I ran the numbers on a typical buy-to-let deal someone sent me. The margins were much thinner than I expected.

Someone sent me a potential buy-to-let deal recently and asked whether it stacked up.

Rough numbers looked like this:

Purchase price: £235k

Deposit: 25%

Mortgage rate assumed: ~6%

Expected rent: £1,050/month.

I tend to sanity check deals using four things:

• Cashflow

• Operational complexity

• Risk

• Exit

Cashflow

Mortgage would be roughly £880/month.

Allowing roughly £150–£200/month for maintenance, occasional voids, compliance etc, the real margin ends up being very small.

You’re probably looking at something like £0–£50/month depending on assumptions.

Operational complexity

Standard single let, so operationally it’s fairly simple to run.

Risk

The issue is how thin the margin is. One repair, a slightly longer void period, or a small interest rate move and the return disappears.

Exit

If the area has strong long-term demand it could still make sense as a long hold, but purely from an income perspective the numbers felt weak.

Personally I’d only feel comfortable if either the purchase price was lower or the rent was meaningfully higher.

Curious what others here are seeing at the moment.

Are deals like this still common or are people finding stronger numbers elsewhere?