What is the minimum rental yield in property investment?
Besides generating a rental income in property what do other investors look at? Is there such a thing as a high yield savings account? If there was one, with genuine high yields which an individual could access at any time of the year, then there’d be a lot of interest. However, considering that interest rates are at an all time low, this is not going to change any time soon and so any Google searches on high yield savings account won’t be getting you many results.
What about high yield bond funds, high yield dividend stocks or high dividend yield shares, especially high yield UK shares? This is where we step into risky territory and the term changes from managed investments to speculative investments with huge degrees of fluctuations. This is the realm where individuals of high net worth and hedge funds can bear to take on the risks as they have a lot more of a buffer than any regular investor.
In our (it must be said biased) opinion, the only real safe high yielding investment is acquiring property. But the question then arises as to what is the basic yield on property that is satisfactory to an investor? That is at the discretion of the investor, but from our experience, it seems that most investors that invest outside of London are looking for anything above 7% net yields and anything about 5% net yield within the Greater London area. When we discuss net yields here, we mean a net rental yield and do not take into account a yield on cash i.e. we don’t include capital appreciation.
Strategies to create high yield investments in the UK
But to achieve a high yielding property portfolio, especially when it comes to rental returns, the investor will realistically have to invest outside of the Greater London and head more towards the north of England. To counter this comment however, we believe that if clients are savvy and creative, they can generate good rental investments producing high yields in any part of the country. It might just take a bit more hard work or a bit of creativity. Before commencing any property investment projects, the investment appraisal is key to determining how much an asset can be squeezed and one needs to really think about how to fully sweat the asset.
It would be wise to attend property investment seminars or to read up on property forums to get a handle on the latest strategies, property tips and how others are generating high yield investments in property. We have previously written about investment property forums and how to best approach them. You should also try and read the free property investment guides that are widely available to download.
On a final point, you can also attend property investment shows in the UK and abroad, but we have found them – in general – to be full of salespeople where they herd attendees into property seminars and presentations to be sold to. It is still good for a stroll around to see what the latest developments are and to network with other property investors and landlords, but be sure to leave your credit card at home!