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I'm very interested to know what the best yearly yields people have been getting. I've been wanting to see if it is worth investing into property.
There is a huge difference between what people have been getting on their properties and what you will get today in today’s market.
In the past yield has been good with some places also seen good value increase. However today it is a completely different game. Today it is really only for professional as the government has made it hard for amateur to get anything out of properties. Regulation is increasing with various licensing schemes you have to be part of.
Not to mention the public doesn’t like landlords and the media is only writing bad about this industry.
Last year people has been able to earn far more on shares without lifting a finger. With properties there is work involved.
If I were new today I would most likely not enter it today.
Have a lovely weekend
I have been keeping an eye on the industry and they are changing the mortgage and HMO guidelines too aren't they?
Yields fluctuate depending on cities, towns, areas and what type of property you buy ie flat.
The best thing to do is maybe try and research on what areas you would like to invest in and look at the current rental market in that area.
From your experience what sort of properties get the best yields. So if every property type was in the same area, would houses, flats or HMOs be best?
In all honesty it is down to your own preference in terms of what type of property you would like to invest in.
Generally houses can be a safer bet and are more desirable, also they can be turned into a HMO,s later on, if wanted.
Generally speaking (however property is not general it is specific):
HMO's will yield more as you have rented out each room and are maximising rent achievable. Flats second and houses after. However we are finding things move around from this. Currently in Birmingham City centre a 2 bedroom apartment will yield higher than a studio or one bedroom, when generally speaking smaller units should yield more.
In prime central London contrary to peoples' beliefs 5 and 4 bedroom flats yield more than 1 and 2 bedroom flats. It is worthwhile spending the extra money in central London and buying a place with more bedrooms. In SW1 for example a one bedroom flat could rent for £2600 pm but a four bedroom flat will achieve £15,000 pm but you could purchase a 4 bedroom apartment for less than 5 times the cost of a 1 bedroom.
However we are very lucky to have so much data and have the technology we do to pick out the highest yielding properties.
But the fundamental thing you have to remember is what is your money currently earning and see if it is better invested in property.
A pensioner who has £100,000 in a bank account earning 1% in interest will be better purchasing a property with even a yield of 3%. There is no magic number.
The well know investor Benjamin Graham would use government bonds as a base line to compare other investments.
On my 3 most recent purchases in East London, I am getting 6%, 6.6% and 6.7% ROI - this figure factors in 2 weeks void, maintenance and advertising/RGI
Property let for last 3 years= good yield
property then vacant for 4 months, undergoing £2,500 remedial work = bad yield.
you pays your money you takes your chances
My best net yield after all costs last year was 11.3%
Would that be commercial or residential?