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Writer's pictureCharlotte W

What’s the Rental Return on Your Porthcawl Buy-to-Let Property?

A two-minute read to help you quickly determine the return on a buy-to-let property in Porthcawl.


If you’re looking for a property to rent out, it’s important to understand the numbers involved. You may have inherited a property and are thinking of letting it. Use the information here to identify if that is a prudent thing to do or if the capital from selling the property could be better invested.


Find the numbers


The simplest way to work out your gross return on a rental is to estimate some numbers. You can have a browse on the property portals to get a vague sense of what properties in your budget sell for and let for. These figures change across the country so it’s important to start with your own research.


Quick and easy


Here’s a simple calculation to get you the basic overview. Let’s use an example of a £150,000 property that rents out for £500 a month.


500 x 12 (months in a year) = 6,000 p.a.


Divide 6,000 by the purchase price of £150,000 = 4%.


For some investors, a 4% gross yield would be sufficient. Others look for higher but it’s all rather area dependent.


Deduct your deductions


We’ve worked out your gross figures. But it’s the net figures that are the ‘money in your pocket’ numbers. To work these out, you’ll need to employ a little more guesswork. Better still, ask a local property expert, like us, who deals with these things, day in, day out. Then you’ll be closer to an accurate estimate. The figures you need are:


· Solicitors’ costs (if you’re purchasing a property)

· Landlords’ insurance

· General property maintenance

· Agency fees

· End of tenancy cleaning costs


These can be off-set against your income for tax purposes.


Taxes, taxes, taxes


It’s reasonably straightforward to submit your tax returns yourself. They need to be done annually and submitted by the following January. It’s recommended though to use an accountant. They will be up to date with all the latest options open to you. Not only that, they can often help in other areas, like looking at your pension or investment options.


For rental opportunities in Porthcawl, get in touch with us on 01656 773345. Our lettings specialists can help you consider the market and the best options out there for you.


Copyright AVENUE Property Management & Lettings Ltd 2021

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