I have an increasing number of investors looking for the guarantee of high yields. Different investors have different criteria - some are seeking as high as 15%, which is difficult in Northampton unless you let large properties on a room by room basis. Most seems to regard 8-9% as a good yield - and it certainly is when you consider that the best savings accounts are currently paying around the 3% mark.
So how do you get a yield of 9%? More often than not, Landlords look to raise the rent. This generates more income and squeezes out a higher yield. This is possible in the current market - in the 6 years I've been a lettings agent, rental prices have never been stronger, but whether it's sustainable is another matter. What happens when rental prices aren't as strong? A fair number of investors don't worry about questions like this(!) and may find in the fullness of time that their high yield investments aren't as high yield as they think.
I'd argue strongly that the best way to get yourself something high yield is to concentrate on the price you're paying for the property, not the rental value. If you can buy a property cheaply, you've got a built in insurance policy that means if the rent moves around a bit, you're still operating at a high yield - you don't HAVE to rent it for maximum money on EVERY occasion.
A landlord's other fall back is the LHA market. Unless you're buying in one of the premium areas of town (which is unlikely if you're after a decent yield) there's a constant demand for properties from the Local Authority - currently over 4000 homes are required and the figure is growing. This is your safety net, because you know your property will let for a set price. Using the LHA pay scale as a guide, ANY property you buy in Northampton will generate you a 9% yield as long as you pay less than the following price for it:
This actually makes property investment really simple. Stay within these price bands, and you're guaranteed a high yield. Properties in these price bands sell really quickly for that reason - you'll have seen some on this blog. They are out there though, and particularly as repossessions they come up on a reasonably frequent basis. For the novice investor, they are probably a good place to start.
So how do you get a yield of 9%? More often than not, Landlords look to raise the rent. This generates more income and squeezes out a higher yield. This is possible in the current market - in the 6 years I've been a lettings agent, rental prices have never been stronger, but whether it's sustainable is another matter. What happens when rental prices aren't as strong? A fair number of investors don't worry about questions like this(!) and may find in the fullness of time that their high yield investments aren't as high yield as they think.
I'd argue strongly that the best way to get yourself something high yield is to concentrate on the price you're paying for the property, not the rental value. If you can buy a property cheaply, you've got a built in insurance policy that means if the rent moves around a bit, you're still operating at a high yield - you don't HAVE to rent it for maximum money on EVERY occasion.
A landlord's other fall back is the LHA market. Unless you're buying in one of the premium areas of town (which is unlikely if you're after a decent yield) there's a constant demand for properties from the Local Authority - currently over 4000 homes are required and the figure is growing. This is your safety net, because you know your property will let for a set price. Using the LHA pay scale as a guide, ANY property you buy in Northampton will generate you a 9% yield as long as you pay less than the following price for it:
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1 bed
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Anything less than £56k
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2 bed
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Anything less than £70k
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3 bed
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Anything less than £79k
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4 bed
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Anything less than £106k
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This actually makes property investment really simple. Stay within these price bands, and you're guaranteed a high yield. Properties in these price bands sell really quickly for that reason - you'll have seen some on this blog. They are out there though, and particularly as repossessions they come up on a reasonably frequent basis. For the novice investor, they are probably a good place to start.
