The research firm analysed the buy-to-let market over the last 30 years and found the market to be surprisingly unstable with periods where profitability was marginal or even negative.
Brian Hall, founder of The Model Works, said: “There appears to be a naivety about how stable the market really is.
“Profitability is falling and it may currently be negative for many landlords when all the costs are taken into account.”
The findings also revealed profits in the past have been driven through property price inflation.
Hall said: “In a rising market, an investor benefits from increasing equity but there is also a correlation between prices and rent levels.
“As prices rise so can rents and prior to the credit crunch property prices tripled over a 10-year period. Fractionally higher gross rental yields today cannot compensate for the relatively stagnant property prices we are currently experiencing.”
The new upgraded anaylis model utilises five dimensional motion charts to track profitability over time to provide insights into factors that investors should consider when evaluating their options.
Hall added: “Reviewing historic figures to secure an insight, one gets the impression that the big profits were made when no one was looking in circumstances very different from today.
“Understanding volatility and risk is common-place in the investments sector. With so many now choosing buy-to-let, instead of conventional investments it is vital that these decisions are well founded.”