What is a rental yield?
Rental yields are a commonly used term in relation to buy to let. A rental yield is a percentage figure that highlights the rental returns an investor is likely to achieve. The higher the better, as higher percentages mean more attractive returns.
A rental yield is calculated by taking the yearly rental income generated from a buy to let property and dividing this by the property’s purchase price. It’s important to focus on rental yields that are as high as possible when you look for a buy to let property to invest in, as this figure can mean the difference between a lucrative or disappointing venture.
Should I buy to let?
There are ways of knowing whether buy to let is right for you. If you are interested in making an investment, but want something more tangible than stocks and shares, property provides a welcome alternative. However, you also need to understand the risks involved, and be conscious of market changes that could affect you.
As a first-time buyer, buy to let can seem like more hassle than it’s worth, leading you to wonder ‘is buy to let worth it?’. To truly succeed with property investment, you need to be willing to tie your money up for a long period of time and understand that property prices can fluctuate. Buy to let isn’t for the faint-hearted, and before getting started you need to not just understand, but also accept the risks that come with BTL.
You could have found the perfect property and the best buy to let mortgage to buy it with, but would still be at risk of potential hazards along the way. Some of the most common risks that come with buy to let include market changes that could cause your property to decrease in value, and potential void periods. A void period is essentially a period of time where you don’t have a tenant in your property, and miss out on rental payments.
While these things could negatively affect your investment for a short period of time, the benefits of buy to let far outweigh these risks. Once you feel confident and are prepared for any risks, you should move forward with your buy to let UK investment to take advantage of the opportunities on offer.