Retirement funded by BTL - Reality after 1 year.
Discussion
Whilst this is great in your example it's simply not achievable today.
If someone tried to replicate the same without having businesses (or large cash reserves) to fund the properties then they would have a mortgage or four.
Therefore growth would be important as the mortgage would need to be interest only.
Also I doubt if anyone aged 63 would be granted a mortgage over the traditional 25 year term so the rental incomes wouldn't cover the interest repayment, never mind a capital repayment.
So well done for managing it, but I doubt many will be able to do the same with the price of property as it is now.
If someone tried to replicate the same without having businesses (or large cash reserves) to fund the properties then they would have a mortgage or four.
Therefore growth would be important as the mortgage would need to be interest only.
Also I doubt if anyone aged 63 would be granted a mortgage over the traditional 25 year term so the rental incomes wouldn't cover the interest repayment, never mind a capital repayment.
So well done for managing it, but I doubt many will be able to do the same with the price of property as it is now.
technodup said:
o, you're splitting hairs, for all intents and purposes for most on this forum they are all Glasgow or thereabouts.
And it's just not true that property is that cheap everywhere. Try finding anything anywhere near London for less than £50k that isn't a garage, some sort of shared ownership or whatever.
But hey, what do I know, you're clearly the expert.
Well you've certainly got the last part right. I AM an expert. A provable expert. But the rest of your post is just rubbish. And it's just not true that property is that cheap everywhere. Try finding anything anywhere near London for less than £50k that isn't a garage, some sort of shared ownership or whatever.
But hey, what do I know, you're clearly the expert.
Motherwell isn't Glasgow. Nor is Rutherglen. They are in 3 separate council districts. They could be in any 3 separate areas anywhere in the UK. In HB terms their LHAs are all completely different as are their interpretations of legislation.
What's "cheap" is only in one sense relative to area, but if you think no property dealer in London can find cheap property then you're very very much mistaken. And why are you excluding garages? Or shared ownership property?
Listen, 'cheap' ends at no cost. For nothing. Do you think it's impossible to own property anywhere, including London, that costs you NOTHING? And if it's costing you NOTHING what does it matter what it's market value is? Well it is impossible. For you. But like you said, "what do YOU know"?
drainbrain said:
DonkeyApple said:
All I would add is that it's prudent to spread your exposure over more than one asset class even if it means a lower income. Especially if at the age when sourcing an alternate income is difficult. I would certainly look to plough excess income into something else as a prudent hedge rather than increasing exposure in the one class. You don't want to be 75 and dealing with margin calls and sitting tennants should there be a downturn or a significant change in taxation or laws etc.
There's only a certain "prudence" in risk spreading as general slumps/recessions teach. The same lesson's learned by betting every horse in a race or buying a thousand lottery tickets instead of one or putting money on every number or both colours on the wheel. But there are so many 'species' of property and options within it that a truly massive spread can be achieved within this single asset class. And I don't see age as a barrier to sourcing alternate income. Incapacity, maybe depending what it is. And inability certainly, because no-one my age is likely to be playing professional football for example. But age in itself is no barrier to earning. That's a pension-salesman's fallacy. Loads of us old duffers work. Many of us even enjoy it. Some even do quite well out of it. I certainly enjoyed it and may even go back to it if The Real Boss permits. Margin call is about dealing with the wrong type of lender in the wrong type of agreement and sitting tenants are an old school 'risk' that I didn't know in the AST age even existed any more. Even significant negative tax change or law is highly unlikely. Turkeys- even pretty stupid ones- don't vote for Xmas. And anyway, once again, being any particular age isn't of any significance. s
t happens. Like I said, it ain't a risk, it's a certainty. Brings three options. Adapt, exit, or fail. But…spreading risk and thereby deliberately lowering income on the CHANCE of some future negative event…..don't think we'd make very good business partners. To me that's a bit like saying serious road accidents happen every day so I won't go to work today and earn any money in case I'm knocked down and killed. Yeah well, maybe.
It's not a hedge to increase exposure within the same general asset class. But I don't think you are evaluating the risk in a conventional manner. And not do I think you are fully appreciating what a margin call is as it's not something that is restricted to choosing the wrong lender etc. For example, the Governemt has just put margin calls on all leveraged BTL regardless of who the counter party to the debt is. Likewise, sitting tennants have no correlation to the lender.
And I'm not understanding why gambling on horse races or the national idiot tax feature in this I'm afraid?
drainbrain said:
Well you've certainly got the last part right. I AM an expert. A provable expert. But the rest of your post is just rubbish.
Motherwell isn't Glasgow. Nor is Rutherglen. They are in 3 separate council districts. They could be in any 3 separate areas anywhere in the UK. In HB terms their LHAs are all completely different as are their interpretations of legislation.
What's "cheap" is only in one sense relative to area, but if you think no property dealer in London can find cheap property then you're very very much mistaken. And why are you excluding garages? Or shared ownership property?
