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Stacking a Buy to Let Property Investment - Long Term Lets



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By : David Garner    99 or more times read
This article will take a simplistic look at stacking a buy to let overseas property investment. We will take into account the financial comings and goings; rental yield, tax liabilities and ongoing management fees.

This is a very simplistic model that tells no lies and, if applied to any long term, buy to let overseas property investment, will give you a clear picture as to whether the property investment you are faced with actually 'works' on an on-going basis.

Firstly we will look at the rental yield we can achieve, and we do this by an 'on the ground' comparison of what similar properties are currently renting for in the immediate area of the property investment we are stacking. For the purposes of this example we will say we are looking at a 50 square metre 2 bedroom apartment in a city, with a value of 50,000 and we can find a range of between 5 and ten similar apartments in the area currently rented or available for long term let through local letting agents.

Let's say we can see average annual rents of 6,000 for a property of this type.

Next we will look at associated costs as follows:

Annual Mortgage Interest: 2,440 (80% LTV mortgage at 6.1%)
Annual Property Taxes: 500
Annual Community Fees: 600
Letting Agent Fees: 480
General Maintenance: 600
Income Tax: 20% of Net profits
Void Periods: 1 month

So in annual income we will receive 5,500 taking into account one void month.

In Annual outgoings we will pay 4,620

In income tax we will pay 176

So we are left with a grand total of 704 for the year or 58 per month in positive cash flow.

So this example does stack up as a potential buy to let overseas property investment. We have planned for maintenance, void periods, management fees and associated taxes and we are still earning money every month.

In further articles I will look at stacking an overseas property investment for it's capital growth potential.


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