Alternative to BTL. I've had enough

Alternative to BTL. I've had enough

Author
Discussion

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
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Morning all,

I'm sure this has been asked before for various reasons but what other investments are there that give >7% return?

A bit of background information on my situation:-
I've been a landlord for 15 years starting when I was 26, over that time I've saved up deposits and bought when I could afford another property, I now have 4 houses and a shop which includes a separate flat.

For the most part I've been happy, always had a good professional relationship with tenants and prided myself with the fact that I carry out repairs that are reported within a few days were possible.

Financially, due in part to the low interest rates they've gave a great ROI, the average LTV is around 50% and all are on repayment. It's long term plan for the future.

Now the reason for the question.
Of late I seem to be dealing with more and more tenants who just want to play the system, not with rent arrears but just in general. Staying for 2 years leaving a fully refurbished house looking extremely tired then claiming normal wear and tear when deposit time comes etc.

The final straw was returning from holiday last night to find a letter from the council informing me that they've received a complaint from a tenant that parts of the flat were in disrepair, it's a lovely flay and far from in disrepair.

I've never received a complain from the tenants and when we last spoke 2 months ago whilst I was fitting new carpets for them (at my expense) everything was fine and they were grateful for the new carpets.

I spoke to them last night and they said they'd made the complaint as a way of getting further up the waiting list for a council house, oh deep joy.

They would be all paid off by the time I'm 52 and if I'm honest I was looking forward to enjoying the benefits that would bring but I don't know if I can be arsed with this for another 11 years, life's to short as they say.

So back to the original question and apologies for the long post but what are the thoughts of PH, surely there's a better alternative but I just can't think what it is?

Thanks in advance,
Darran

greygoose

8,225 posts

194 months

Sunday 28th August 2016
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Shell shares yield about that at the moment, whether that can continue with current oil prices is debatable.

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
greygoose said:
Shell shares yield about that at the moment, whether that can continue with current oil prices is debatable.
There's a few that pay good dividends at the moment isn't there and it's something I'm giving serious thought too.
My problem is if I cash in now that's it just div reinvestment and any share growth / loss.

With BTL due to the 50% leverage and low interest rate's it's still a great overall ROI and I know that in 11 years I'll have X and roughly X per month
Ultimately someones paying my mortgage off for me.

Also I have a few shares and worried about sticking all my eggs in the same basket.

Thanks for the reply
Darran

DSLiverpool

14,671 posts

201 months

Sunday 28th August 2016
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Darranu said:
Now the reason for the question.
Of late I seem to be dealing with more and more tenants who just want to play the system, not with rent arrears but just in general.
Your a good man and people are doing to you what you wouldn't dream of doing to others, you have a great plan for being 52 less so for being 41 ! as such stretch the end game a few years and get them fully managed - have no contact with your tenants at. Possibly keep one house back to managed yourself if you want to keep your hand in.

thebraketester

14,192 posts

137 months

Sunday 28th August 2016
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Do you rent them out privately or through and agent?

An agent might be a good idea as they deal with all the bulllst. Ok, it's gonna dent your initial return but should free you uo from the faff

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
DSLiverpool said:
Darranu said:
Now the reason for the question.
Of late I seem to be dealing with more and more tenants who just want to play the system, not with rent arrears but just in general.
Your a good man and people are doing to you what you wouldn't dream of doing to others, you have a great plan for being 52 less so for being 41 ! as such stretch the end game a few years and get them fully managed - have no contact with your tenants at. Possibly keep one house back to managed yourself if you want to keep your hand in.
Thank you,
That's not a bad idea actually, I sort of feel like they've won if I sell up.

I've always looked at agents as been a layer of people between me and the tenant that can cause things not to get actioned as quickly as I'd like, be that chasing rent or facilitating repairs.
It could be that that's exactly what I need as it would insulate me from it all slightly and if things aren't quite as efficient then so be it.

Cheers,
Darran

AMDBSTony

1,074 posts

166 months

Sunday 28th August 2016
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Darranu said:
DSLiverpool said:
Darranu said:
Now the reason for the question.
Of late I seem to be dealing with more and more tenants who just want to play the system, not with rent arrears but just in general.
Your a good man and people are doing to you what you wouldn't dream of doing to others, you have a great plan for being 52 less so for being 41 ! as such stretch the end game a few years and get them fully managed - have no contact with your tenants at. Possibly keep one house back to managed yourself if you want to keep your hand in.
Thank you,
That's not a bad idea actually, I sort of feel like they've won if I sell up.

I've always looked at agents as been a layer of people between me and the tenant that can cause things not to get actioned as quickly as I'd like, be that chasing rent or facilitating repairs.
It could be that that's exactly what I need as it would insulate me from it all slightly and if things aren't quite as efficient then so be it.

