. Letting fees (5%) + vat
    2. Management fees (6-8%) + vat
    3. Annual gas safety certificate (£70)
    4. Repairs @ 5-10% of rent (damp, window issues, electrical problems, boiler faults, roofing repairs; most common for us)
    5. Maintenance of 3 % of rent
    6. Voids (2 weeks per year average) over 2 years
    7. Service charge if leasehold
    8. Ground rent if leasehold
    9. Additional admin fees for tenancy documentation, registering deposits etc
    10. Right to rent checks and referencing
    11. EPC once every 10 years
    12. There will be a cost for ECR's once they become mandatory
    13. Half yearly inspections as a minimum - is there a cost from the agent or do you account for your time and travel time?

    ‎In my opinion every prudent landlord must take the above in to their profit and loss calculations when assessing the viability of a buy to let investment. 

    How to you calculate net yield?

    While I am here, I was interviewed at the Landlord Investment Show recently so I thought I would add the video as I talk a bit about my views on the market and what landlords should be doing:

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    What's the difference between maintenance and repairs?

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    I would say maintenance is on-going things like re-decorating a scuffed wall or re-grouting tiles in the bathroom.  Repairs are items that have broken and need repairing or even replacing, such as washing machines, roof tiles, kitchen cupboards, taps, door handles etc.

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    I've been looking into possibility of entering BTL investing world in coming years.  I took various figures and estimates from various websites to have my own ROI model.

    In my current spreadsheet, I have about 25~30% of gross rent as cost items other than mortgage interests, which is not so different from your numbers.

    Question to other people : Is it OK to assume "service charge + ground rent" of flats should be similar to "additional costs associated with houses" although the former might be a bit higher?

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    Net yield or profit is impossible to work out accurately as there are too many unknown variables, tenants not paying, tenants trashing the place, leaks etc etc.  Your profit may vary wildly from year to year..   I have found though the more properties you have the more stable the profit.

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    I think that’s fair. I project average costs and voids in assessing a property’s worth. But I also have found that the profit gap increases over time (regulation aside) mostly because I fix my mortgages but raise rents when I have new tenants move in, but also because I find that repairs/Maintenance are highest in the first year as you get to know some of the flaws of a property

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    Hello Jason,

    Good to see you have specific factors that you take into account when you calculate your yield. We think that for the first time when calculating your yield you should keep it simple until you are used to the different factors, and then begin to add in more.

    We have a basic yield calculator for everyone to use, that consider some factors but not all that you have mentioned.

    If you find this useful we also have a more in depth calculator for our subscribed customers who want to take a lot more things into account when calculating their yield: https://oneandonlypro.com/calculators

    Any question please don’t hesitate to ask.



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    Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.