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Self Employed Youth

Uk Commercial Property (And Flats)

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I've noticed a building come up.

And the price seems very low compared to the rental yield.

I'm sure it will fetch more than the guide, and that the yield will decrease.

What kind of yield would you expect?

7% yeild allowing for 20% costs, voids etc takes you 19 years to get your money back (pre tax) , then you are left with whatever capital is left.

If you are betting that house prices will fall then you might be willing to accept less than 7%. Likewise if you believe prices will fall, then you will demand over 7% gross yield.

To me 7% yield looks like 25 years after tax (lower rate payer, no tax deductible mortgage interest), so you will need capital appreciation for it to be worthwhile. Assuming a £100k initial investment and 2% inflation in property prices (note japan) Your capital at the end of 25 years will be worth £160,843.

So invest 100k at 7% gives you you £160k profit after 25 years (before GCT).

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First time I ever saw a Jew in Barnsley. They look like me! We spoke briefly, they were eyeing up the same property.

Guide price £85k.

Rental yield @guide price assuming current rent + hb lets = 25% (20k per year ish).

I haven't enough capital to buy it. Could bid low or buy with mortgage, but no debt, no interest, no usury bar the tax upon the currency itself.

Edited by Seasonally Employed Youth

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