Do you really know your numbers? When investing in property it is easy to do quick calculations to find out whether the investment is viable or not but have you taken into consideration the full costs and income from the property. Some aspects may be overlooked and as a result the return on your property may not be what you imagined. Knowing exactly how much return you are getting on your portfolio will govern whether it is a success or not.

Many investors invest in property as it will give them a better return than if the money was sat in a bank. They calculate it by working out the yield based on the gross annual rent divided by the property value. For example a property worth £100,000 with a monthly rent of £600 the calculation would be as follows:

£600 x 12 = £7,200
£7,200 / £100,000 = 0.072 = 7.2%

Using this basic calculation the yield would be 7.2% and therefore more than the interest gained in a bank account. However this is just a rough calculation and there are other aspects which should be taken into account when investing. If you look at the real rate of return the result is different as the costs of maintenance and management are taken into account. Many people buy a property with a mortgage which means extra costs are incurred. If we source your property we charge a fee, 50% of the first month’s rent, and other letting agent fees may also be applicable. We also offer bespoke furniture packages at £900 for a one bedroom property and £1500 for a two bedroom property.

Purchase Price – £100,000
Deposit (25%) – £25,000
Mortgage (75%) – £75,000
Costs to Purchase – £2,000

Monthly figures:
Rent – £600
Mortgage @ 6% – £375
Management fee @ 10% of gross rent – £60
Monthly Operating Expenses @10% of gross rent – £60
Total monthly expenses – £495
Total cash flow (Rent – Total Expenses) – £105

Therefore:
Total money into deal (Deposit + Costs) – £27,000
Annual cash flow – £1,260
True Rate of Return (£1,260 / £27,000) – 0.046
The RRR is therefore – 4.6%

The Real Rate of Return is therefore a more exact reflection of return and will help you make more informed investment decisions. Resulting in investing in properties which will give a higher rate of return as it is not always possible to rely on the property’s value increasing. You should therefore run these calculations on your properties to see if they are profitable and have a positive return. If you have any questions or queries regarding the return on investment don’t hesitate to speak to us.

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When renting a property you automatically take on responsibility for the safety of your tenants. It is important that all hazards are removed and the property is safe. A good way to do this is treat it as though you were living in the house yourself and keep all rooms and furnishings to an acceptable standard. It is important to do this as you are responsible for the property and you can also be prosecuted.

Recently Westminster council removed a large number of hazards from properties, and handed out 200 legal notices to carry out improvements. If landlords fail to do this they face fines of up to £5,000 and prosecution.

It is therefore a good idea to keep on top of all maintenance and that way it will not get out of hand. Use common sense when checking your property. If it is an obvious hazard it should be fixed. Clean up your own properties; don’t wait for the city council to take action.

Here is a quick check list to help you keep everything in order:
•Fix any damp patches. The longer you leave them the worse the damage will get.

•Fix broken windows and doors and make sure all handles, catches and locks are working.

•Staircases, bannisters and handrails should be solid and secure.

•Stairwells and hallways should be kept clear in case of a fire.

•If appliances and not used for a long period of time keep them unplugged.

•Plugs and sockets should not be damaged and checked by an electrician.

•Provide an Energy Performance Certificate for the property.

•Curtains and blinds (any flammable material) should be kept away from heaters and plug sockets.

•All gas appliances should be checked by a registered plumber.

Our staff will complete a check of your property and perform regular inspections but before you put it on the market you can check these things yourself.

For more information on removing hazards from your property: https://www.gov.uk/renting-out-a-property/landlord-responsibilities

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Our Director Dean Jackaman has put together a list of dos and don’ts for anyone thinking of investing in buy to let property. If you would like more information on investing in property contact us. We can advise you where to start looking, and how to get the most out of your investment.

Always:

- Do your market research first. The internet is a powerful tool, so use it!

- Do your figures before you make any offers? You could save yourself thousands!

- Always check the rental opportunity of your investment. Is it in a popular area? Does it have year-round demand? Is it close to a station or other amenities?

- Always get good advice from a recommended letting agent or investment company or consultant you can trust. Ask them to support the rental figures and popularity they may claim with hard evidence.

Never

- Buy anything on a whim or someone else’s recommendation without checking it out thoroughly first.

- Pay full asking price for anything brand new or second hand unless it is at least market value or below market value.

- Buy anything that requires lots of work if you know you will never have the time to do it.

- Take on a tenant who has not been thoroughly referenced by an independent referencing agency. Make sure you get a landlords rent guarantee from the agent.

- Rent to a tenant without a minimum of six months deposit or bond and make sure you read up on deposits. You can find out more at www.depositprotection.com

- Never buy all of your investments in one area as demand can change.

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During your time at university one of the most important things you will have to organise is your student accommodation. It’s not only the place that you will live for the next one, two or even three years but also the place where you will study before your exams so it’s important to have somewhere to relax and work.

We have a set of very helpful agents that will help you find your perfect place and search the market. Here are our top tips when looking for a student flat:

Area

• When looking for next year’s accommodation timing is important. You need to be early as the student houses are soon snapped up. It also gives you a wider choice of properties to look at.
• Make sure you research the area.  Check out what is in the area, how far is it to the shops, and town centre. How long will it take you to get to your morning lecture and how close are the train stations for going home at the weekend. How much will it cost for a taxi back on a night out.

Flatmates

• Who do you want to live with? We have a range of student houses with different numbers of bedrooms so you can live with as many or as little of your friends as you want. Do you want a party house or do you need a quieter environment for your final year’s studies. Make sure you are certain you want to spend the next year in the same house as all your friends.

Property

• Be sensible; make sure you can afford the house. You will have to budget for rent, bills, food, a TV license, and of course your nights out. University halls are more expensive than private accommodation but you will have to organise your own finances.

Letting Agent

• At Jackson and Co we specialise in student accommodation so we are knowledgeable and can help you find your perfect flat. We can help with any element of your student housing to make it as carefree and easy as possible. You will be spending a lot of time in your house so it is important that you are happy with everything.

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Who said that renting needs to be expensive?

Check out this charming, self-contained, one bedroom studio flat with separate kitchen and bathroom and in a fantastic location for commuters.

This won’t be on the market for long so check it out now and register your interest with Jackson and Co to avoid disappointment.

http://www.rightmove.co.uk/property-to-rent/property-30189649.html

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