Working out potential rent and value

HOW CAN I WORK OUT THE YIELD IF I DONT KNOW WHAT THE RENT OR END VALUE WILL BE

This where you have to do some research on the main property website or talk to local letting agents to get a feel for firstly what the end product for your buy to let should look like and secondly what rent and value that final finish will provide.

COMPARABLE INFORMATION

You’ll need to collect two types of comparable data.

  • Rental Data - to allow you to judge how much rent your property can achieve and what quality to target.

  • Sold Data - to allow you to understand end values when any refurbishment work is completed, also look at currently marketed property values but understand sold prices are more reliable.

Rightmove is a great starting point for comparable evidence allowing you to look at what is currently being marketed for rent/sold in the same location, and a similar property type. If there’s enough evidence always compare like for like as each asset type will have a different price point. For instance detached houses will usually rent for more than a terraced property in the same location.

When searching think about the followng:

  • Location - specific to amenities, and your property, is it in a better or worse location.

  • Asset type - is it detached, semi-detached, terraced, flat, bungalow etc

  • Quality - Compared to your finished product, will yours be better or worse, and therefore can you charge more or less to a tenant, make sure you understand the local market though, providing the wrong quality product in the wrong market will likely impact your rent.

  • Size - you can often find this in the description, on floorplans if provided or last resort check the EPC for outline sizes. If you can get the size it will allow you to get a more accurate understanding of how your property compares.

  • EPC Rating - the better the rating the lower the energy bills, so the lower the cost to a tenant. Over time we will likely see tenants prioritising good EPC properties, as tenants try to minimise their living costs.

  • Facilities & Fixtures e.g. are there en-suite bathrooms, seperate washer dryer, quality of fixtures

  • Furnished / Unfurnished

Always take an average of all the data you collect then look at those that are most similar to your property to get a feel for where your rent might be or the end value.