Another great video Jamie! I still speak to investors who base their decision on gross yield but as you say, ROCE is the way to go if you want to compare the investment to another.
Thanks Pete, massively appreciate it! I think both are great all in all, I just think ROCE is just a much more powerful comparison metric to be honest! Let me know what other content you'd like me to cover mate 💪
Thanks mate, really appreciate the feedback, going to put as much effort as possible into these going into 2021, so any feedback is welcome in how we can make them even better! ROCE for the win 💪
A very timely video for me Jamie; thank you. I'm having a meeting later in the week with one of my investors who now appears to have unrealistic expectations of what's achievable. Your video now helps me to get him on the same page as me . Thanks!
Nice and to the point video. I'd always work with ROCE but tend to pretend both. Now if we could only get everyone to calculate it the same way and include the same costs..
Do you have a useful spreadsheet that we could download, that accounts for all of this and shows your projections - similar to your 'refurb' and property refurbishment check sheet. Take it a step further and one which also takes into account appreciation e.g. Yr 5 and 10. Why? There must be this magic bracket i.e. cost of purchase vs rental income that targets specific properties. Ack ROCE 15-20% but in real terms, you seem to like the £100k mark - why? I'm keen to know more based on your experience. LOVE the content and grateful you avoid the hard sell!
Could you do a detailed video about all the costs of a buy to let including one of costs, monthly costs and yearly costs such as getting the gas and water checked it would help a lot:)
Good examples, but there's no need to round up or simplify things; just do the calculation and present it because it saves time and reflects reality. Enjoyed the video!
Great explanation Jamie! How could we take the property appreciation into account along with the ROI. Let's say by the end of the year along with all annual rental income my property value increased by 10% for example. How do we take that into consideration?
Rental yield is quite confusing because some people say taxes are included as a cost and some people say they are not. RY is supposed to be the Net Operating Income, therefor it does not include taxes, isnt that right? and which ones? the property tax or the income tax? or both?
I'm struggling with this. That £30k isnt profit, its just the rent received (turnover). You still have to pay the mortgage, maintenance costs, letting agent fees, insurance, etc out of that £30k. when you value a business using ROCE its EBIT/Capital employed.
Great video as usual. I think it depends on the exit strategy for the property. Most of my properties are refurbs, flips or land purchases. Because I'm in the SE the numbers are quite large so showing the profit the investor will make after a 8 month refurb is more important to them. They tend to want to see ROI. Is one or the other better for different exits?? I understand how ROCE is preferable if you're going to BRR.
Thanks Tanya! you're right, it really does depend on quite a few different things.I think ROI is almost ALWAYS the best for your own investments, but yield is more recognisable for people that need it presented in a more simple fashion!
@@JamieYork I totally agree that ROCE is a far more useful metric. With luck (and, of course, careful research and selection) you'll even outperform that on the capital growth side. I watched your video on using property data to look at historic growth to see the trend. Do any of the free sites you recommend have similar features? Don't mind paying when the time comes but when getting started keen to try to use mostly free resources like Streetcheck and Lendlord. Will graduate to paid when I've got a few more properties under my belt know the game better!
Another Great Video Jamie (I am working my way through them a fantastic amount of free content). It might be a bit late to get a response to this given the date). Just looking it ROCE so this is Profit on the Property after all expenses (lettings etc.) / the deposit down in effect. (My deposit would be £16,250) But to actually get off the ground I need £1500 legal, £2K SDLT £500 broker (then possibly £10k refurb but that is slightly different). So I actually need to put £30,200 of my own money (which is a lot more) Now as some of them are really kinda like Capex costs (they will not be there year on year) how do you account for them. As to roll them into the ROCE seem unfair as they are inescapable and you can never really get the money back on them. I think the refurb money can almost be thought of as an investment in an investment. Because in theory, you can rent the house out as it is. Or you can choose to say spend £10K lets's say that's the windows, bathroom, and kitchen with the idea being that you will probably increase the value by 2.5x so £25K. So then you can Refinance take money out have £x left in and calculate a ROCE Any Thoughts
Jamie, when working on ROI, do you only include your own capital deployed or total cash involved including purchase price, refurb, legal and broken fees and stamp duty
Good Morning Jamie: I hope that you are well. How do I plan for my property to continue generating income and paying its bills etc once I die. At present my will states for all to be sold and distribute it. Buy I do not want that. I would like my legacy to continue. Have found nobody that can offer me legal advice as to how to do it. Thanks in advance.
Hello, great video! My question is, should I include the equity that is in the house at time of purchase for the ROCE or ROI. For example, if I close a deal on 300k house for 250k, should I include the 50k equity in my ROI calculation? In my head I figure the amount of equity at time of sale can vary with market conditions in the future so I wouldn't include it since I don't plan to immediately sell the property for the 50k.
Hi Jamie. Can you make a video for the citizens of Countries in where the interest only mortgages are not available? Because the cash flow Is damaged by the repayment of the capital during the years. On the other hand the IRR of the investment Is very high. How can you consider that?
Great video Jamie, all makes sense. My only question is where you did the £2500 divided by £30,000 the answer on the calculator = 0.083 (8.33%). Is there an easier way to do the calculation so that ‘8.33’ is the answer on the screen? or do you need to convert the decimal into a %? Thanks
Your principle portion of the mortgage is not an expense, as it it buying back some of the real estate. Therefor the 2500$ should be higher reflecting a higher CoC return?? Or am I missing something??
