Yields and purchase prices across the country?

[KGeeson]

It would be interesting to see how Yields, ROI and purchase prices vary across the UK (or indeed the world) from the real experiences of our members!

Please include:
- Property type / number of rooms
- Property value / purchase price
- Yield
- ROI (optional)

It will be a great thread to get a fast overview of how property investment returns differ by location and what is realistically happening out there in the market today.

 

[Le Seb]

Well... I am building a website which does exactly that!
You can download a free V0.1 spreadsheet, but the new more robust version is coming very soon - I will update you.

For now, if you go to yieldpal.co.uk you can download the spreadsheet and tell me what you think

 

[Nicholas Wallwork]

Well... I am building a website which does exactly that!
You can download a free V0.1 spreadsheet, but the new more robust version is coming very soon - I will update you.

For now, if you go to yieldpal.co.uk you can download the spreadsheet and tell me what you think

Thanks @Le Seb and as it's free we'll keep your link live for our users...

 

[nmb]

Would it be a fair generalisation to say that the higher yields are probably available in the Midlands and the North of England with lower yields, but potential for significant capital growth, centred round London and the South-East/ South-West?

 

[Nicholas Wallwork]

Would it be a fair generalisation to say that the higher yields are probably available in the Midlands and the North of England with lower yields, but potential for significant capital growth, centred round London and the South-East/ South-West?

I think you need to exclude London as a separate market all together in this comparison as yields are certainly lower there due to the high prices...

I think as a very general rule of thumb though this is correct, although some pretty damn good yields in the SE in good areas where there is infrastructure investment e.t.c. (e.g. cross rail)

 

[nmb]

Perhaps an interesting strategy might be to look at areas of the Midlands and North offering above average yields with the chance of benefiting from infrastructure investment in the future? To make the best returns you would have to gamble a little as the slightest sniff of new infrastructure investment in an area would see property prices react accordingly (HS2 was a prime example when it was first announced although progress seems to have slowed somewhat). However, if you invested carefully you would still have a relatively high rental yield to fall back on?

 

[PropEx]

As you have included the whole world, I will give you my normal investments.

I usually buy 2 bedroom condos for about 35k GBP and get a yield of between 12% and 20% depending on where in America the aforementioned properties are.

 

[nmb]

Hi PropEx

That certainly makes very interesting reading but may I ask what the net yield is after taking into account expenses and running costs?

 

[PropEx]

Hi PropEx

That certainly makes very interesting reading but may I ask what the net yield is after taking into account expenses and running costs?

That is the net yield, I see no point in speaking about gross yields to be honest.

 

[nmb]

I have never seen the point of quoting gross yields either because a yield of 20% looks interesting but if your costs are exactly the same as your income then your net yield is zero. So in theory you can pay off a property using rental income in between five and nine years? These are the type of figures which are very interesting to those looking to build a buy to let portfolio where they can use historic assets as collateral against future purchases to keep finance costs as low as possible.

 

[PropEx]

I have never seen the point of quoting gross yields either because a yield of 20% looks interesting but if your costs are exactly the same as your income then your net yield is zero. So in theory you can pay off a property using rental income in between five and nine years? These are the type of figures which are very interesting to those looking to build a buy to let portfolio where they can use historic assets as collateral against future purchases to keep finance costs as low as possible.

Not only are the yields high, but some of the properties were being sold for over 100k GBP before the crash. These are the reasons why I am amazed that people still only buy properties in the UK, where quite simply you can't get these sorts of deals. Sorry, to answer your question, yes you can pay off a property using rental income in between five and nine years. Some places in Arizona not so long ago, you could easily get 30% yield, not so much now though.