Listen, 'cheap' ends at no cost. For nothing. Do you think it's impossible to own property anywhere, including London, that costs you NOTHING? And if it's costing you NOTHING what does it matter what it's market value is? Well it is impossible. For you. But like you said, "what do YOU know"?
That sounds like puff for some magic money making scheme. Amazing returns, no risk.Motherwell isn't Glasgow. Nor is Rutherglen. They are in 3 separate council districts. They could be in any 3 separate areas anywhere in the UK. In HB terms their LHAs are all completely different as are their interpretations of legislation.
What's "cheap" is only in one sense relative to area, but if you think no property dealer in London can find cheap property then you're very very much mistaken. And why are you excluding garages? Or shared ownership property?
Listen, 'cheap' ends at no cost. For nothing. Do you think it's impossible to own property anywhere, including London, that costs you NOTHING? And if it's costing you NOTHING what does it matter what it's market value is? Well it is impossible. For you. But like you said, "what do YOU know"?
Zoon said:
Whilst this is great in your example it's simply not achievable today.
.
…as people have been saying since the dawn of time. .
Nonsense, tho. People are starting up btl businesses at this very moment. They may all be "Doomed I tell ya" but they may not be. My money's on 'may not be'.
eldar said:
That sounds like puff for some magic money making scheme. Amazing returns, no risk.
Risk? Certainly there's risk. The risk is that time is wasted trying something that makes no or insufficient profit to justify itself never mind 'amazing returns'.But if your ownership costs you no money then there is no money at risk. drainbrain said:
Well you've certainly got the last part right. I AM an expert. A provable expert. But the rest of your post is just rubbish.
Listen, 'cheap' ends at no cost. For nothing. Do you think it's impossible to own property anywhere, including London, that costs you NOTHING? And if it's costing you NOTHING what does it matter what it's market value is? Well it is impossible. For you. But like you said, "what do YOU know"?
My point was you don't have a clue who I am, what I've done, not done, been party to or anything else. Your initial boast doesn't impress me.Listen, 'cheap' ends at no cost. For nothing. Do you think it's impossible to own property anywhere, including London, that costs you NOTHING? And if it's costing you NOTHING what does it matter what it's market value is? Well it is impossible. For you. But like you said, "what do YOU know"?
Thing is I agree with much of your basic premise but you're coming across as a monumental bellend so I'll leave it there.
technodup said:
y point was you don't have a clue who I am, what I've done, not done, been party to or anything else. Your initial boast doesn't impress me.
Thing is I agree with much of your basic premise but you're coming across as a monumental bellend so I'll leave it there.
Silly person. Thing is I agree with much of your basic premise but you're coming across as a monumental bellend so I'll leave it there.
Blimey this is all getting a bit silly.
I can see how the OP is getting 10% yields and clearly he has knowledge of some of the tenants of these properties which is what is giving him comfort. 10% yields are probably about right for small retail premises like these. Void periods for small retail property can be very,very lengthy and in some cases impossible to rent in poor economic circumstances. He might be able to get higher rents but then he may not have as good a knowledge of the tenant.
The only way to look at owning small retail premises (for an amateur) like these over 5 years with a decent allowance for void periods. Probably means on a risk adjust basis you're getting 8% and then there's less capital appreciation likely because it's small retail space and not residential.
I'll be honest I wouldn't consider investing in those kind of properties even at a 10% yield unless I knew an awful lot about the tenants.
I can see how the OP is getting 10% yields and clearly he has knowledge of some of the tenants of these properties which is what is giving him comfort. 10% yields are probably about right for small retail premises like these. Void periods for small retail property can be very,very lengthy and in some cases impossible to rent in poor economic circumstances. He might be able to get higher rents but then he may not have as good a knowledge of the tenant.
The only way to look at owning small retail premises (for an amateur) like these over 5 years with a decent allowance for void periods. Probably means on a risk adjust basis you're getting 8% and then there's less capital appreciation likely because it's small retail space and not residential.
I'll be honest I wouldn't consider investing in those kind of properties even at a 10% yield unless I knew an awful lot about the tenants.
drainbrain said:
…as people have been saying since the dawn of time.
Nonsense, tho. People are starting up btl businesses at this very moment. They may all be "Doomed I tell ya" but they may not be. My money's on 'may not be'.
25% deposits are normally required on BTL mortgages.Nonsense, tho. People are starting up btl businesses at this very moment. They may all be "Doomed I tell ya" but they may not be. My money's on 'may not be'.
So to get into your position someone would need say 100k cash.
Without a business to sell or a large chunk of savings to generate this then it can't be done.
So whilst there are people doing it, the deposits alone would be what you actually paid for your properties outright.
Then deduct mortgage payments from the rents - voids - damage/maintenance - tax.
And all of a sudden it doesn't look very attractive.
Of course when you own a property outright with no mortgage the returns are much better.
