A headline yield is easy to calculate and easy to game. Divide the annual rent by the purchase price and you get a number that ignores almost everything that determines whether the property actually makes money.
What the yield leaves out
- Factoring fees, which in some Glasgow tenements run to four figures a year
- Void periods between tenancies
- The cost of getting the property to a lettable standard
- Upcoming common repairs the factor has already scheduled
What we check instead
We look at the factoring account before anything else. A tenement with a healthy sinking fund and no scheduled major works is a very different proposition from one facing a roof bill split eight ways, even if the two show the same yield on paper.
After that: the EPC rating, because minimum standards keep moving and a D today may need work tomorrow. Then the tenancy history, if there is one. A property that has let steadily for years tells you more than any projection.
The areas we watch
Dennistoun and Govanhill still offer the strongest entry prices for a first investment. Shawlands and Partick cost more but let faster and to longer-staying tenants. Which suits you depends on whether you are optimising for cash flow or for a quieter life.
Every property on our investor list comes with these numbers already done. If something does not stack up, we say so.