Buy-to-let property investment refers to buying a property with a view to rent it out. By renting out the property, you create a source of income in the form of monthly rent. As the value of the property rises, it creates
capital growth and over the same period, rent also increases. A buy-to-let does not necessarily have to be a place you can live in, or in a locality where you are currently living. Consider rental properties with the eye of a tenant and look at the different types of houses
and apartments available in an area with good locational factors and economic fundamentals which will add value to your investment. Rental areas have two possible areas of growth market yield and market capital growth.
Capital growth refers to the increase in value of a property over a period of time. It is affected by various factors including location and the economic climate. As a result, the value of a home is subject to change depending on the factors influencing the
performance of a property.
Yield is the annual rental income a tenant pays, as a percentage of the total value of the property. It is a working figure that shows the property owner how well the investment is doing.
Gross yield is the total annual income from the rental properties as a percentage of the total value of the property.
Net yield is gross yield minus the deductions of running costs; expenses such as service charges, ground rent, letting fees and so on. Net yield is the true reflection of the profit made from the rental income.
Capital growth refers to the increase in value of a property over a period of time. It is affected by various factors including location and the economic climate. As a result, the value of a home is subject to change depending on the factors influencing the
performance of a property.