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I ask myself this question :
"Will I make a yield of 8% or more if I rent and how fast will I get my deposit back ?"
I have never sold a property on my Landlord journey
I just buy and hold ...
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.
I agree John I find if I am getting an 8% yeild I am buying right and it ticks the boxes you have indicated
Hi there DL,
I'm curious about your 8% rule. is this gross or net and do you also account for all costs to acquire the property and any refurbish/update costs before calculating yield or is this a 'quick calculation' based on the 'for sale' price of a property I wonder.
Just curious as a recently new LL with 2 properties so far.
I try to keep it simple
100k purchase 8% £8000 a year gross rent
I find if I use this fig I am buying a property at the right price
I ask myself:1. Is there high tenant demand in the area?2. Does the deal stack up in terms of the level of borrowing the rent will support?3. Is the property within a 10 minute walk of a major transport link such as station, bus route, etc.4. Is the property within a 5 minute walk of a pint of milk?5. Does the property feel like it is in a safe and secure area where you can walk home at night and feel comfortable?6. Would I live there myself? If not, then why should I expect my customers to live there?7. Is there parking at the property or easy to park in the street?8. Does the property have fast broadband?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Vanessa, point 6 would I live there is crucial for me, then 3, major transport, then 2 rental support. I will ignore 1, tenant demand if yield is really high allowing me to undercut market rents. As to point 6, I do actually move in when there are any major issues, especially houses with multiple occupancy. Good tenants breath a sigh of relief when a landlord moves in to fix issues.
Yield is real, capital gain is speculation. If am am sure of the tenant, I can plot out his rent and reinvest this over the term of the contract.
Oh and my golden rule. Will I be able to sell in the future and who to. I make sure I have an exit mapped out before I buy. This is highly important in commercial and there are many great deals if looking at present tenant but what then? Often not a lot.
``Yield is real, capital gain is speculation``
Both are speculation .
Its only the time lag that often differs though before they respectively become real
Yield may become real at the end of the month if the rent is paid and there is no void
Capital gain may become real at the end of the year(s) when you remortgage or sell if the asset has gained value
Jonathan Clarke. http://www.buytoletmk.com