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What’s
the secret of building a successful property portfolio and
retiring on a guaranteed income for life?
One of the key benefits of property is the ability to
GENERATE INCOME ... as well as the potential CAPITAL GROWTH when the property values increase.
Current property prices are about 20-25% lower than peak
prices of 2007/8. In some locations property has fallen
by even more. For new investors who are looking for income,
this is good news.
Bank interest rates are at an all time low, with investors
in bonds and shares seeing their income fall dramatically.
On the other hand, income from property has increased.
The fall in property prices and generally good demand for
rental properties, mean that the yield in some locations
has increased.
Click to search buy to let mortgage deals.
If you are uncertain what exactly yield is, let's explain.
The yield is the percentage annual income compared to the
purchase price of the property. So if you purchase a property
for £100,000 and the annual gross rental income is £10,000
- the yield is 10%.
In London, the yield is generally about 6-7%, although
in prime Central London such as Mayfair, Belgravia, etc
its more likely to be max 5%. In some locations in the North,
the yield may be 10% or more.
Much better than you can achieve by leaving your cash in
the bank.
 Property Investment For Income Or Capital Growth?
Buy-to-let investors tend to fall into one of two catagories: those aiming for maximum capital growth and those wanting an income.
It's not an exact science, but often cheaper properties provide a high yield, but less growth. Whereas properties at the higher end of the market, may provide good capital growth, but low yield.
How you set this up will largely depend on how much capital you have to invest and whether you need income today.
If your income is low and you want to earn more, you should focus on cheaper, high-yielding properties eg properties under £100k in areas of good rental demand, such as towns and cities in the North and the Midlands.
If you already have a high income and don't need extra, you may be better investing in higher value property, where the rent comfortably covers the mortgage, but where you will earn on the capital increase in the property over the next 5-10 years. For example properties in London and the South East.
If properties rise by 10%, you will make more if you own a proeprty worth £300,000 than if you own a property worth £80,000.
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