Always look at the yield as one of the comparisons when viewing a BTL property and if its high for the area ask yourself why?
Once you start investigating you realise that the return is high because the property or location has potential issues.
Ones I’ve seen recently include next to a pub, takeaway, massage parlour, council waste depot, haulage yard, supermarket, railway line etc.
Not everybody wants to live next to these type of properties and as a result, it’s harder to sell or rent.
This reduces the number of BTL Mortgage lenders available and of the ones that are in the market, you may get a lower loan to value, reducing your return on capital and the interest rate is normally higher.
So if the yield is better than comparable properties in the area find out why.
Tags: BTL, valuation