Obelix Posted September 17, 2012 Share Posted September 17, 2012 Has anyone done their sums? A house in Hillsborough worth say £125k and brings on £500pcm. £6k per year. £125k in a high interest bond paying 4.5% would pay £5625 per year with low risks and no effort. Take out of your £6k a year income (presuming the house has no mortgage) void period (no rent), estate agent costs (tenant fining fee £500 + vat = £600) + 10% management fee if not diy, insurance £200, maintenance on a 100 year old £unlimited and it makes you wonder why bother? So where is this greed? When it is money worth more in the bank? It also doesn,t help when the LHA pays something like £495 pcm for a 3 bed for a run down house in a run down area. That virtually set a starting point for rent in this City. Most "old" landlords, ie with portfolios bought some time ago don't have the servicing costs. If you are buying now on a buy to let mortgage you will find it quite hard to make anything like a reasonable return, after voids and feckless tenants perhaps 2% yield. Not even enough to keep up with inflation. Capital returns, (don't forget the CGT) are also non existant at the moment unless you are very lucky. Link to comment Share on other sites More sharing options...
Cyclone Posted September 18, 2012 Share Posted September 18, 2012 Where do you find a 4.5% bond? Link to comment Share on other sites More sharing options...
Obelix Posted September 18, 2012 Share Posted September 18, 2012 Where do you find a 4.5% bond? Birmingham Midshires as long as you sock away at least 10K I think. State Bank of India is offering 5% Link to comment Share on other sites More sharing options...
Cyclone Posted September 18, 2012 Share Posted September 18, 2012 I assume that these are multiple year bonds (2, or maybe even 3 or 4)? Link to comment Share on other sites More sharing options...
Cyclone Posted September 18, 2012 Share Posted September 18, 2012 Birmingham Midshires http://www.bmsavings.co.uk/savings/fixed-term-savings/ 3.4% gross, 2.72% net, 2 year fixed bond. Nothing higher than this listed on their website. Rent would be taxed in the same way of course, although if you run it as a business all the expenses can come out before the tax is applied. https://www.google.co.uk/compare/savingsaccount/qs#!profile=FOUR_TO_FIVE_YEAR_BOND 4.6% gross here if you take a 5 year bond, but then you're gambling on interest rates staying low for that long, which IMO is unlikely.... The best 1 year bond is 3.35% gross, which looks a lot more comparable to the amount you'd generate in rent (although with much lower risk). Link to comment Share on other sites More sharing options...
Obelix Posted September 18, 2012 Share Posted September 18, 2012 I assume that these are multiple year bonds (2, or maybe even 3 or 4)? I think both are 5 years and they could well be pulled any time. Tesco had a 5% 3yr bond but that closed a week or so ago. Link to comment Share on other sites More sharing options...
Cyclone Posted September 18, 2012 Share Posted September 18, 2012 Poor gamble that interest rates will stay low then IMO. Link to comment Share on other sites More sharing options...
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