Cairn Estate and Letting Agency

How do you answer: How’s your property portfolio performing?

Worried about your BTL portfolio and whether your ROI and Yields are strong enough? Should you sell your HMO or try and reduce your Cap-EX to increase your returns? Have you maximised your ERV or is it to low?


Do you know your BTL’s from your HMO’s to your Capex’s? All these abbreviations and acronyms can tongue tie and confuse even the seasoned developer from time to time.

Here’s a guide to set you right so the next time someone asks; ‘how’s your property portfolio?’ you are prepared:


Buy-to-let is a British phrase referring to the purchase of a property specifically to let out, that is to rent it out. A buy to let mortgage is a mortgage specifically designed for this purpose.


What is ROI “Return on Investment”

This measures the amount of return on investment relative to the investments cost. To calculate the return divide it by the cost of investment and the result is expressed as a percentage or ratio.


To calculate net yield, you need to deduct all the expenses (ongoing costs + cost of vacancy) from the annual rental income (weekly rent x 52). You then divide that number by the property’s purchase price and times it by 100. This will give you the percentage yield. Gross yield you don’t take deductions.


Houses in multiple occupation (HMOs), also known as houses of multiple occupancy, is a British English term which refers to residential properties where ‘common areas’ exist and are shared by more than one household. Common areas may be as significant as bathrooms and kitchens / kitchenettes, but may also be just stairwells or landings. HMOs may be divided up into self-contained flats, bed-sitting rooms or simple lodgings.[1]

Strictly speaking, HMOs are not the same as purpose-built flat blocks, since most will have come into being as large buildings in single household occupation. Some legislation makes a distinction between those buildings occupied mainly on long leases and those where the majority of the occupants are short-term tenants.


Capital expenditure or capital expense (“capex”) is an expense where the benefit continues over a long period, rather than being exhausted in a short period. Such expenditure is of a non-recurring nature and results in acquisition of permanent assets. It is thus distinct from a recurring expense.


The valuer’s estimate of rent which will be achieved at the next event be it rent review or new lease, given today’s market conditions i.e. rental value at today’s date. Referred to in the Red Book as Market Rent.

Also stated where there is an outstanding review or a holding
over situation, and the rent represents the valuer’s estimate of the reviewed rent, or the rent likely to be agreed under a new lease, at the date of valuation.


BMV stands for Below Market Value. So a BMV property deal is a property deal where the property can be purchased at a discount to its current market value


Independent Financial Advisers or IFAs are professionals who offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market. The term was developed to reflect a United Kingdom (UK) regulatory position and has a specific UK meaning, although it has been adopted in other parts of the world, such as Hong Kong.


The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom, but operates independently of the UK government, and is financed by charging fees to members of the financial services industry.[3] The FCA regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets.[4] It focuses on the regulation of conduct by both retail and wholesale financial services firms.[5] Like its predecessor the FSA, the FCA is structured as a company limited by guarantee.


Market Value (MV): The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion.


Void Period: The estimated time that premises are expected to remain vacant before a letting is secured.

So while you were a student in your HMO you dreamt of being a FTB and owning your own house. Now you dream of BTL’s and maximising your ERV, Yields and ROI while keeping your Capex to a minimum. Should you try BMV or are they just someone you should report to the FCA? What does your IFA think?

Now You Know ;)

But if you still need help Contact Cairn on 0141 270 7878 and we will guide you through the abbrv’s – LOL.