ASK73: How do you accurately calculate your return on investment? PLUS: Can I turn my flat into serviced accommodation?

When calculating the return on investment for property, Rob and Rob consider a minimum return of 10%. This figure takes into account both initial capital expenses such as deposit and stamp duty, as well as ongoing costs like interest payments and agent fees. However, it's important to also factor in other expenses like billing certificates and void periods to get an accurate calculation. Tom, a new investor, asked this question during the latest episode of Ask Rob and Rob, emphasizing the importance of understanding the true return on investment for potential properties. This question is relevant to many other investors, making it an excellent one to address.

Calculating return on investment for real estate involves considering various ongoing expenses such as interest payments, agent fees, voids, and maintenance. While there's no one-size-fits-all approach, consistency is key to comparing properties accurately. For instance, a 10% maintenance cost for a house and a 5% maintenance cost for a flat can be a rough guideline, but actual costs may vary. Remember, no calculation is perfect, and it's essential to reevaluate and adjust your projections as you gain more experience. Ultimately, the goal is to create a reliable framework for making informed investment decisions.

Consistency is key when calculating potential returns on real estate investments. While it's important to capture as many expenses as possible, it's not necessary to delve into every detail. Instead, use a consistent list of expenses each time you assess a property for comparison purposes. The specific percentage used, such as the commonly discussed 10%, may vary depending on individual calculations and risk tolerance. By running different scenarios and assessing various properties, you can determine what is considered a strong investment. Some common expenses to include in calculations are service charges, ground rents, and management costs, even if you don't personally incur them. However, maintenance costs may not be necessary to include for newer properties. The ultimate goal is to maintain a consistent approach to evaluating potential investments.

Consistency is crucial when analyzing potential real estate investments, especially when it comes to using a consistent mortgage rate. Although mortgage rates may fluctuate, using the same rate every time allows for accurate comparisons between different investment opportunities. This was discussed in detail during the conversation, emphasizing the importance of maintaining consistency to ensure accurate analysis. Regarding Tony's question, the answer is yes, it is possible to change a leasehold property into serviced accommodation, but it would depend on the specific terms of the lease agreement. Serviced accommodation refers to short-term rentals, often through platforms like Airbnb. This type of letting can be an attractive option for investors due to its potential for higher yields. However, it's essential to understand the specific rules and regulations of the lease agreement before making the transition. In summary, consistency is vital when evaluating real estate investments, and it's possible to change a leasehold property into serviced accommodation, but it depends on the lease terms.

It's crucial to thoroughly check the legal terms of a property before making a purchase, especially if you plan to use it for short-term rentals like Airbnb. I was excited about a potential property investment in the city center, but the lease restriction against short-term lets was a deal-breaker. Ignoring such restrictions could lead to unnecessary risks and potential legal issues. Even properties with concierge services, which may make short-term rentals more challenging to manage, can still be considered, but it's essential to be aware of the potential complications. Therefore, always double-check the legal pack and be prepared to pay a fee if necessary. The final decision on whether to proceed with the investment or not depends on your individual circumstances and risk tolerance.

While serviced accommodations can be profitable, there are significant barriers to entering this market, particularly with mortgage restrictions. If you're considering this type of investment, it's crucial to check if your mortgage allows for short-term lets and consider switching to a mortgage product that does. The Property Hub Magazine's upcoming issue will provide more in-depth information on this topic, including what to check and what to do. For just £5 a quarter, subscribing to the magazine gives you access to all current and past issues. Another investment worth making is listening to the Property Podcast, which returns on Thursday. Don't forget to join us for Ask Robin Rob next Tuesday. Until then, happy investing!