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

Discussion in 'General Property Investment Discussion' started by Longterminvestor, Nov 10, 2019.

  1. Longterminvestor

    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?
  2. lookinginvest

    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.
  3. nancyfrank232

    nancyfrank232 New Member

    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
  4. Conrad Paton

    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.
  5. lookinginvest

    lookinginvest Member

    Are yields really meaningless? Surely you would take these into account incase you were not able to sell the property immediately?
  6. Conrad Paton

    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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