Fair to work out property yield based on multiple sources?

Sacred

Sacred

Sacred

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8 Oct 2005
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179
Hi

I've been thinking about getting another flat in the building I'm in, primarily because they make pretty good investments. I'm not planning on living in it (yet), I simply want to own one, for later and for their resale value at a later date.
Apartments in my block have gone up like silliness in my block even with this 'impending recession'.
I bought my current 1 bed flat in it for £220k, and now its worth about £290k.
This happened in about 18 months, granted its not the biggest jump a price can make, however, the building is 300m fromthe olympic ground and I know closer to the time they will be worth a lot more.

Just a little background, I have on house which I re-mortgaged to get this flat, I currently let the house out on a 'guaranteed rent' scheme

Now. Onto my question.

If I wanted to buy another 2 bedroom flat, for £375k, and let it out AS WELL AS my curent flat. Making it 3 properties that I have rented.
How do I calculate yield? Is it fair to combine each source?

I've worked out based on how I was told to calculate property yeilds that with all 3 rents combined against the capital invested from the bank to have a yield of around abou the 8.5% mark after all deductions.
Based on dividing the total invested capital by rent in each year (x100)

Is this the correct way to do it with rental property or should I be calculating yield solely with mortgage payments/rent?

I will be living with my gran for a while (a year or so) so that I can concentrate on Uni work and also look after her, but also save some money.
And I'll be working weekends and using a student loan to support myself.
Before I do buy one I will save roughly about £3k and will have sold my car (£6k) so will have a little backup capital should I have trouble paying my mortgage during some months.
OK I will be paying more than half the income frm the rent in mortgage fees, but this is based on me having 2 investments in the same building and being able to sell them off when I need to, or live in them should I choose to

Any thoughts would be great.

-greg
 
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I've been hearing and reading this everywhere, how does this affect the housing market?
Would you not say its a good time to nab a bargain, mortgage and property-wise?
 
it totally depends where you are buying, the rental market at the moment is top notch, hasnt been this good for a while, but again depends where to.
 
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[TW]Fox;11248450 said:
Whilst its not quite as dramatic as he paints it, now is not the best time to buy for let.
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Technically I won't have bought anything until around november.
I have to save a little and start clearing out my flat first. I'm moving out regardless, as I can be more focused at my grans.
 
Stinky said:
it totally depends where you are buying, the rental market at the moment is top notice, hasnt been this good for a while, but again depends where to.
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Bow, The Bow Quarter to be exact. Heavily sought after flats near the olympic village.
Theres nowhere else in east london that you could sell a 2 bed flat (albeit on the penthouse level) for £460,000. Well I havent been able to find one anyway.
 
Sacred said:
Bow, The Bow Quarter to be exact. Heavily sought after flats near the olympic village.
Theres nowhere else in east london that you could sell a 2 bed flat (albeit on the penthouse level) for £460,000. Well I havent been able to find one anyway.
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well speaking with the market the way it is here. a 2 bed flat would take 2 days max and we would have had lots of people look and an application in the door.

i can only assume that the same would be happening in the london area as there are obviously a lot more people, i would have thought it would all be relitive (more properties to let, more people looking etc)

would the rental income cover the morgauge cost?
 
Sacred said:
I've been hearing and reading this everywhere, how does this affect the housing market?
Would you not say its a good time to nab a bargain, mortgage and property-wise?
Click to expand...

No, now is the worst possible time to buy. We are at the end of a 13 year property cycle, prices will continue to fall and that fall will increase in severity for at least another year - possibly longer.

Property prices didn't increase to their current level because they were underpriced, they increased because of speculative ramping and an excess of capital. That excess is now gone.

The crash will happen, 100% guaranteed.
 
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