Investing in a buy-to-let property can generate a good Return on Investment (ROI) but it's important to remember that rental income is not always guaranteed (unless you have a deal with a letting agent) and that property values can go down as well as up. With this in mind it's important to invest for income and not short-term capital growth and your monthly rent should be the key consideration for a buy-to-let property. To compare the investment potential of different property's, a landlord will use the rental yield.
Rental yield is the annual rental income expressed as a percentage of the property value. For example, a property generating £5,400 worth of rent that is valued at £120,000 has a 4.5% yield. Good rental yield is considered to be over 6% and this would indicate a worthwhile investment. However it's also important to take into account other costs associated with owning a buy-to-let property including any insurance premiums, repair & maintenance costs, letting agent's fees and periods when the property is not let, which could all impact on your returns.
Our buy to let rental yield calculator can be used to compare the yields from different properties to help determine which is the most suitable as a long term investment. The yield can also be used to compare the returns on other investments such as the interest rate you might receive on your savings.
To use the calculator, enter your figures directly into the corresponding fields & then press 'Calculate'. Your results will appear below the calculator.