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Knight Frank
London and Country specialist property buying agents
29 May 2016  |   Philip Eastwood

A retirement property should help you to do just that – retire. The main focus therefore should be making sure the property generates a positive cash flow. In order to do this, the property you purchase needs to Let extremely well and as such appeal to a wide rental market; that usually means it must be close to transport, be well presented, have a café culture close by with all the local shops and amenities on the doorstep. There is also a direct correlation between the number of bedrooms a property has and the amount of rent you can achieve. My advice, buy as many bedrooms as you can!

All you really need to know is, the bigger and the better the yield the more money you will receive in your pocket each month. The yield allows you to calculate what annual return you will see from your investment as a percentage. You can then easily compare each investment opportunity. To calculate the yield you need to work out what the total rental income for the year will be and then divide this by the price of the property. To turn this figure into a percentage you then multiply it by 100. Be warned, this will only give you the Gross yield and will not take into account any overheads associated with an investment property i.e. solicitors fees, surveyors costs, maintenance, lettings agents fees and depending on the purchase price stamp duty land tax.

Buy in an area that you know is within one hour’s drive from where you live. Research is imperative to successful property investments and if you are familiar with an area then you are already one step ahead. If the property is close by then you are on hand should anything go wrong with one of your properties. The type of return you focus on will depend entirely on what you want from the investment. If you are looking for long term capital appreciation, however are not reliant on a healthy rental return then you should be investing in an up and coming area with planned regeneration and new infrastructures. If you are just intent on maximising cash flow then you need to be investing in less expensive housing in convenient locations, ex local authority housing services suit this type of investor well. Whatever investment you decide to make, if it is close to transport and local amenities then you can’t go wrong.

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