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Performances, Charges, and Income

Nearly one in eight landlords fails to consider any additional costs when calculating the profitability of their property portfolio, a study suggests.
According to new research from a specialist buy-to-let business, more than half do not factor in any repair costs.
The study estimated that the total average cost of a buy-to-let property, including letting agent fees, maintenance, repairs, marketing fees and mortgage interest, amounted to £11,359 a year.

Landlords may be overestimating returns by up to 50pc. The study stated that the most accurate way to measure the performance of a buy-to-let investment was by using "return on investment" or "return on equity", as these methods take into account gross profit, capital gain, and the costs of running the property – including the amount spent on refurbishment.

A further cost is "void" periods, when a property is empty between tenants. The study suggested that in any one year, up to 60pc of landlords face void periods, however, only 12pc of these take this into account when assessing returns.

Potential investors can be drawn in by inaccurate or misleading advertised returns, so it is advised that you delve deeper into the detail.