How do you assess BTL opportunities?

[dan_i 0]

Hi, I’m starting my BTL journey and want to understand how everyone goes about assessing multiple BTL opportunities. 

Some people seem to work on a 7%+ gross yield basis, while others drill down into net ROI which gets pretty complex when comparing lots of properties. 

What’s the best approach? How do you assess your investments?

Thanks folks

[conrad_paton 101]

Hi Dan,

ROI is the way to go. Gross yield is pretty meaningless.

But when considering multiple properties  to purchase with a view of renting them out, I always choose the most fitting to the needs of most residents in the area.

If I loose a little ROI but gain more certain tenancies with choice of tenants and little or no void periods then to me it's worth it.

Remember gross yield assumes full occupancy and some people include voids etc into their ROI calcs and some don't.

As long as you use the same formula for ROI on each property you are considering then you can compare them financilly.

Just be mindful that there are other factors (beside the financial) to consider aswell.

Conrad