Blog Post No. 189
London vs Outskirts: Return on Rental Investment Yield
Episode 12 | How to Analyse Rental Property
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When it comes to analyzing rental properties, our experts have shared some valuable insights. They emphasize the importance of considering various factors. Firstly, evaluating the weekly rental income and converting it into an annual figure is a fundamental step. Then, this annual income is divided by the property’s asking price, with the result multiplied by 100 to determine the yield. In London, a yield of 2-3% is often seen as a good benchmark.
However, it’s not just about yield. Location matters significantly, along with factors like property condition, orientation, and furnishing. Investors often aim for a minimum rental cover of 1.2 to ensure they cover costs and have surplus for unexpected expenses.
Outside London, yields can reach 7-10%, but long-term asset appreciation potential should also be considered. Proximity to transportation, natural light, and tax aspects come into play when determining a property’s value.
In summary, while analyzing rental properties might not be straightforward, our experts stress the importance of careful consideration of factors like yield, location, and future appreciation potential in making informed investment decisions.
The Word From the Street is a series featuring real estate agents giving advice on property needs. We cover a wide range of topics, such as how to find the right property, how to negotiate the best price and how to prepare a property for sale. Each real estate agent is giving their unique perspective and expert advice. The series is targeted to a wide audience, from first-time buyers and sellers to experienced investors.
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