Renting out a property yourself can be difficult. Aside from the hassle of finding and managing the right tenants, there can be many unexpected costs – the most painful of which is the potential of a void period between tenancies.
So what is the most important factor in rental income? Reliability.
The long term average void rate as a percentage of gross rental income is 7% according to the IPD residential index, which measures the performance of around 7,000 professionally managed private rented residential units. This can significantly impact your total return.
To date, we have met or exceeded all of our forecast Dividend yields, 100% of Rental income has been paid on time and over £2 million in Rental Income has been paid out to investors so far. This is because we make sufficient provisions for any potential costs, including void periods. We have significant property management experience in-house, and monitor our portfolio carefully.
To learn more about how your Dividends are calculated, read on. Or, click below to return to the marketplace.
How are Dividends forecast?
The Dividend values on our platform are presented after all fees and costs are considered.
They are calculated as the Gross Rent collected from tenants, minus property-related costs including: purchase costs, furnishings, cosmetic remedial works, forecast maintenance, annual voids, corporate taxation, all fees and mortgage interest payments (for geared properties).
These estimates are based on consultation with third parties, such as local estate agents and surveyors. We then apply estimates for void periods, on-going maintenance, and any other costs we envisage as per the above. Our estimates are available for review as part of the investment process.
However, it is important to note that this information is based on estimates and Property Partner does not provide investment advice in this regard. It may be that lower Gross Rents are secured and/or higher costs incurred. Read more about Key Risks.
When you invest in a property you own a portion of the individual property via a specific UK Limited Company, (the SPV). You will receive a share of the Dividends from the SPV every month, in direct proportion to your ownership of the SPV that owns the property.
Under no circumstances will you be required to contribute further capital, e.g. during vacant periods or to cover defaults.
How do I calculate my monthly income?
Every property has a different projected Dividend yield and every property has different opportunities for capital growth as well.
As an example, if you invested £10,000 in a property on the platform with an estimated Dividend yield of 3.05%, you would expect to receive £305 per year in dividends (i.e. £10,000 x 3.05%). This would mean an estimated income of £25.41 a month, which would be paid directly into your Property Partner account. You are free to then reinvest or withdraw those funds.
Any capital gains would be in addition to this Dividend yield. The combination of income, capital gains and our charges would give you a Total Return.
When will Dividends be paid?
Your share of Dividends will start accruing from the date the property is purchased, or a later date if specified in the property description. Dividends for any given month will be paid on the 5th of the following month, directly into your Property Partner account. If the 5th of the month falls on the weekend or a bank holiday, dividends will be paid on the next business day.
The first payment will typically follow the first full month from purchase – for example, if a property is purchased on 15th December, the first disbursement will be on 5th February for the period 15th December to 31st January.
In addition, we provide an updated estimate of the valuation of each property each quarter. RICS accredited surveyors carry out revaluations of all our properties on a quarterly basis and we update the valuations on the 5th of January, April, July and October (if this falls on a weekend or bank holiday, then the next business day) so that you can monitor any capital returns. All of this will be presented through your personal dashboard on the platform.