Could I have done better.

[oldnbold]

I have a small BTL portfolio. I have just sold the first property that I bought 10 years ago when I knew nothing about BTL. It has been the worst performing property that I've had both in terms of income, capital gain and problem tenants, by a long way.

Now it's sold I've got actual real world figures on my investment over that 10 year period. I originally put down a £13k deposit to buy, and over the 10 years of ownership I've had £32k of net rental income, actual income less agent costs, mortgage costs, repairs, legal and selling costs etc. The sale has generated a £28.5k profit.

So my £13K invested 10 years ago has produced just over £60K pre tax profit.

I know absolutely zero about other forms of investment, other than having a few k in ISA's, premium bond's and a classic car.

My question to those of you in the know is could I have done better if I'd invested my pot somewhere else in 2007? Bearing in mind I'd only be happy with at most medium risk. But more to the point I'm mindfull that I maybe should now diversify a bit, so suggestions on a good place to stick the sale profit would be welcome.

[VEX]

I cant help you, but a really interesting question, I am interested to see the view point of others.

On paper, I would say that looks pretty good, considering there was a crash inbetween.

V.

[oldnbold]

VEX said:

I cant help you, but a really interesting question, I am interested to see the view point of others.

On paper, I would say that looks pretty good, considering there was a crash inbetween.

V.

I was hoping that someone with a knowledge of "the markets" could have shown that the £13k invested elsewhere for 10 years would have shown a better return, as I've often seen comments here that BTL is not that great a place to invest your cash and is often criticised.

I'm truly interested to find another place to invest other than BTL, but know nothing of stocks, bonds, funds etc and am a bit wary of IFA'S because I'm never sure how independent they actually are.

[superlightr]

I would be very happy with that. It was pretty safe as in a physical asset. Sounds like your agents could have done better with better tenants. If this was a "poor performing" property in your eyes what will a better one be like?


Be interesting comparison:

We bought a 2 bed house May 2011 £207k no mortgate.

total Rent £61k to date (Dec 2016) no agents fees. Great tenants.

Value if sold £262k (based on next door 1 year ago so likely to be a bit more)

£55k + £61k = £116k pre tax profits.

which I think is
So £207k invested and £116k pre tax profits


So like the OP could the £207 invested done better then £116 pre tax in 6 years and be as safe as well houses.....?

Edited by superlightr on Wednesday 18th January 16:57

Edited by superlightr on Wednesday 18th January 16:57

[Prohibiting]

Bought a BTL in 2010 with very little knowledge other than research online for £93,000. £36k deposit and £57k mortgage + £3k fee's etc.

I decided to put it on the market for sale last year (as I predict a housing crash) and I have a completion date for 27th Jan 2017. Accepted offer for £135,500k. Got a £49k mortgage to pay off and various fee's means I will be left with approx £80,000 in bank.

So £38k turned to £80k in 6 years. I don't understand why people say BTL isn't very good because personally that seem's pretty damn good to me.

[matrignano]

Interesting thread, I'm thinking of a BTL to start investing "proper money" rather than just bits here and there in various ISAs.

What's attractive with BTLs is the leverage effect of the mortgage, however it is a lot more complex, time consuming and costly to manage, and much less tax efficient (stamp duty on purchase, income tax on rent - I'm a higher rate payer, capital gains on sale).

[oldnbold]

superlightr said:

Sounds like your agents could have done better with better tenants. If this was a "poor performing" property in your eyes what will a better one be like

Thanks for sharing your experiences, when I say poor performing I meant in relation to my other properties. Unfortunately this particular property is an ex LA house on a not so great estate. I've had several agent's over the years, the latest one offers me a rental guarantee provided the prospective tenants pass the higher than normal vetting, but this area just seems to attract scum.

I'm glad to see others that have very positive experience and good profit from BTL. I was hoping that some of the talented and successful investors that contribute here would have shown me that if I'd invested in a certain fund/shares/bond's 10 years ago I'd have made more with no hassle and therefore point me in the right direction for a future investment.

[oldnbold]

matrignano said:

Interesting thread, I'm thinking of a BTL to start investing "proper money" rather than just bits here and there in various ISAs.

What's attractive with BTLs is the leverage effect of the mortgage, however it is a lot more complex, time consuming and costly to manage, and much less tax efficient (stamp duty on purchase, income tax on rent - I'm a higher rate payer, capital gains on sale).

