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Price, Yield, Growth - Finding The Right Balance

Belvoir Shrewsbury is not only an Estate Agent specialising in selling and renting properties, it also has access to excellent mortgage and financial advice through first class advisers. Belvoir Shrewsbury also gives property advice to prospective landlords.


Belvoir Shrewsbury also gives property advice to prospective landlords,
advising them of what and where to buy and how much to spend as a good investment with good returns.  
As an example, we consider here how property investment returns could work for you.

When you let an investment property your gross yield from income on average should be in the region of 5% per year on a new purchase.  
However, the net yield will be less because of costs associated with the property: income tax, agents fees, insurance and upkeep; although the last three are tax deductible.  
You can’t do much about this, however, maintaining your property to a good standard will in the end pay dividends, as it will let more quickly (less voids) and for more rent.  
Over time both the rent and the capital growth will increase, so the return on your investment (ROI) a combination of income (rent) and value (capital growth) will be significant.  
In Shrewsbury rents are now on the rise as a consequence of the Governments decision to stop agents charging tenants to move into a new rental property and the cost of purchasing a property.  Rents are rising at approximately 3% per year and that is likely to continue, property prices are rising at about the same rate 3% annually.

The average price for an average house (3 bed semi) in Shrewsbury is circa £190,000.  
If this was rented the rent would be £750.00 per calendar month or £9000.00 a year so an initial gross yield of 4.75%.  
However, the rent could be £875 after 5 years giving a new yield of 5.5% (using the purchase price) and
the value of the property could be £220,000, so an income of about £50,000 and a capital growth of £30,000; in 5 years your ROI could be roughly 45% gross!  
Taking into consideration tax and expenses that would still see you with around 30% net ROI depending on personal circumstances and market conditions.  
If you extrapolated this over 10 years the gross ROI on the property could be as much as 100%!

Should you wish to discuss property prices and letting properties as an investment please give
Paul or Richard a call at Belvoir Shrewsbury, on 0174 242000.  

For advice beyond the factual part of investing in property we can also refer you to some of the best financial advisors in the business.
 
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