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Property Prices vs Rental Income


steppensheep

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I was a little surprised at the lowish rental compared to prices of the place on the Isle of White that Cunning Plan posted. Thought it might be an IoW quirk, so I want to look at large country pads in a few places.

Lancashire

 

995 pcm / 379,950 *12 = 3.1%

 

795 pcm / 210,000 * 12 = 4.5%

 

These are about 10 or so miles from Burnley where you get a 10% return on a crappy two bed terrace. I guess there are various reasons, but presumably one is the fact that housing benefit props up the bottom end. Makes me want to rent a nice pad in the country all of a sudden.

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Dont fall for the rental trap.

One, the published tracked rental figures- as they are - are terrible.

Two, the yield does  not show voids.

Voids will kill you as a LL.

Sure, you might get 10% when a place is let. However ... if its empty 12/24 months you are  fucked.

Keep in mind that 1 months rent is ~8% of yield. Its not unusual to see 2+ void on rental in the South. That sounds bad. Its even worse when the rental only lasts 6 moths and goes empty again.

A 10% will be wiped out if the place is empty 6 weeks/year.

 

 

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20 minutes ago, spygirl said:

Dont fall for the rental trap.

One, the published tracked rental figures- as they are - are terrible.

Two, the yield does  not show voids.

Voids will kill you as a LL.

Sure, you might get 10% when a place is let. However ... if its empty 12/24 months you are  fucked.

Keep in mind that 1 months rent is ~8% of yield. Its not unusual to see 2+ void on rental in the South. That sounds bad. Its even worse when the rental only lasts 6 moths and goes empty again.

A 10% will be wiped out if the place is empty 6 weeks/year.

 

 

Saw this 8% figure before; not sure if it was SG that posted it, but it really bought it home to me how a greedy LL can shoot themselves in the foot when they try to up the rent by the odd £20~30 and end up with a void for just one month.

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1 minute ago, MrXxx said:

Saw this 8% figure before; not sure if it was SG that posted it, but it really bought it home to me how a greedy LL can shoot themselves in the foot when they try to up the rent by the odd £20~30 and end up with a void for just one month.

The things that kill LL are finance (paying for it) and voids.

Ina downturn, the income fromrentals is so patchy that having leverage will kill you.

If ZIRP had nto hape[pned all thios IO BTL would have been repod. That fat cunt Fergus admitted it - base rates over 3% would have killed him.

 

 

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My rent is 575. I pay no rates or maintenance fees.

The flat was bought by the LL for 140,000. They pay a bare minimum of 2K a year rates and bulding maintenance. Better to budget 2.5K based on previous years' additional charges. The building is also in financial trouble and there will be future major charges coming.

575 * 12 = 6900 - 2500 = 4400

Gives a 3% yield. Hardly spectacular.

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11 hours ago, spygirl said:

Dont fall for the rental trap.

One, the published tracked rental figures- as they are - are terrible.

Two, the yield does  not show voids.

Voids will kill you as a LL.

Sure, you might get 10% when a place is let. However ... if its empty 12/24 months you are  fucked.

Keep in mind that 1 months rent is ~8% of yield. Its not unusual to see 2+ void on rental in the South. That sounds bad. Its even worse when the rental only lasts 6 moths and goes empty again.

A 10% will be wiped out if the place is empty 6 weeks/year.

 

 

Well this one has a 4 month void already.

Ouch.

https://www.rightmove.co.uk/property-to-rent/property-50139888.html

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2 hours ago, JoeDavola said:

My rent is 575. I pay no rates or maintenance fees.

The flat was bought by the LL for 140,000. They pay a bare minimum of 2K a year rates and bulding maintenance. Better to budget 2.5K based on previous years' additional charges. The building is also in financial trouble and there will be future major charges coming.

575 * 12 = 6900 - 2500 = 4400

Gives a 3% yield. Hardly spectacular.

Rates, as council tax - assuming any form of tax applies in NI....

Even at a 50% deposit, io mortgage at 3% will cost them about 3k/y interest rates. Take that out and tgey are you 300/m to live there.

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1 hour ago, sleepwello'nights said:

Is that what your looking to rent for your move to the IOW?

No.

I am seeing an office next week so that cuts down the house budget. Only got a few weeks to get somewhere so may just take a bog standard place for the first six months.

But with the office sorted, the house search becomes much more open to interesting places.

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Slightly off-topic, but things must be getting interesting in the rental market. Yesterday I got a Christmas card from my LL and today she popped in in person with a bottle of bubbly and another one of Californian red. Never happened to us before, and it's not our first Xmas with this LL either. She's been sweeter than type-2 diabetes recently. Earlier this month she offered to replace our boiler completely out of the blue.

It's a real shame she was late to protect our deposit. I'll almost feel like a bad guy chasing her for compensation once we leave. Almost, but not quite.

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