Think in net, not gross
Gross yield is the number quoted to you. Net yield is the number you actually receive, and the difference is where expectations usually break.
- Void periods between tenants — a normal cost, not an exception.
- Maintenance, society charges and lease rent, payable whether or not it is let.
- Property tax.
- Repairs, and making the property ready between tenants.
- Brokerage on each new letting.
- The time it takes to manage, which is a real cost even unbilled.
What makes a property let reliably
A reliable rental is rarely the most impressive property. It is the one that suits the largest number of plausible tenants.
- Proximity to employment, and to transport for those commuting further.
- A configuration that suits the common tenant profile in that area, rather than an unusual layout.
- Condition good enough not to deter, without over-specification you will not recover.
- Parking, which tenants increasingly treat as a requirement.
- A functioning society with reliable water and power backup.
- A landlord-friendly building — some societies restrict letting, which you want to know before buying.
Residential or commercial for income
Residential lets more easily, to a much larger pool, and exits faster. Rents are typically lower against the capital and tenants turn over more often.
Commercial can offer stronger income and longer leases with escalation built in, but the tenant pool is smaller, void periods can be long, and finding the next tenant takes a different kind of effort.
Which suits you depends mostly on how much vacancy risk you can absorb without it mattering.