Glasgow BTL Yield

Author
Discussion

Salgar

Original Poster:

3,283 posts

183 months

Wednesday 23rd April 2014
quotequote all
Continuing on from the other thread, I had no idea you could buy property anywhere in the uk that was this cheap.

There look to be decent (on the inside) two bedroom flats to be had for £30-£35k

Looking at the sums:

£35000 Flat =
£26000 Mortgage +
£9000 Deposit

£400 Rent/month -
£60 - 15% Management fee -
£122 Mortgage payment =

£218
£218 * 12 = £2616

£2616 / £9000 * 100 = 29% Yield

Or even £2616 / £10000 = 26% Yield (With fees + paint etc)

This sounds too good to be true?

Obviously there are the risks of no tenants, tenants not paying etc, but with a good management company and well vetted tenants to minimise these risks this seems like an interesting proposition?

Am I missing something?

Sarnie

8,025 posts

208 months

Wednesday 23rd April 2014
quotequote all
Salgar said:
Am I missing something?
Yes. Most BTL lenders have minimum property values of higher than £35k.

Salgar

Original Poster:

3,283 posts

183 months

Wednesday 23rd April 2014
quotequote all
Sarnie said:
Salgar said:
Am I missing something?
Yes. Most BTL lenders have minimum property values of higher than £35k.
I don't think that's true, I just found 3 different lenders who have a lower minimum than that.

Yell_M3

389 posts

199 months

Wednesday 23rd April 2014
quotequote all
I bought a studio in Glasgow for £50k, getting 375 a month on that. That's a pretty decent area. And a good return in my opinion. 35k won't get a two bed in a decent area, and unlikely to get 400 a month. And being from Glasgow, I wouldn't recommend buying a flat in a crappy area!

BoRED S2upid

19,641 posts

239 months

Wednesday 23rd April 2014
quotequote all
I wouldn't be buying in Glasgow and living in London no matter how good your management company is your going to need to visit once in a while.

There are other areas of the country where you can get sub 50k property and would feel safe visiting your investment.

gibbon

2,182 posts

206 months

Wednesday 23rd April 2014
quotequote all
BoRED S2upid said:
I wouldn't be buying in Glasgow and living in London no matter how good your management company is your going to need to visit once in a while.

There are other areas of the country where you can get sub 50k property and would feel safe visiting your investment.
Such as?

Sarnie

8,025 posts

208 months

Wednesday 23rd April 2014
quotequote all
Salgar said:
I don't think that's true, I just found 3 different lenders who have a lower minimum than that.
Really? Who?

Not one lender

Natwest = £50k
BM Solutions = £40k
Kent Reliance = £100k
Woolwich = £66k
Abbey = £75k
TMW = £50k
Aldermore = £75k
Accord = £100k
Clydesdale = £125k
Coventry BS = £75k
Leeds BS = £50k
Virgin = £40k
Skipton BS = £50k

Not one lender I've looked at this morning would consider a £35k property.....

NPI

1,310 posts

123 months

Wednesday 23rd April 2014
quotequote all
Salgar said:
Am I missing something?
£10K to fix the roof?

Salgar

Original Poster:

3,283 posts

183 months

Wednesday 23rd April 2014
quotequote all
Sarnie said:
Salgar said:
I don't think that's true, I just found 3 different lenders who have a lower minimum than that.
Really? Who?

Not one lender

Natwest = £50k
BM Solutions = £40k
Kent Reliance = £100k
Woolwich = £66k
Abbey = £75k
TMW = £50k
Aldermore = £75k
Accord = £100k
Clydesdale = £125k
Coventry BS = £75k
Leeds BS = £50k
Virgin = £40k
Skipton BS = £50k

Not one lender I've looked at this morning would consider a £35k property.....
http://www.hsbc.co.uk/1/2/mortgages/buy-to-let-mortgages/buy-to-let-mortgages-eligibility

25k minimum loan - nothing about value afaik

98elise

26,365 posts

160 months

Wednesday 23rd April 2014
quotequote all
NPI said:
Salgar said:
Am I missing something?
£10K to fix the roof?
This. I bought a flat in the south east for £26k let at £395 pcm a few years back. Then the bills started rolling in for the work that needed to be done. Fire/security doors were regularly trashed, and the building needed more than 1m worth of work according to a survey. This was on top of the 2k pa maintenance cost.

Its a pitty Groak doesn't post on here anymore. He owns 100's of cheap flats in Scotland and had a lot of experience at the bottom end of the market. Had a 458 IIRC, so not doing too badly at it smile

Edited by 98elise on Wednesday 23 April 13:17

jdw1234

6,021 posts

214 months

Wednesday 23rd April 2014
quotequote all
Isn't that your return on equity not gross yield?

You are also not netting off the cost of an annual full refit after a Glaswegian skag head strips the whole place out to fund their habit.


Magog

2,652 posts

188 months

Wednesday 23rd April 2014
quotequote all
Where's Groak when you need him!


BoRED S2upid

19,641 posts

239 months

Wednesday 23rd April 2014
quotequote all
gibbon said:
Such as?
Take your pick of cities north of Manchester right move is your friend. Just don't buy them all in Liverpool leave some for me wink

Sarnie

8,025 posts

208 months

Wednesday 23rd April 2014
quotequote all
Salgar said:
http://www.hsbc.co.uk/1/2/mortgages/buy-to-let-mor...

25k minimum loan - nothing about value afaik
HSBC won't do it.

Most of the above lenders have minimum loans of circa £25k, but they won't lend on a £35k property.

What about the other two lenders you mentioned?

Zoon

6,653 posts

120 months

Wednesday 30th April 2014
quotequote all
Salgar said:
£122 Mortgage payment
Is that interest only?

dazwalsh

6,095 posts

140 months

Sunday 4th May 2014
quotequote all
Your projected yield is return on deposit not purchase price. The yield in its simplest form is annual rent pre expenses divided by purchase price x100 giving you around 13% on your figures. Still not too bad.



Edited by dazwalsh on Sunday 4th May 23:55

hidetheelephants

23,731 posts

192 months

Monday 5th May 2014
quotequote all
Magog said:
Where's Groak when you need him!
What he said.