General (main property discussion here) - Still in the learning curve.........

Hi again everyone, hope you are well.

A few "easy" questions for a few experts out there....

1, Please explain "Yield"?

2, Do you think the BTL market will be going well for the next 50 years? Its on going isnt it, always property for BTL'ers to buy to let? As new property is being built, bocomes older/flr sale etc, seems to me like an ongoing market, WHICH IS GREAT!

3, Some of you (as i sit and read all forums), have companys you buy your property under, is this a good option? Good and bad points of creating a property investment company...

4, Has any of you who have ALOT of property, ever had quite a few sit empty and been doomed about paying 10 mortgages with no income?

Thanks again for your time, i actually make notes from your posts, so i can understand it, so thankyou for your help.

Matt

Hi Matt,

I can explain the yield part of your email for you.

Yield is what you get out of a property from what price paid, so to speak!

Basically, Gross Yield is yearly rent divided by the price you paid for the property x 100 as a percentage. Net Yield is the same as above, but taking away expenses like mortagage,maintenance & letting fees etc from your rental figure.

Example, if you buy a property for £45000 and get £400 per month rent, which is £4800. This equates to 4800/45000 x 100 = 10.6% Gross yield.

Hope that helps. If you can get gross yields above 10%, the net yield will still be pretty good after taking away all the expenses,leaving you with more profit. But they are hard to find nowadays, especially in England..

Cheers

Simon

Completely agreed with Simon on 1.

On 2. No-one knows. Perhaps factor in 4% capital growth pa.

On 3. Limited company approach is helpful if you plan to buy and sell or if you plan to have a very sizeable portfolio (see other forum threads on this topic).

On 4. This is always a worry but one you can mitigate by keeping borrowing below 75% and buying in good rental areas.

Owen

virtually all asset classes will do well in the long term!! stocks and shares the best if you have a 50 year investment horizon!!

tom