A better rate of return for less investment means more hard cash in your pocket.

When it comes to buy to let a lot of people make the choice to buy a modern property on Moreton Hall and while there is nothing wrong with the area or indeed the properties there it doesn’t necessarily give you the best return for your investment.

I have over the last five years sold many properties to local property investors and I have seen the difference it can make when you consider all the options.

Let’s take a look at the below two examples of one time buy to let options that would be comparable for first time landlords.

House 1

 

 This three bedroom house recently let for £895pcm, the average price for a property similar to this would be £260,000 and let’s say the management agent charges you 10%. The gross yield is 4.13% and net yield is 3.72%

(Your gross yield is your return on investment before deductions such as taxes and expenses, whilst your net yield is your annual return after such expenses are taken into account).

House 2

This three bedroom house recently let for £820pcm, the average price for a property similar to this would be £190,000 and the management agent again charges you 10%. The gross yield is 5.18% and net yield is 4.66%

You may look at the two properties and think you would much rather live in house 1 but you are not going to live there are you! You may also think house 1 will attract a better client and need less maintenance but there is no way of telling this. What I can tell you is that house 2 is likely to be built well; has local amenities and schools; a good bus service and your tenant will be more inclined to stay there longer.

There are many things to consider as Buy-to-let investment is very different from owning your own home. When you become a landlord, you’re effectively running a small business – one with important legal responsibilities.

To find out more drop me a line and we can discuss what kind of investment options are available and which one suits you best.