We have all read the stories about buy-to-let millionaires and their huge portfolios. But the days of double-digit house price rises are gone, so experts say invest for income not short-term capital growth. As explained recently by thisismoney.co.uk.
To compare different property’s values use their yield: that is annual rent received as a percentage of the purchase price. For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield.
Rent should be the key return for buy-to-let. Most buy-to-let mortgages are done on an interest-only basis, so the amount borrowed will not be paid off over time. Belvoir! Sheffield not only have years of experience of property investment but also have expert knowledge of the Sheffield property market, therefore we can help and advice perspective landlords on potential investment returns on purchasing property in the different areas of Sheffield.
If you can get a rental return substantially over the mortgage payments, then once you have built up a good emergency fund, you can start saving or investing any extra cash. Remember though, people rarely buy a home outright and they come with running costs, so mortgage costs, agents fees must be worked out and they will eat into your return.
Once mortgage, costs and tax are taken into account, you will want the rent to build up over time and then potentially be able to use it as a deposit for further investments, or to pay off the mortgage at the end of its term.
This means you will have benefited from the income from rent, paid off the mortgage and hold the property’s full capital value.
Belvoir! Sheffield is the one stop specialist for Sales and Residential Lettings and Property Management, Investment and Wealth Management Advice, Fit-outs and Renovations, Property Insurances and Mortgages. Belvoir! Sheffield was the winner of the Belvoir Franchise of the Year Award for 2013 and is a multi award winning agency.
For more information, please visit https://www.belvoir.co.uk/sheffield-estate-agents/ or call 0114 331 0033. Alternatively, please email rick@belvoirsheffield.com
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