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What kind of return would you expect on a buy to let investment?

L

Longterminvestor

Administrator
What would be your minimum target for a rental yield on a buy to let property in the UK? Do you also factor in a degree of capital appreciation in your figures?
 
L

lookinginvest

Member
It depends, for an HMO I would be looking at high single digit rental yields (or perhaps higher) with limited capital appreciation. For more traditional buy to let properties I would be looking at a reduced rental yield and decent long term capital appreciation.
 
N

nancyfrank232

New Member
What would be your minimum target for a rental yield on a buy to let property in the UK? Do you also factor in a degree of capital appreciation in your figures?
I do not factor in a degree of capital appreciation

I look for a return that is a multiple of the current environment, risk-free rate
 
C

Conrad Paton

Member
I dont look at yields.

I look at ROI. Return On Investment.

Yeilds are pretty meaningless.

I factor in a lot of capital appreciation as I only buy at BMV, below market value.
 
L

lookinginvest

Member
Are yields really meaningless? Surely you would take these into account incase you were not able to sell the property immediately?
 
C

Conrad Paton

Member
Yes, dont work with yields, they do not take into account any expenditure or expenses.

So a rental property with a lower yield could make more ROI if it has lower overheads, and/or was purchased with an interest only BTL mortgage.

Estate agents and advertisers like yields because people understand them. But you shouldn't calculate a minimum target yield for properties as the OP asked.

Calculate a minimum ROI.

Hope this helps

Conrad Paton
 
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