 

[Michelle Barringer]

I would think that for a lot of investors they want to invest in BTL where they have some access to the property to give them more control if there are any problems - as whist you can use an agent to manage - if you have any major issues with the property or the tennant most investors would want or need some hands on resolution - therefore investing relatively locally feels safer (or at least in the same country you live in)

 

[PropEx]

If you have a decent management company there won't be any problems that is what you pay them for. The market in the US is completely different to the UK though, for example if tenants are late with their rent by I think 6 days then you can evict them, I'm guessing it takes a bit longer in the UK.

 

[KGeeson]

If you have a decent management company there won't be any problems that is what you pay them for. The market in the US is completely different to the UK though, for example if tenants are late with their rent by I think 6 days then you can evict them, I'm guessing it takes a bit longer in the UK.

Can i ask how you got into investing abroad? Have you ever lived in the area you buy in, or do you have a trusted contact out there? With the returns you are talking about it is surprising more UK investors don't consider buying abroad. With those numbers I'd be interested myself but I would definitely feel far more nervous investing abroad than in the UK (different property laws, economies, etc). It would be interesting to hear your experiences of this, and whether you hit more 'bumps in the road' than you would with a UK investment?

 

[PropEx]

Can i ask how you got into investing abroad? Have you ever lived in the area you buy in, or do you have a trusted contact out there? With the returns you are talking about it is surprising more UK investors don't consider buying abroad. With those numbers I'd be interested myself but I would definitely feel far more nervous investing abroad than in the UK (different property laws, economies, etc). It would be interesting to hear your experiences of this, and whether you hit more 'bumps in the road' than you would with a UK investment?

It was through a friend who was investing in the US, when he told me the yields and prices I thought it was a no brainer. It is far easier to buy in the US than the UK, as there is less red tape and far less transaction costs. I could send money over there today and the property would be mine tomorrow. Yes, I have a guy in America who finds property for me in the wholesale property market, so I am making a profit as soon as I buy it. He sorts out the management company for me who usually take about 10% of the rent. I can't say I have had many "bumps" as I generally go into areas with good vacancy rates and yields. For all the faults Americans have, their customer service is second to none.

 

[nmb]

@PropEx I was wondering whether you have been impacted in any way by the devaluation of sterling against the dollar. Do you hedge your currency exposure?

 

[Blake Bull]

@PropEx I was wondering whether you have been impacted in any way by the devaluation of sterling against the dollar. Do you hedge your currency exposure?

I was wondering the same thing.. If you bought back in 2014 then you would have made money just on the strengthening of the Sterling.
However, with the way the Sterling is right now you could lose money just on the exchange rate.
Personally, I'm looking at countries where their currency has been significantly devalued in the past 12 months. Istanbul,Turkey being the number one candidate for me.

 

[PropEx]

@PropEx I was wondering whether you have been impacted in any way by the devaluation of sterling against the dollar. Do you hedge your currency exposure?

Because I'm buying wholesale and I'm buying on average 30% below market value I would say I'm pretty well hedged already and especially if you take into consideration the difference in the average yield in Britain and the yields i am getting in the US.

 

[PropEx]

I was wondering the same thing.. If you bought back in 2014 then you would have made money just on the strengthening of the Sterling.
However, with the way the Sterling is right now you could lose money just on the exchange rate.
Personally, I'm looking at countries where their currency has been significantly devalued in the past 12 months. Istanbul,Turkey being the number one candidate for me.

It is only devalued if you know the currency's true value. I can't see Turkey's currency strengthening any time soon, or their tourism industry for that matter!

 

[Blake Bull]

It is only devalued if you know the currency's true value. I can't see Turkey's currency strengthening any time soon, or their tourism industry for that matter!

Are you insinuating that Turkish property prices/yields are totally dependant on the Turkish tourism sector?

Let's look at the facts... In 2015 the Tourism sector equated for 10.6% of Turkey's total annual GDP. The UK's is 7.1% and the US is 8.5%.

Turkish property prices, especially in Istanbul are not dependant on tourism.

Furthermore, to answer your question about a currencies 'true value'. Please enlighten me with your opinions on the macro and micro outlook for the Turkish Lira.