The new year brings new beginnings and maybe a time to reflect on your finances for the next 12 months. You may be asking what sensible changes you can make to increase the overall productivity of your money.
Well if you are a landlord you may be looking at how much rent you are receiving, or if you are new to the property market then you may be interested to consider the benefits of investing money in the property market.
In comparison, the property market can provide much more attractive returns than keeping your money in a savings account. For instance the everyday savings account at Barclays provides interest of 0.30% per year whereas the new Marcus by Goldman Sachs account is 1.50%
However, if you buy a property in Manchester for £240,000 and rent it for £1,300 per month then your money will be making a massive 6.5%!
There are however things to remember in all of this, if you do rent a property you will need to factor in mortgage costs, tax, estate agency fees, furniture costs, maintenance, ground rent and service charge so once you take all the above into account you may end up with 3 to 4% (based on the example above).
Even so, the returns can still be far more lucrative than a savings account. Investing in property also provides the opportunity to achieve ‘capital appreciation’ where the value of your property will increase over time.
We have created a free to use rental yield calculator below, feel free to see how much you are making now…
Rental Yield Calculator