If you are looking to buy-to-let, among many other factors, there are two main figures you should take into account. They are year purchase and yield.
Yield is calculated as follow:
(The annual rent of the property ÷ by the property value) x 100
The yield comes as a percentage. This tells you the return you are going to make on the property. The higher the yield number is, the better then investment looks to be.
Year purchases is calculated as follows:
(Property Value ÷ Annual rent of the property) x 100
Year purchase identifies how many years it will take for you to make a return on the cost of the property. For example, if your year purchase is 4.2 it will take you 4.2 years to make the money back on your investment through the payment of rent. This means that the lower the number is, the better the investment is predicted to be.
However, although these figures are a great way to get you started in deciding whether it will be a good investment, there are several other factors you need to think about.
- Is the property in a good location?
- Will the property be let quickly?
- Is the home nice inside
- Does the property need a lot of work doing to it
- Do you have enough money to put up with the investment in the meantime
- Can you decide trustworthy tenants that pay on time
All of these can be helped with a trusty letting agent such as ourselves! If you are looking to buy to let, get in touch with us and will we help you decide if that is the right investment for you.
Thank you for reading
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