You're absolutely right, the leverage effect is a huge advantage, one of the reason's that my example did OK was the mortgage taken out in 2007 reverted to base rate plus 1% when the 2 year fix ended, so the financing cost was very low.

I appreciate that the government's recent changes make it more difficult to make good profit from rental income, especially for a higher rate tax payer. However my belief is that the capital gains still offer a worthwhile return as a medium to long term investment. I know a pal of mine has his BTL in his wife's name as she only works part time and he's a HR tax payer.

[STURBO]

I think that is a great return.

But....Previous performance is not a guarantee of future performance.

It's about buying something at a price which is good value. I think this is getting harder with BTL (Yields are declining, tax system changes etc) , but not impossible. BTL is not a great idea regardless of the purchase price / yield.

If I had a time machine I'd go all out to buy as much as possible in the 90's. But that does not mean house prices are going to double again in the next 10 years.

Buying into a highly leveraged BTL now, which only yields 5% at the current interest rate is a significant gamble. It might pay off but there could be some significant losses if capital values fall, rates rise and the tax regs change again. To think it's a one way bet now is foolhardy.

[drainbrain]

Bought this Feb (7th?) 2008 for £2500


https://www.google.co.uk/maps/@55.8622918,-4.20579...


Brings in £250pcm. Management takes 5%+vat

Current value £20/25k.

[caziques]

Bought 168 acres of forestry around 2002 (in NZ), £70,000.

Just having the trees harvested, which should (fingers crossed) provide a net return (after roading and replanting etc) of over £150,000.

Had to pay rates each year, £3000? total.

Land is probably worth £150,000, and it won't be too many years before we have a few thousand pounds of carbon credits each year. I'll let the children do the next tree harvest.

Exchange rate fluctuations have meant the returns in NZ dollars are not as great.

[oldnbold]

STURBO said:

I think that is a great return.

Buying into a highly leveraged BTL now, which only yields 5% at the current interest rate is a significant gamble. It might pay off but there could be some significant losses if capital values fall, rates rise and the tax regs change again. To think it's a one way bet now is foolhardy.

I absolutely agree, as with any investment some research is required, but in my opinion it is much easier for the average person to research the viability of a BTL than the stock market for example.

The above example took place during a fairly big recession, I purchased in a crappie area and with only a 15% deposit so was highly leveraged. For the first 6 years of ownership I'd have been lucky to even pay off the mortgage if I'd had to sell. Due to pure luck it worked out. I've learned from this and the remainder of my portfolio has been purchased with those lessons in mind.

I'd still like to investigate alternative investments if anyone has any suggestions, otherwise it's either another BTL or more premium bond's.

Edited by oldnbold on Wednesday 18th January 19:04

[drainbrain]

Well you've had 2 i.e. commercial property and forestry.

What about alternative property investment like Dolphin Trust?

[oldnbold]

drainbrain said:

Well you've had 2 i.e. commercial property and forestry.

What about alternative property investment like Dolphin Trust?

Yes, I noted your commercial property, the forestry might just be out of my comfort zone.

[MarshPhantom]

The O/H's parents are into BTL, they suffer with bad tenants because they don't buy houses that people will want to rent out and their frankly bad attitude they show to potential tenants is enough to put decent people off. I certainly wouldn't rent a house from them.

[fridaypassion]

We've had a couple we have bought and sold just flipped one for 10k and about 1 years rental a couple of years ago and the first one we bought in 2008 thats on 54k of capital appreciation and pre tax rental profit.

I'm in two minds at the moment as we have great tenants but could do with the equity back to put into my main business as it can generate better returns than BTL. Unfortunately I got the BTL before I set my business up! Hey ho. It looks like the Government are out to take as much fun out of BTL as possible so we will be selling up as and when my tenants move. If anyone wants a 3 bed terrace bringing in £550 PCM for 100 grand let me know

[gregs1959]

My son has bought a nice 2 bed terrace. All refurbished. £73,000. Getting £500pcm.

[oldnbold]

gregs1959 said:

My son has bought a nice 2 bed terrace. All refurbished. £73,000. Getting £500pcm.

Where abouts is it?

[BoRED S2upid]

Yes OP you could have done better with a few funds that have performed incredibly well over the last 10 years gold would have also performed better IF you were lucky enough to have invested that £13k at its very lowest price but hey if you could have picked any of these you would have earnt a load working as a trader. So maybe you personally couldn't have done better.

It's a great return on a £13k investment which is why so many of us are in BTL.

[gregs1959]

Oldnbald


It's in Fleetwood. Lancashire