Buy to Let - What to consider?

[BoRED S2upid]

If your in fr the long haul can't you put property into a SIPS Pension pot now? Im sure my Financial Adviser mate said something about that.

[stabbed rat]

BoRED S2upid said:

stabbed rat said:

OP - I am in a similar position to what you are looking to be in. I have a 2 bed 2 bath flat that I own outright with a yield of about 5%

I get £450 a month (£50 of which goes to the letting agent) so I walk away with £400 a month for doing nothing. I haven't had any problems so far with regards to damage, however my brother who bought at the same time has recently had a small issue. It was all paid for out of the deposit from the tenants and his property has been re-let.

So far we have had good experiences and will be looking to buy again in the future, possibly borrowing but keeping gearing extremely low.

You mean £400 - tax obviously not £400 in your back pocket.

Firstly, why would it matter if I meant pre-tax or not? at the end of the day I get £400 in per month from the property, tax would then get paid when I hand in my tax return at a later date. Every bodys tax circumstances are different so I might as well just say what it brings in and not mention what tax goes on top of that.

and secondly, No, I mean what I said, I get £400 per month. I won't go into details on here but I am under the personal allowance and therefore get to keep my £400 per month.

ETA - Nice mini, what engine are you putting in it?

Edited by stabbed rat on Tuesday 24th May 21:17

[jonnydm]

groak said:

jonnydm said:

Just had a look at those two as they'd previously been off my radar (look at Ground Rents for work and houses in SE/SW personally) but those are some impressive potential yields there.

What worries me is that they are far away to get to regularly to sort things out and that finding tenants could take a while. Whats the market like for these? Any idea what they'll go for?

I'm tempted to make some calls though!

The 5 bed in Langside Rd Govanhill can either be developed into an HMO (very lucrative if done right. £1000+pcm)or ( a lot easier and thus arguably better) a 1 x large DSS family flat. Properly occupied, you'd be looking at +/- £650 pcm. The 2 bed in Airdrie looks like £450pcm. Personally, I think you may be surprised to see how cheaply they go for. quite possibly lower end of valuation. If so, there's a quick capital gain to be made by flipping them into the next Glasgow auction.

Just having another look at those two, the Airdrie one specifically; any idea what the market there is like, what sorts of tenants will be there etc? Also any other quirks of the Scottish market?

[scotal]

BoRED S2upid said:

If your in fr the long haul can't you put property into a SIPS Pension pot now? Im sure my Financial Adviser mate said something about that.

I doubt he mentioned SIPPS and residential property.
You can't put BTL into a SIPP. You can put commercial property into a SIPP.

Some claim you can get away with putting mixed use into a SIPP as well, but I have a feeling that at some point that could get really messy.

[BoRED S2upid]

stabbed rat said:

Firstly, why would it matter if I meant pre-tax or not? at the end of the day I get £400 in per month from the property, tax would then get paid when I hand in my tax return at a later date. Every bodys tax circumstances are different so I might as well just say what it brings in and not mention what tax goes on top of that.

and secondly, No, I mean what I said, I get £400 per month. I won't go into details on here but I am under the personal allowance and therefore get to keep my £400 per month.

ETA - Nice mini, what engine are you putting in it?

Edited by stabbed rat on Tuesday 24th May 21:17

Ive had friends rent out property in the past and not pay the tax man so just used your post to point out to the OP not to take the risk.

The Mini has a 1.6 Turbo lump.

[stabbed rat]

BoRED S2upid said:

stabbed rat said:

Firstly, why would it matter if I meant pre-tax or not? at the end of the day I get £400 in per month from the property, tax would then get paid when I hand in my tax return at a later date. Every bodys tax circumstances are different so I might as well just say what it brings in and not mention what tax goes on top of that.

and secondly, No, I mean what I said, I get £400 per month. I won't go into details on here but I am under the personal allowance and therefore get to keep my £400 per month.

ETA - Nice mini, what engine are you putting in it?

