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I am looking to buy a btl property?

Should I be looking for properties with the highest rental yield or capital appreciation or both? Should I buy a one/two bed apartment or a house with 3/4 beds. My budget is 500k and location is London.

Asked on Oct 6 2013, General in Isleworth | Report content

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  • Whether you choose to invest for capital growth or for yield comes down to your outlook and your current financial position. I wont try to answer this question for you, but I will explain the rationale behind the different approaches. Yield investment in property is generally a lower risk. If the value of property falls your high yield should cover you until the value of the property recovers. If prices rise your properties should also benefit. If you are on a fixed/low income this is a sensible approach to take. The alternative capital appreciation route involves you gambling on a rise in values and ignoring greater yield returns to achieve this greater capital uplift. The risk is that if values fall you may end up supporting your investment on a monthly basis. This approach will make you money more quickly, but with greater risk. There is no right or wrong answer as to which property to buy. Generally, smaller units have greater yield but equally a large house can be let out on a multi - let type basis (room by room) to deliver great yields. The best approach would be to go for the best value for money in my opinion. If you can buy a 300k house for £270k this offers better value than a 100k flat for 100k. The easiest ways to achieve this are to look for properties that require a quick sale (desperate vendor), auction property or a repossession. since 2007 87% of repossessed properties have been sold, by the banks for less than the outstanding mortgage. You must do your homework, but in some instances you will save yourself as much as 30% of the property's true value.

    Answered on Oct 6 2013, Report content
  • Hi, We would firstly ask the question of how long would you like to invest in the property? We would say that a better yield would be on the 3/4 bedroom home yet we would also state that this may different demographically and would suggest you speak to a local estate agent for a better understanding of the market in the area. We hope this helps.

    Answered on Oct 8 2013, Report content

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