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Property Investment
Yields, deposits, stamp duty and void periods: the figures worth charting when you compare buy-to-let deals and the firms that source them.
Charting property investment
Property is full of numbers, but most investors only look at one or two of them: the price and the headline yield. Charting a wider set of figures for every property makes it far easier to compare deals, spot the ones that are underperforming and see whether a strategy is really working. Here are the metrics we think are worth tracking.
Gross and net yield
Annual rent as a share of the price, before and after letting fees, insurance, repairs and voids, side by side for each property.
Total cash in
Deposit, stamp duty, legal and lender fees and repairs stacked together, so the real cost of each purchase is clear.
Rent over time
Monthly rent tracked from the first tenancy onwards, against the local average for the same type of property.
Months empty
Void periods year by year, one of the quickest ways to see whether a property, or an area, is letting well.
Price against yield
Purchase price plotted against gross yield by area, showing where cheaper entry prices really do mean higher returns.
Offer to completion
Weeks from an accepted offer to completion, useful for planning cash flow and judging how well a purchase was managed.
Measuring a deal sourcer
If you pay someone to find properties for you, their performance can be charted too. The figures worth recording are how many deals they put forward compared with how many you buy, how purchase prices compare with recent sold prices on the same street, how long it takes to find the first suitable property, and the fee as a share of the price.
Sourcers who show their working make this easy. For example, LAT Property Investments, a Derby-based property sourcing company, supply each deal with comparable sold prices, evidenced rents and a full breakdown of purchase costs, so the numbers can be tracked across several purchases rather than taken on trust.