Cheers,
Darran
Hi Darran

I dont bother with managing my domestics, too much hassle. I have a great Agent who takes 8% which is reasonable. I deal with the Commerial offices myself as they are easier.

There has been much talk on these forums of risk with BTL, no doubt the experts will be along in a short while to put everyone straight, but i find that property is an excellent investment and has certainly served me very well.

There may be a few cheap properties in the near furure as the tax rules change regarding offsetting interest against income received, will be ready to buy a few more when this happens.

Best of luck though - its hard taking risk to secure your own future.

Whatever you do, beware of those that purport to know more than you regarding your money. Loads of them about but as its not their money they dont seem to grasp what risk really is, ie letting others play with your hard earned!! They will probably be swarming to educate me after this post biglaugh







sidicks

25,218 posts

220 months

Sunday 28th August 2016
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AMDBSTony said:
Hi Darran

I dont bother with managing my domestics, too much hassle. I have a great Agent who takes 8% which is reasonable. I deal with the Commerial offices myself as they are easier.

There has been much talk on these forums of risk with BTL, no doubt the experts will be along in a short while to put everyone straight, but i find that property is an excellent investment and has certainly served me very well.
The OP's comment are a prime example of the risks involved in BTL, particular where the desire is for income rather than overall return.

That does men that properties cannot be an excellent investment - indeed many of us have highlighted the ability to leverage as precisely why property can be an attractive long term investment.

AMDBSTony said:
There may be a few cheap properties in the near furure as the tax rules change regarding offsetting interest against income received, will be ready to buy a few more when this happens.

Best of luck though - its hard taking risk to secure your own future.
Agreed - that's why it's important to understand what risks are involved in any investment, and where these can be mitigated!

AMDBSTony said:
Whatever you do, beware of those that purport to know more than you regarding your money. Loads of them about but as its not their money they dont seem to grasp what risk really is, ie letting others play with your hard earned!! They will probably be swarming to educate me after this post :
Plenty of different types of investment risk - pretending risks don't exist doesn't help the OP.

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
Thanks Tony, good advice indeed.

AMDBSTony

1,074 posts

166 months

Sunday 28th August 2016
quotequote all
sidicks said:
AMDBSTony said:
Hi Darran

I dont bother with managing my domestics, too much hassle. I have a great Agent who takes 8% which is reasonable. I deal with the Commerial offices myself as they are easier.

There has been much talk on these forums of risk with BTL, no doubt the experts will be along in a short while to put everyone straight, but i find that property is an excellent investment and has certainly served me very well.
The OP's comment are a prime example of the risks involved in BTL, particular where the desire is for income rather than overall return.

That does men that properties cannot be an excellent investment - indeed many of us have highlighted the ability to leverage as precisely why property can be an attractive long term investment.

AMDBSTony said:
There may be a few cheap properties in the near furure as the tax rules change regarding offsetting interest against income received, will be ready to buy a few more when this happens.

Best of luck though - its hard taking risk to secure your own future.
Agreed - that's why it's important to understand what risks are involved in any investment, and where these can be mitigated!

AMDBSTony said:
Whatever you do, beware of those that purport to know more than you regarding your money. Loads of them about but as its not their money they dont seem to grasp what risk really is, ie letting others play with your hard earned!! They will probably be swarming to educate me after this post :
Plenty of different types of investment risk - pretending risks don't exist doesn't help the OP.
Just where do you get off?

You seem to get your jollies from disecting every post as everyone is wrong and then inserting bold text all over the place putting everyone straight. Its quite rude you know.

sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
AMDBSTony said:
You seem to get your jollies from disecting every post as everyone is wrong and then inserting bold text all over the place putting everyone straight. Its quite rude you know.
rofl

Remind where I've said that everything is wrong? I've just pointed out that understanding the risks (not pretending they don't exist) is important. It's your perogative to disagree if you think otherwise.

I've highlighted one word - income - because it's very important to distinguish managing a property portfolio for long term growth / returns rather than for income.

Finally, given that your previous post contained two snide comments about 'experts' etc, you might like to look closer to home about rudeness when posting!

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
sidicks said:
The OP's comment are a prime example of the risks involved in BTL, particular where the desire is for income rather than overall return
Just to clarify I don't desire income from my investment at present, that's why there all on repayment.
Any profit left over get's invested in shares each year as a way of spreading the risk.
I live solely from my income from my day job, BTL is just a plan B if my pension doesn't turn out to be as good as forecast.

Regards,
Darran

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
thebraketester said:
Do you rent them out privately or through and agent?

