We would like to discuss a case scenario where a buy-to-let property offers a typical yield of 10%. This equates to an annual rental income of £15,000 or £1250 per month. The typical deposit needed to buy this property would be 25% which equates to £37,000. This means that we would need to borrow £112,500 from the bank or lender to buy a property priced at £150,000.
The monthly payment on this would typically be around 4% per annum. This equates to £4,500 per annum or £375 per month. Monthly rental income (£1250), minus monthly mortgage payment (£375), equals £875.
Let us assume that monthly costs of £100 per month goes to maintenance and other expenses. This equates to a net income of £775 per month, as a capital gain or profit. Once the investor builds up a portfolio of say three properties, he would have an extra monthly income of £2325. The investor still needs to consider the future property value appreciation or capital growth.
Investing in property is both useful and flexible for many reasons. Aside from the obvious financial gains, it can be used to help you achieve specific goals such as:
- To build a portfolio that will give you enough income to enjoy your retirement
- A source to earn additional income and improve quality of life
- A hands-off investment that requires very little of your time
- High yielding returns on capital
- To invest for your children’s financial future
- A safe and secure investment plan
It is important that you know what you are trying to achieve from investing in property. Realising this will help you plan an investment strategy and work towards achieving those financial goals.
This is where EVERMARK can assist by providing clients with an integrated end-to-end full service. Our investment consultants can provide advice and guidance from the initial search, purchase process through to property management via our strategic partners.