# help with BTL property yield is it worth it?



## dannygdesigns (Mar 16, 2015)

Pretty much got my offer accepted on my second BTL property listing price 85k offer £77,500 rental income will be £475 max - giving it a yield of 7.35% ..

I was naive when getting my first, had not researched anything and had no idea of what yields were until now I seemed to of struck luck and 3 years down the line its done great however coming to my second property researching online about yields it says anything under 8% isn't great and most people won't touch it under 8 and this will be 7.35% 

Can anyone give me any advice and do you think it is a decent deal to go for? 

Estate agents recon it will have no problems renting out but they'll say that anyway to get the deal, its a 3 bed terraced only thing that put me off when going to look at it was the fact it had no rear garden, its on a court so has 1 allocated parking space in front of the property not sure how much this would bother potential tenants.


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## FJ1000 (Jun 20, 2015)

The theoretical yield is all well and good - but how much net profit will you actually be making after taking off costs (mortgage, service charge, letting agent fees, ground rent, landlord license if needed and TAX) ?

The tax is the killer. Due to that (and other reasons) I’m getting out of BTL.


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## kingswood (Jun 23, 2016)

whats the growth potential to?

im waiting for brexit to bite before buying another


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## pxr5 (Feb 13, 2012)

As FJ1000 says that is the theoretical max yield. You really need to consider the total of the other costs to you and how you could mitigate these as much as you can. Are you using a letting agent, they will charge c10-15%? Maintenance fees (gas safety, legionnaires etc.) and as it's an older property it may need more general maintenance. Also estate agents will tell you what you want to hear regarding tenants. Can you afford to have the place empty for a period and the consequences of that? Of course you can offset some of these things, but it all adds up. Tax is a killer. Depending on your income you will at least be paying 20%, 40% if a high earner. I think all those things are more important than the max yield you'll be getting. Sorry if that sounds tough, but it's the way of the world with being a landlord.


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## liamsxa (Nov 3, 2007)

As close to 10% as you can get. And try and buy 10% bmv


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## dannygdesigns (Mar 16, 2015)

Thanks guys, Yeah with total costs of everything else it probably wouldn't be making much net profit my other one gives me a few hundred net profit a month which is a better yield purchase price 78k and rent £560. But for my situation its not all about maximum return now its more of a pension pot when I'm older id like to have quite a few houses all paid for themselves so even if the houses aren't even making profit now its not too bad as long as there not losing me money but the extra little bit of spending money a month would be nice. 

@pxr5 My other property is managed for 8% but this time I think I will do it myself and just get them to do the tenant find and legals to try keep costs down, I pay currently around £50 a month for someone to call up an electrician or plumber when there is an issue I am sure I can do that. 

I can afford the place to be empty I always consider this when buying. Your completely right the yield is such an easy number to pluck up and everything else is much more important just want to make sure its not going to bite me in the backside going for a lower rental property.


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## dannygdesigns (Mar 16, 2015)

kingswood said:


> whats the growth potential to?
> 
> I'm waiting for brexit to bite before buying another


It was built in 2006 and went for £96,000 not sure if that helps to determine growth potential? one on the same street went for £83,000 in January 2018


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## FJ1000 (Jun 20, 2015)

I use upad to list properties to let up on Rightmove, Zoopla etc. £150ish and you do your own viewings; much better than paying a letting agent IMO. They can also do the credit check, inventory, EPC etc.


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## wish wash (Aug 25, 2011)

Things that have put me off from buy to let is, getting the house trashed, tenants stop paying rent and refuse to move out.


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## Taxboy (Aug 23, 2006)

So far I've been lucky with my tenants who have lived in the property for the last 4 years. However with any investment there is always the risk / reward issue. The bigger the potential return the greater the risk it won't deliver.

You are absolutely right in that you should never invest in something you are not comfortable with


wish wash said:


> Things that have put me off from buy to let is, getting the house trashed, tenants stop paying rent and refuse to move out.


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## sshooie (May 15, 2007)

lol, I've just had a btl fire damaged. 

Long story but I let to a business who look after young adults with 'issues' and they are refurbishing @ their cost.

I have 3 btl and have had excellent tenants, I only use the agent to vet, agents are a waste of oxygen ime.

I think having a good relationship with the tenants and doing what you say you will do when you say goes a long way.

I did have a bit of a nightmare with one tenant poor payer etc.... my brother.

Lesson learnt.


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## FJ1000 (Jun 20, 2015)

I had something similar many years ago - the last time I used a letting agent.

Agent found prospective tenants that wanted to go ahead but I was leaving the country for a couple of weeks so didn’t have time to meet them. Asked the agent to do the credit and background checks (both professionals), and take cleared funds for deposit and first months rent - and I’d meet them when I got back.

After I get back, I check my account and no money received. Called up the agent and the lady I speak to not sure what’s going on - says the letting agent I dealt with will call me back. He calls me back and says that the tenants paid with a stolen credit card!!

It was unbelievable incompetence. The credit card was clearly a white woman’s name, and it was a black guy presenting and signing for it. They still accepted it. Then, I went and checked the references - called up the blokes “employer” - they’d never heard of him. It was fake.

It took 3 months to get them out, and on their way out they stole the TV and set fire to the kitchen. Charming.

In the end I got a recording of the agent admitting to taking a credit card against my instructions and without any checks - and I threatened to take them to small claims. The agent paid my costs for missed rent, and I had insurance that covered the new kitchen.

Never used a letting agent since!


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## Guest (Oct 11, 2018)

Are you buying without a mortgage? You seem to have based your yield calculation on a 100% investment in the property.

Edit to add that after a bit of googling, I see "yield" is different to "ROI", which to me seems a better figure to go on.


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## dannygdesigns (Mar 16, 2015)

BareFacedGeek said:


> Are you buying without a mortgage? You seem to have based your yield calculation on a 100% investment in the property.
> 
> Edit to add that after a bit of googling, I see "yield" is different to "ROI", which to me seems a better figure to go on.


I am purchasing with a mortgage, I didn't take time to work out ROI as its much more complicated and most of it will be estimates on costs I worked out the yield based on the fact that the on going costs would be similar to my other property which is a higher yield.

But thank you I am looking at trying to calculate a ROI now.


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## jr2007 (Oct 5, 2016)

Where are you buying properties for sub £80k??!! Looks like my London bubble has clouded potential opportunities elsewhere!


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## Sharpyyyyy (Sep 26, 2015)

jr2007 said:


> Where are you buying properties for sub £80k??!! Looks like my London bubble has clouded potential opportunities elsewhere!


I live in Nottingham and you can easily buy houses for sub 80k round here & Mansfield.


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## dannygdesigns (Mar 16, 2015)

jr2007 said:


> Where are you buying properties for sub £80k??!! Looks like my London bubble has clouded potential opportunities elsewhere!


South Yorkshire mate, £77,500 3 bed terraced, en suite, downstairs toilet, nice kitchen built in 2007 bargain.. decided to go for it was nothing coming up as nice and feel like I have a good deal. Not going to be making much profit from it on a monthly basis but long term its worth it as the house gets paid for by the tenants.


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