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Example
Property Investment III–
50% Mortgaged Purchase
A more stable investment is seen with a 50-50 investment. This investment
sees a lower total yield on initial capital deposit than the previous
investment, however the mortgage repayments will be lower than the
previous options. If rates increase, the repayments are therefore
likely to be lower and the investment more secure.
This is based on continual occupancy for a 12-month period.
|
|
| Purchase: |
Cost (£) |
| Property* |
100,000 |
| Associated Costs (Stamp Duty, Legal, Survey) |
3,000 |
| Preparation to Let (Estimate) (Curtains, Paint, Furniture,
Appliances) |
5,000 |
| Sourcing Fee (4% of Property Value) |
4,000 |
| Total Acquisition Costs |
112,000 |
|
*Traditional 1st floor
flat. Sec entry, reception hall, bay windowed lounge, fitted breakfasting
kitchen, 2 bedrooms, en-suite toilet, bathroom, gas central heating.
|
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| Finance: |
|
| Deposit |
62,000 |
| Mortgage @ 70% |
50,000 |
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| Rental: |
|
| Let @ £700pcm |
8,400 pa gross |
| Gross Yield on Deposit Paid |
20.00% |
| Less: |
|
| Insurance (est.) |
250 |
| Letting and Management Fee (15%) |
1,260 |
| Gas, Electricity, Safety Check, misc Maintenance |
350 |
| Interest on Mortgage Repayments (rates 5.5%)
|
2,750 |
| Total Annual Expenses |
4,610 |
| Net Income |
3,790 |
| Net Yield from Rental Returns on Deposit
Paid |
6.11% |
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| Total Income: |
|
| Add Capital Gain @ 8.5% (Scotland ave. 2001) on 100,000 |
8,500 |
| Net Income on Rental |
3,790 |
| Net Annual Yield on Initial Investment
of Deposit Paid |
19.82% |
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