What Does Interest On Deposited Funds Mean?

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You will hear lots of common phrases in the property industry and one that has become widely used in recent years is interest on deposited funds. So what exactly does it mean?

It certainly sounds good when you see it on an advert for investment property. You would be forgiven for thinking that interest on your deposited funds means a nice little bonus while you are waiting for completion. In some case this might be right and even better, if there is a short lead time from the start of construction to completion, you will benefit from some extra peace of mind.

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How To Calculate Net Rental Yield

Calculate net yield

The most important thing to learn if you are hoping to achieve big things in buy to let investment is how to calculate net rental yield. After all, you are in it for the money and if the financial side doesn’t stack up, then you could be wasting your time and money.

To help us understand how a net rental yield is calculated, let’s use the example of Richard:

Richard is looking for property that will earn him a good return on his investment over time. He looks at all the available options and settles on two for comparison.

  • The first property is valued at £130,000 with a potential rental return of £600 a month
  • The second property is valued at £200,000 with a rental return of £850 a month

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