An agent might be a good idea as they deal with all the bulllst. Ok, it's gonna dent your initial return but should free you uo from the faff
Hi,

I manage them and carry out all the repair myself with the exception of gas, all boilers are on a British Gas maintenance contract which allows the tenant to call them direct with any issue's.

I've always avoided agents as we all know that any repairs incur their cut on top, as I do the repairs myself it seems like I'd be paying the 8% + vat and the end result would be the same, me popping down to fix.

If I wasn't so handy this wouldn't be an issue but I really don't like the idea of an agent charging me x plus their cut to fix a blocked drain for example when I know I could just do it myself instead.

That said I think it's the maintenance that's starting to drag me down a bit so maybe worth thinking about just stepping back a little.


sidicks

25,218 posts

220 months

Sunday 28th August 2016
quotequote all
Darranu said:
Just to clarify I don't desire income from my investment at present, that's why there all on repayment.
Any profit left over get's invested in shares each year as a way of spreading the risk.
I live solely from my income from my day job, BTL is just a plan B if my pension doesn't turn out to be as good as forecast.

Regards,
Darran
Understood - the reference to income was for a similar BTL thread yesterday where the OP was focused on income, very low risk and easy access to cash at short notice, which made 100% BTL inappropriate.

In your circumstances BTL is likely to provide attractive long term returns and will be a good diversified away from other investment exposures you have elsewhere.

My advice therefore is to mitigate the risks you highlighted in your original post by using an agent to take all of the administrative hassle away from you!

Isn't there a way you can get an agent to take away most of the admin with the tenants, which still allowing you to get involved in the maintenance (if you chose to do so), thus saving you money?

Edited by sidicks on Sunday 28th August 10:00

pchmlk

247 posts

91 months

Sunday 28th August 2016
quotequote all
Darranu said:
I've always avoided agents as we all know that any repairs incur their cut on top
The flipside is that, IME, you have a ready source of tried and tested contractors who know not to take the piss on price. I would always use an agent - for lack of hassle and for their contacts.

Hoofy

76,253 posts

281 months

Sunday 28th August 2016
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Anyone had problems with agents? My uncle was renting and using an agent until the tenants stopped paying and then the agent just basically said, it's all yours, we're washing our hands of this, here's the contact info for a lawyer we recommend (we probably take commission for this, too).

The tenants trashed my uncle's home and I think they've been ordered to pay back £1 a week for the next 40 years. This was about 5 years ago and I don't think they've seen a penny back.

Jockman

17,912 posts

159 months

Sunday 28th August 2016
quotequote all
You have a conventional pension and a commercial shop. Any thoughts on combining the two?

I appreciate this will increase your exposure to property for a short period but it may allow you to take advantage of a possible dip in values at an opportune time.

Steelnads

171 posts

272 months

Sunday 28th August 2016
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I am now 50 and have been a professional property dealer and landlord for 27 years. Over the last few years I have been selling up. It is completely different to even 10 years ago.... much higher risk of non paying tennants and too much choice on my patch. A particular house that I sold recently (first viewing full asking price) would always be let immediately and the tennants would stay 4 or 5 years plus... showed 40 plus people over 8 months and all were unacceptable. The house was immaculate with new carpets etc. In my view you now get crap returns and the good years of BTL are long gone for me.... still got a few left but these will be dumped if I get a wiff of agro from them.

anonymous-user

53 months

Sunday 28th August 2016
quotequote all
Darranu said:
The final straw was returning from holiday last night to find a letter from the council informing me that they've received a complaint from a tenant that parts of the flat were in disrepair, it's a lovely flay and far from in disrepair.

I've never received a complain from the tenants and when we last spoke 2 months ago whilst I was fitting new carpets for them (at my expense) everything was fine and they were grateful for the new carpets.

I spoke to them last night and they said they'd made the complaint as a way of getting further up the waiting list for a council house, oh deep joy.
If there was a named individual on the letter from the council i would be letting them know of your conversation with the tenant and their reasons for doing so whilst inviting them to view the property if possible to verify the non issue.
Whilst at the same time be looking for the next tenant as soon as you can get rid of the present asswipe.

Darranu

Original Poster:

338 posts

219 months

Sunday 28th August 2016
quotequote all
Jockman said:
You have a conventional pension and a commercial shop. Any thoughts on combining the two?

I appreciate this will increase your exposure to property for a short period but it may allow you to take advantage of a possible dip in values at an opportune time.
Hi,
I really don't know anything about pensions which isn't ideal.
I'm fortunate as I have 3 pensions, BAE, Bombardier and Railway and all of them are final salary so I'm not sure if they're that flexible.

I'm sure there's more tax efficient ways of owning the shop though as you say.

Thanks
D