DonkeyApple said:
Of course it is. Slumlandlording in Glasgow, minicabs and blaming the lender for not understanding risk. There can be only one! 
Y'know I don't know where this 'slumlandlording thing came from but that's a dreadful and wholly unjustifiable slur. And the minicabs has gone! Funded by the btl 'empire',started in recession, built for 8 years. Sold! Actually I've an offer to buy another and bigger one. It's got to be one of the safest and easiest businesses on the planet. Even I managed to get 'lucky' with it. There is currently an opening for a third (sleeping) partnership in this new one, but if you want to start the 'what if' type "risk analysis" 'elf and safety' approach then I don't think this stunningly simple and easy to profit from investment would be for you. It'd make buying a property and renting it out seem positively safe by comparison! And we all know the dreadful panoply of 'risks' buying a property and renting it out can bring! LOL!And as to lenders, fortunately there are many who DO understand risk. They're currently fast replacing the ones who don't who are - as far as I know- still pretty well bust now. Not the best advert for 'risk analysis' are they?
Anyway, we're far from the point. The point is, despite the best efforts of the "doomed I tell ya!" brigade, this is a happy btl funded retiree announcing that 1 year in it's absolutely fine.
drainbrain said:
DonkeyApple said:
Of course it is. Slumlandlording in Glasgow, minicabs and blaming the lender for not understanding risk. There can be only one!
Y'know I don't know where this 'slumlandlording thing came from but that's a dreadful and wholly unjustifiable slur.
I'm glad you're back but your original post seemed imply that you had no prior experience or capital and had just built a pyramid of properties within 12 months out of nothing. Obviously, once I realised who you were I appreciated that you have decades of experience, cash and an extremely obtuse view.
Zoon said:
drainbrain said:
…as people have been saying since the dawn of time.
Nonsense, tho. People are starting up btl businesses at this very moment. They may all be "Doomed I tell ya" but they may not be. My money's on 'may not be'.
25% deposits are normally required on BTL mortgages.Nonsense, tho. People are starting up btl businesses at this very moment. They may all be "Doomed I tell ya" but they may not be. My money's on 'may not be'.
So to get into your position someone would need say 100k cash.
Without a business to sell or a large chunk of savings to generate this then it can't be done.
So whilst there are people doing it, the deposits alone would be what you actually paid for your properties outright.
Then deduct mortgage payments from the rents - voids - damage/maintenance - tax.
And all of a sudden it doesn't look very attractive.
Of course when you own a property outright with no mortgage the returns are much better.
Property for nothing? Not really a magic trick, is it?
Other people inherit it.
Other people get 100% finance for it. That takes a certain amount of buying skill (or in my case, luck) and time to unburden, but there's no rush, is there?
etc etc etc
DonkeyApple said:
Groak, it came from you when you described your high leverage btl model in Glasgow renting to DSS ten years ago that came a cropper a couple of years later when your lender changed the terms of their business.
I'm glad you're back but your original post seemed imply that you had no prior experience or capital and had just built a pyramid of properties within 12 months out of nothing. Obviously, once I realised who you were I appreciated that you have decades of experience, cash and an extremely obtuse view.
" Came a cropper??????" I beg to differ. The LENDER 'came a cropper', all that happened for me was I took to expanding with cash instead of borrowing so expansion slowed. I tried to explain to them that the world may have gone into recession but not in my bit where, if anything, business was booming. I also tried to explain to them that they shouldn't destabilise businesses which were making them profit. But to no avail. Actually in the end they entirely refused the renewal of my facility this July which was the 4th reneging on their own arrangements they'd done since 2009, but all that meant was doing a bit of selling to buy out the debt. I'm just at the very last stage of that just now and as I write another missive is concluded for settlement Monday and the last one settles on 14th November. And it's bye bye Royal Bank! 'Came a cropper' indeed! That business plan (which is why a far far better corporate manager funded it) had fully accounted for a facility withdrawal, and the only party who really lost anything from its withdrawal was RBS. Silly people. No wonder they're bust. Incidentally, at least half a dozen sales were for less than I paid which was very helpful for the mitigation of CGT which I'm glad to say is looking like being pretty tiny. Overall, including rental income, not one single unit was not profitable. I'm glad you're back but your original post seemed imply that you had no prior experience or capital and had just built a pyramid of properties within 12 months out of nothing. Obviously, once I realised who you were I appreciated that you have decades of experience, cash and an extremely obtuse view.
I must be writing funny. In the original post I was trying to say that the cash surplus from the portfolio over the last year has added another 4 to the hoard. And I think another one's on the cards for Dec.
It's also probably fair and right to say that RBS funding contributed hugely to building up the portfolio. Especially the 3 year period when they funded 100% of the purchase price which means that those properties have really cost me nothing which is quite an ROI!!
Gassing Station | Finance | Top of Page | What's New | My Stuff