Sometimes you will see rental yields calculated as the rent divided by the purchase price of a property, that is true if you tie up working funds by paying outright for a property. However, most landlords will lever their working capital to maximise their return, rental yields then become the variance between income and outgoings, like any other business.
Even with an interest only, buy-to-let mortgage there are still the deposit and purchase costs (capital invested) and mortgage interest payments included in the expenses. Purchase price and rental level is therefore the prime focus.
Houses in Multiple Occupation (HMOs) usually give the highest yield, but they are difficult to manage and even harder to find. We live in an area with an “Additional Licencing” regime which prohibits any more large properties being split into flats unless it is done with full planning permission, which is expensive. The next best are two, and three, bedroom town houses, either terraced or semi-detached followed by bungalows. The added advantage of bungalows however is that they can be maintained with a step ladder!
Whilst we are experts in the industry financial advice should be sought from a qualified person. Why not get in touch with our partner advisor, Haydn, if you are considering investing.
Thanks for reading, Martin.
433 Abergele Road