As a landlord of a property, a key indicator of the success of the investment is the return that it produces. This return is typically referred to as a yield.
We have produced a calculator which will work out the investment yield for you.
When investing in a buy to let property, landlords need to be aware of the variable costs in running the property. Occasional novice investors believe that they will get 100% of the rental revenue, however this is impossible.
Firstly there are mandatory obligations such as annual gas safety inspections, and your obligations under the landlord and tenant act.
Most importantly the property needs to be insured and the annual premium is deducted from your gross rent (before expenses)
If the property is leasehold, it's likely that there will be service charge (block running expenses) and ground rent too, which can either be fixed or rising over the period of the lease. The service charge may or may not include the buildings insurance, thus you will need to check the lease.
If you employ a letting and managing agent, their fees will need to be deducted from the annual revenue too before you can properly establish your NET yield (revenue after all expenses)
Finally as a landlord you need to always allow for wear and tear, repairs, and maintenance too. However it doesn't stop there. Each time a tenant leaves it's likely that you will need to re-paint, re-lay floors, and possibly upgrade areas of the flat to achieve the same rent as before.
At Open Property Group, we are very experienced landlords. As a rule of thumb, we allow 10% of our annual rent to allow for repairs, maintenance and wear and tear expenses.
All the above needs to be considered when considering property investment. Open Property Group are cash purchasers of tenanted property and if you are a landlord and wish to sell your property with tenants please contact us TODAY