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I am interested to know what is considered a good return.Taking gross rent and the current market value of one of our properties the gross return is 7.2%. We have seen capital appreciation of around 11% in three years. Our letting on this one is to students and have an inexpensive agent who is very good so our experiences on 4 properties is very positive.
Is 7.2% average?
It largely depends where you are in the UK imho.Yields are typically higher in the North, but capital appreciation is lower and vice versa in the South.This discussion may shed some light:Rental Yield
general operations director (aka Colonel Nicaffi) - propertytribes.com
In Essex you'd struggle to get that good a yield on traditional BTL but maybe on HMO/ students. Need to have bought on old market value rather than current to really be doing well.
But surely the return should be based on current market value not historic cost. For example if you took the current market value and invested it in any other investment you would have a comparison worth having. Though based on Historic value looks good but is irrelevant.
I agree Nick. There are very few opportunities of getting a good enough yield in Essex at present.
Depends on location. In Liverpool my clients would be achieving approx. 9% to 11% gross yield on single properties, and 10% to 13% on multi flats, some HMO's are achieving 15% + gross yield.
I get about 8.5% in Southampton but not a lot maybe 10% in 4 years of growth.
In London i get 3-4%, but 50% growth in 4 years.
At capital appreciation has now stopped, if not in decline in London now, I'm concentrating my efforts in Southampton.
I have been getting over 7.2% net returns on average. I don't bother with gross returns.
Of course net returns is the real result but for comparisons gross gives a headline result as the difference is so individual. I am amazed that people look at the return as being based on their outlay compared with current value. For example a colleagues family bought a house in the 70's for £3,200 and currently lets it for £14,500 pa. That would appear to be a return of 453%....not bad!
I used the most recent valuation I have, which may not be the current market price.
For example I have a flat I bought in 1996 for £80,000 which was valued for a remortage in 2014 at £210,000. The latter is the value I use for my calculations, though Zoopla said it was worth £317k this year. The current mortgage is larger that the original price so using that would give silly numbers.
My Business runs in general on around 15/17% But I have been in this game a long time
If I was buying today I would need around 8% for me to be tempted
anything less I feel just doesn't work for me
Learn Change and Adapt ?????