Our Buy-to-Let Property Guide
Whether you’re a first time buy-to-let investor or you are looking to grow your portfolio of rental properties, our letting agency can help you find a suitable property.
What are your investment property plans?
You should consider both the Capital Growth and the Rental Yield when looking to purchase an investment property. Each of these has different advantages:
Capital Growth is the profit made on a investment property over time. This is measured by the increase in the property’s market value over the invested amount or purchase price.
Rental Yield is the amount of money you make on an investment property. This is achieved by measuring the gap between your income you receive from renting out your property.
Why is Rental Yield important?
When you know the rental yield of a property, you are better placed to understand the amount of profit you may receive on that property, or whether you could earn a higher rental yield with a different property or by investing in a different area.
What is a good Rental Yield?
Rental yields can vary depending on the area and property. As indication, a rental yield can vary between 5-7% for a single occupancy tenancy whereas an HMO (House of Multiple Occupation) can achieve a higher gross rental yield which can vary between 10-15%
What should I do before purchasing a Buy-to-Let property?
We suggest that you seek advice from a mortgage broker as you will need a specific buy-to-let mortgage for your rental property. A mortgage broker will give you an indication of costs as a buy-to-let mortgage will normally require a higher deposit and rates are often higher than a residential mortgage.
It is essential to read through and check the seller’s Home Report to ensure you are aware of the quality of the buy-to-let property you are purchasing. A Scottish Home Report is prepared by a Chartered Surveyor which details the condition and value of the property.
Contact us today
If you have any questions or would like to have a chat about our property management services for your rental property, we’d be delighted to hear from you.
Gross Rental Yield Calculation
1. Sum up your total annual rent that you would charge a tenant.
2. Divide your annual rent by the value of the property.
3. Multiply that figure by 100 to get the percentage of your gross rental yield.
Net Rental Yield Calculation
- Sum up your total annual rent that you would charge a tenant
- Sum up the annual fees and expenses of owning the property
- Subtract the total annual expenses from the total annual rent
- Divide it by the value of the property
- Multiply by 100