Edited by stabbed rat on Tuesday 24th May 21:17

Ive had friends rent out property in the past and not pay the tax man so just used your post to point out to the OP not to take the risk.

The Mini has a 1.6 Turbo lump.

Fair enough

Mini sounds fun

[jonnydm]

groak said:

jonnydm said:

Theres a big auction taking place later on this week - Allsop on the 26th - I might be going along there as auctions can be a good place to buy.

There are two in Scotland - one in Glasgow and one in Airdrie - which would be really very good bargains indeed if bought at the guide prices. The one in Kilmarnock seems very good too, but I don't know that area as well as the other two.

Ultimately, from what I can tell strong money on those two; £68k in Glasgow and £39k in Airdrie. Not bad returns to be made, still well in excess of 10% but far from the bottom of the guide prices. Likewise the modern 2 bed in Nuneaton that had a low guide at £25k ended up going for £51k; again potentially more than 10% to be had there still. The surprise so far for me has been a 3 bed semi near Heaton Park in Prestwich, Manc. Currently bringing in £7200 pa and it went for £55k. Assuming nothing nasty happens to the market over the next few months, with a little polish that house is easily £130k next summer.

[groak]

jonnydm said:

Ultimately, from what I can tell strong money on those two; £68k in Glasgow and £39k in Airdrie. .....

The Glasgow one would almost certainly be a disgusting sheethole and these days £68k is just about on the mainstream market money. So is £39k for the Airdrie one, even tho' it's a newbuild and couldn't be built for £39k. So you're right. Strong money indeed. And a good indication of how much of a waste of time auctions can be. Mind you, often the Scottish stuff at English auctions gets little or no interest so sells very cheap.

[influential]

I've got a few BTLs in the UK plus a few more overseas, but haven't bought anything in the last 3 years. Time to get involved again now, but don't fancy the UK market as US yields are currently much more attractive, albeit you can't get borrowing (very easily) there. So, pros and cons. Agree with another poster on picking up small houses rather than similarly prices flat - oversupply is still a problem on the latter, but they do rent well.

As for the point above re: boilers taking our your annual profit, I always take the British Gas insurance policies in the UK. Work nicely for BTLs, are pretty cheap, and cover everything you'd want. I've claimed a number of times (Note to everybody - don't buy a Fairview property!) without hassle.

Just buying this very week in Florida, foreclosures, directly from the court. Looks like gross yield should be 14-15% on the one I've gone for. Took plenty of trips out there to get the process working, but as I plan to buy a few more, it should end up being somewhat profitable.

[Mr POD]

okay, I've been carrying out some serious research.



Heart says buy this :
http://www.rightmove.co.uk/property-for-sale/prope...
1/4 mile from university,
1/2 mile from city centre

3 x 2 bed flats in Georgian Town House. Area looks a bit rough but it's not Toxteth (almost but not quite)

Mininum Student rents are minimum of £60 a week per person, and over 10 months this is £15600 turnover

None student rents would be approx the same at £500 to £600 per flat a month.

Potentially this would give £6000to£8000 profit a year. (of which I'd get 51%)

Not entirely sure what: in need of some refurbishment and upgrading. actually means but worst case £30k ?


We'd need £35K deposit plus say 10K per flat. Plus Costs to buy of £5K ? solicitors etc ?

Or convert it back to a house for 7 or 8 students. - Only need one kitchen then and 2 bathrooms Instead of 3 ?


So basically NEED £70K ? Giving a return of about 8% on the investment? 2 times what you'd see in the Best ISA.

We've got enough to start the project and keep a controlling 51% share, and we know at least 4 family investors, who given the right business plan, would take a long term investment view.



We wouldn't do much of the work (We want it to be right LOL) instead project managing electrician, plumber/gas fitter, decorator, and carpet fitter. Given that they'd have 3 flats to do, all identical we'd buy in bulk.

Anyway. I digress. What do you reckon. It's mad, but exactly the scheme I think we could pull off.

I'm really excited but at the same time trying to be very realistic.

