Saturday, February 18, 2012

Returns smaller than ever but …

Buy-to-let investment appeal surges

"He says an investor buying a property for £400,000 with a mortgage of £240,000, and earning a rental income at a 4.5 per cent yield, could make an annual profit of £2,484 after the various property related costs had been taken." Well knock me down with a calculator and check my sums, but that looks like a return of 0.6% to me. I know interest on savings accounts is low but that looks a poor deal to me. It's what they're not talking about at dinner parties. I'll have a bottle of Blue Nun with my T-bone and lobster please garson.

Posted by letthemfall @ 02:40 PM (3718 views)
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2 thoughts on “Returns smaller than ever but …

  • Not disputing your point, but GBP2,400 on implied equity out of GBP160,000 is 1.5%.

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  • Assuming the cost of mortgage has been accounted for, surely the 2.4k profit is attributed to the 160k capital investment? If so, then it equates to a whopping 1.5%. What you’d get if you just stuck it in the bank.
    And if interest rates increased 1% on the 240k, then that wipes out your profit.

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