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  1. A local EA (boomer woman if it matters) has recently took to posting property ads on my local town's FB page. Currently they are along the lines of 'reduced by xxk for a quick sale' Now, I've had a run in with this woman before. In a thread that veered into a 'xx is cannot sell their house' I said well, stuff just is not selling. She than rose up and said 'I've sold loads of property this month. I worked with 3 other people and they've sold loads too. We've had some property complete...' I pointed out that she ought to know the difference between 'Sold' and 'Stuck in a chain' I then pointed out the LR only shows ~8 sales for the previous month, in a area covering 1 medium size town, a couple of very a large villages and 20 odd villages and hamlets - basically and area of about 40 by 20 miles. She then responded with 'I'm not arguing with you. Goodbye' I then pointed out she was arguing with me and that I'd just posted an observation. But, like they say, no-one likes a smart **** so she stopped responding. Any how, here's her current posting on the EA's FB page, which I only wondered to as she's posting adverts: 'Are you cheesed off with the paltry return of your cash investment paid out by your bank? Have you considered becoming a Landlord and buying a Buy-to-Let Investment? As a landlord, or more specifically, perhaps a new/upcoming landlord, have you ever been torn between multiple properties? A landlord’s main concern should be buying the property which will offers the best ROI (Return On Investment). Example scenario John wants to be a landlord, so he’s on the hunt to buy a property. John has seen 2 properties he likes. Property 1 costs £150,000 with a potential rental return of £600pcm. Property 2 costs £180,000 with a potential rental return of £775pcm. Which is the better buy? The formula to work this out is quite simple. It basically boils down to “rental yield” What is rental yield? Rental yield is the amount of money a landlord receives in rent over one year, shown as a percentage of the amount of money invested in the property. There are different ways of calculating rental yield, but for the sake ease, I’m going to use one of the most common formulas in my examples. The higher the yield, the better. Calculating rental yield The formula: mrr = monthly rental return i = investment Yield = mrr*12/i*100 Rental yield for Property 1 Monthly rental return = £600 Investment = £150,000 £600 * 12 = £7,200 £7,200 / £150,000 = 0.048 0.048 * 100 = 4.8 % yield Rental yield for Property 2 Monthly rental return = £775 Investment = £180,000 £775 * 12 = £9,300 £9,300 / £180,000 = 0.0516 0.0516 * 100 = 5.16 % yield Conclusion Although property 1 costs less to buy, property 2 offers the better ROI. I did not bother posting a reply. I just cannot be ar5ed. Lets start. You cannot return on cash - the ultimate liquid investment - to property, which at the moment is probably the ultimate illiquid investment. Lets use the 'best investment' te 180k Moving on. Both cases show a 0% LTV i.e. not mortgage finance. What has she missed? Voids. I would hope for 2 months void but expect 3 months but lets just put 1 month in. The rents she quotes are well north of the local LHA. -775/year Building/LL insurance: -300/year Maintenance: -1000/year (bare minimum) I would assume someone able to drop 180K on property invesment is very well off and a 40% tax payer. Lets assume they pay 30% tax. -3000/income tax. That 5.16% gross yield is now 5,300/year, giving a yield a sub 3% net yield. If the 'investor' had any 50% LTV mortgage then we are talking negative cash flows.
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