I’ve recently gone sale agreed on a property, I’m cash buyer and I’m going to live in the property. I’ve calculated that that the rental yield would be less than 7%. I’ve read (somewhere) that you should look for at least 10% as an investor, not sure if the same is supposed to apply for an owner occupier). Anyway my feeling is if I was to look for a 10% yield I’d end up living somewhere I didn’t want to live long term. Also for the investor in an odd way the value is where many people wouldn’t want to live.
Here’s my not very detailed analysis based on 11 months rent (generous I know) and asking prices on daft.
Inner city 2 bed (Smithfield) Buy c. 150,000 rent 1,200 yield (111,200/150,000100) = 8.8%
Periferal 3 bed (Lucan –sprawling part south of N4) Buy c. 210,000 rent 1200 yield (111200/210000100) = 6.2 %
M50 side 2 bed apartment(Park West) Buy c. 100,000 rent 950 yield (11950/100000100) = 10.45%
Leafy 4 bed semi in mature in housing estate (Blackrock) Buy c. 500000 rent 2000 yield (112000/500000100) = 4.4 %
Does this mean Park West is the place to buy, ‘cause I don’t think it’s ‘the’ place to live.
You appear to have discovered that yield is inversely proportional to sale price.
This is probably because:
(a) the higher the rent, the more the renters see it as dead money, which suppresses demand, and
(b) the lower end of the rental market is populated by people who for whatever reason cannot or do not want to buy.
Ahem…capital depreciation, dealing with tenants, Priory hall scenario. If you aren’t an investor I suppose the question is why buy in Blackrock when you can rent? Why rent in Park West when you can buy.
Maybe Park West is an extreme example, I know a guy who owns a place there, its a nice spacious place and he and his partner seem happy enough there. But frankly you couldn’t pay me to live there, there’s really nothing there and you are miles away from anywhere decent - Prison on one side, motorway on an other, business park on an other, industrial on an other. I don’t have a car so may that effect my view but I just couldn’t imagine living there.