So

However the 2 below are probabally the sort of thing I should really go for

http://www.rightmove.co.uk/property-for-sale/prope...

http://www.rightmove.co.uk/property-for-sale/prope...

Because It would be so much less complicated, I'd only need to invest £20K, and I'd see about £4000 profit a year. So actually I'd be better off for a lower investment and less stress.

Typical rents :

http://www.rightmove.co.uk/property-to-rent/map.ht...

[Bebee]

If Jag/Tata build engines in Telford, jobs will be created, homes will be needed, plenty for sale at the mo.

[NoelWatson]

olly22n said:

3/4% pa in my pocket.

If base rates go back up to 5%+, I don't understand how the model would work. The BTL model in most cases (excluding Groakworld), seems to rely on capital appreciation - unfortunately we had a few decades worth of that in the last decade. Without that, I can't see how it works.

[stabbed rat]

NoelWatson said:

olly22n said:

3/4% pa in my pocket.

If base rates go back up to 5%+, I don't understand how the model would work. The BTL model in most cases (excluding Groakworld), seems to rely on capital appreciation - unfortunately we had a few decades worth of that in the last decade. Without that, I can't see how it works.

I think he was planning on little to no borrowing, leaving him with 3-4% of the whole amount and if he borrows it would only be X% of the amount borrowed being charged interest, so it shouldn't drop him in the proverbial. Based on this he probably could rely on capital appreciation, couldn't he?

[NoelWatson]

stabbed rat said:

NoelWatson said:

olly22n said:

3/4% pa in my pocket.

If base rates go back up to 5%+, I don't understand how the model would work. The BTL model in most cases (excluding Groakworld), seems to rely on capital appreciation - unfortunately we had a few decades worth of that in the last decade. Without that, I can't see how it works.

I think he was planning on little to no borrowing, leaving him with 3-4% of the whole amount and if he borrows it would only be X% of the amount borrowed being charged interest, so it shouldn't drop him in the proverbial. Based on this he probably could rely on capital appreciation, couldn't he?

Point is that at some point you will be able to get more than that risk free (and I don't think you are far from that if you are prepared to tie your money up). Capital appreciation - I think we have an "interesting" decade ahead of us!

[NoelWatson]

olly22n said:

Thanks noel, in your opinion, given a sum that would get say 4-5 groak like properties, would you buy the properties or invest the cash elsewhere? If elsewhere, what specifically?

I would pop up to Glasgae, find Groak on/under the nearest park bench, take him for lunch (careful you don't pick up drinks tab), get him to take you on a tour of areas/properties, and see if his model is right for you.

[NoelWatson]

olly22n said:

Sorry noel, I meant if not property what else would you consider investing in?

Depends how entrepreneurial you are and what your attitude to risk is. Also, how much time you have.

[jonny70]

jonnydm said:

The surprise so far for me has been a 3 bed semi near Heaton Park in Prestwich, Manc. Currently bringing in £7200 pa and it went for £55k. Assuming nothing nasty happens to the market over the next few months, with a little polish that house is easily £130k next summer.

link please?

or can you post more information ,please?

[jamescodriver]

http://www.auction.co.uk/residential/LotDetails.as...

you may have to log in to that, but its sold at the last allsops auction.

[groak]

NoelWatson said:

olly22n said:

Thanks noel, in your opinion, given a sum that would get say 4-5 groak like properties, would you buy the properties or invest the cash elsewhere? If elsewhere, what specifically?

I would pop up to Glasgae, find Groak on/under the nearest park bench, take him for lunch (careful you don't pick up drinks tab), get him to take you on a tour of areas/properties, and see if his model is right for you.

More than welcome! Later on, once we've toured the slums, you can come to church. We're always looking for a sacrifice.

[jamescodriver]

Mr POD said:

okay, I've been carrying out some serious research.

stuff

The property next door was sold in 2009 having been on the market for 560 days (13/12/2007 - 24/06/09)...It was three flats, there was a condition on it though that it had to be turned back to a single dwelling...It was marketed at £170k