I don't understand your point
If it returns 10%
If an interest only mortgage is 2.7-3%
If you want cash flow. On 500k your mortgage payments would be 15k off an income of 100
Given I am not sure there is anywhere in the UK yielding more than 7% with London at 2-3% why wouldn't you do it?
(and I'm not doing this but I am trying to determine how they are identifying their target price)
Right now in the states, you couldn't touch a 3% interest loan. Something under 4 would be impressive. Could probably be done with an adjustable rate.
Gross income = 100k
management fee 10% = -10k
Taxes = -20k
maintenance 1k/unit/year = -10k
insurance = -5k
Mortgage = -30K
Net income = 25k
Laying out 500k to get a positive cash flow of 25k? no thank you.
Unless there are something drastically different in how much the tenants cover vs. landlords in the UK vs. the US.
They are probably in it too far, just like the previous owner and trying to get everything they can out of it. If that means holding out for someone to throw stupid money at it, then so be it.