3% net yield a decent return on investment?

by Readers Question

8:44 AM, 16th April 2018
About 8 months ago

3% net yield a decent return on investment?

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3% net yield a decent return on investment?

I have a couple of properties and one property has come onto the market recently which I am interested in.

The Net Yield is around 3% and should rent very easily and provide around £4K profit each year before tax. The property has potential for extensions which can increase the value

However, it seems that house prices will not increase and possibly fall. While this will be a long term investment and I will probably will never sell. I also have concerns over the Rental market after Brexit

I just wondered if utilising funds elsewhere maybe a better proposition or some one could put everything into perspective for me

Many thanks

Sash



Comments

Neil Patterson

8:47 AM, 16th April 2018
About 8 months ago

Hi Sash,

Could you clarify your definition of net please so we can be sure what we are comparing, because it could range from poor to great depending on what cost you are taking off?

Also will you be using a mortgage and potentially be affected by Section 24?

Monty Bodkin

10:00 AM, 16th April 2018
About 8 months ago

Even if your 3% net takes into account all the costs, risk, future risks, hassle and work of being a landlord, I wouldn't bother for a £4K pre tax rental profit.

As for predicting short term house prices- its for mugs.

Craig M

12:44 PM, 16th April 2018
About 8 months ago

Hi Sash,
Are you basing your "yield" on capital deployed or property value?
3% seems low if it is capital deployed.


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