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  • Buy-to-Let

    ROI calculations

    In the case of the 2 houses, the rent is too low. 84k divided by 100k is 84% . 84% of £375 is 315 per month.(Min net return per month) times 12 comes to 3780 per annum. The actual net profit is 3271, so not high enough.

    The actual net profit per month is 272, which is on the low side, for a house with minimal outgoings. (when compared to flats)

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    I don't understand this.

    As things stand, I'm getting £525pcm (£72 after management fees) on houses that cost me around £81,000 and £84,000. Surely that's pretty good?

    Once they're refinanced I'll have left about £15,000 and £17,000 in each one, with gross profits of £3,271 in each case, giving me a return in each case of around 20% on my actual investment.

    What am I missing here?

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    It definitely is good - compared to my preferred areas. What sort of area and what sort of tenant will you have?

    I bought a unit in the SW in 2015 for £155k that profits £450-475 per month. It makes yours look like a bargain. That said, the same property is now worth £235k, so has been a great buy. It still only rents for £750/month, despite the capital growth.

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    Thanks Simon.

    I have four, 2-bed terrace houses in Hull HU5.

    Three let quickly to working tenants, all of whom are paying £525pcm, but the last house remains vacant at this stage. Strange, because its pretty much identical to the others.

    I understand HU5 is an up and coming area and Hull self has lots of inward investment, not least Siemens (and I'm hoping that because the starting point was so low property prices couldn't realistically drop much in value).

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    I’ve spent a bit of time in Hull for work. I was quite taken with it, it’s got some amazing architecture. The water front was really nice, too. Sounds like you’re doing great. I invest in Leeds, if you invest in Hull, it might be worth you having a look - I would guess that the house prices have more potential than Hull...but your yields are better than most areas of Leeds!

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    I did wonder about Leeds, but I'm based in Bournemouth and chose Hull in part because I've made a good property contact there and he sticks to Hull. Reckon I need to stay with what I "know" for the moment, but might venture west in due course!

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    I invest in cleethorpes, just over the river from Hull. Latest deal purchased for 65k cash, renovation and legals 17.5k in for 82.5k valued at 110k and rents for 550pcm.

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    Now that does sound good. Was it a bot of a one-off, do you think, or was it a deal you might typically expect to do?

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    Mmm it my best deal yet, but think its possible again. Basically a family selling for a deceased family member, offered cash within a few days of being on market and saw potential in the house in a good area.

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