Could I have done better.

[HootersGsy]

oldnbold said:

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.

I've just stuck your numbers into a spreadsheet, assumed that 32k net rental income was earned 3.2k every year for the 10 years and that in your final year you received cash back of 41.5k (13k deposit plus your profit) and it shows an IRR of 29.8%. I'd say that was extremely respectable and indeed many fund managers would be envious.

[oldnbold]

HootersGsy said:

I've just stuck your numbers into a spreadsheet, assumed that 32k net rental income was earned 3.2k every year for the 10 years and that in your final year you received cash back of 41.5k (13k deposit plus your profit) and it shows an IRR of 29.8%. I'd say that was extremely respectable and indeed many fund managers would be envious.

Very interesting, perhaps BTL is/was not such a bad investment after all. I doubt however that it would be easy to repeat for someone investing now.

[Pickled]

fridaypassion said:

. If anyone wants a 3 bed terrace bringing in £550 PCM for 100 grand let me know

Whereabouts? My wife's family company are looking to add another property to their portfolio - cash buyers and wouldn't be adverse to sitting tenants

[fridaypassion]

Normanton West Yorkshire

[red_slr]

oldnbold said:

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?

FTSE100 is +16% over the last 10yr so you did well with around twice the return. I think even in a decent medium risk fund 20% over 10 years would be good going.

I guess this is where property can in some cases have 2 slices of cake because you get the rental income plus the increase in property value. If you happen to find a property cheap in a non desirable area then 10-20 years down the line its the new trendy area plus you had the 10-20 years rent then its probably pretty hard to do badly.

[Storer]

The OP has turned his £13k deposit into a £60.5k profit BT

That is over 460% return in 10 years or 46% per annum (without farting about doing compound stuff).

I would suggest that for a relatively LOW RISK that is a damn good return.

Shares would be much higher risk.

[nct001]

I've got a few btls but to give a very very positive example ...

2006 October bought three bed end terrace (Agreed purchase Nov 05 completion owners dragged out whilst market rising)

£212000

£23k deposit

£8k refurb / lived in it 6 month to reduce capital gains

£1k agents fees - self managed last 8 years

Base rate tracker mortgage dropped to 0.87 now on 2.00

£1095 a month rent then £1295 - one tenant 18 months next ever since

2017 Value around £400k (plenty of comparables)


Mortgage now around £110000 - 10 years left on term

I've turned £32k into (nearly) £300k in 10 years.

[oldnbold]

nct001 said:

I've turned £32k into (nearly) £300k in 10 years.

Another great example, my other BTL's would hopefully produce simular results if I sold, however they provide a fairly large chunk of my retirement income and are doing a great job in keeping me in holiday's and Porsche parts at the moment.

Edited by oldnbold on Tuesday 24th January 11:53

[red_slr]

nct001 said:

I've got a few btls but to give a very very positive example ...

2006 October bought three bed end terrace (Agreed purchase Nov 05 completion owners dragged out whilst market rising)

£212000

£23k deposit

£8k refurb / lived in it 6 month to reduce capital gains

£1k agents fees - self managed last 8 years

Base rate tracker mortgage dropped to 0.87 now on 2.00

£1095 a month rent then £1295 - one tenant 18 months next ever since

2017 Value around £400k (plenty of comparables)


Mortgage now around £110000 - 10 years left on term

I've turned £32k into (nearly) £300k in 10 years.

Try getting a 10% BLT mortgage now!

[oldnbold]

red_slr said:

FTSE100 is +16% over the last 10yr so you did well with around twice the return. I think even in a decent medium risk fund 20% over 10 years would be good going.

I guess this is where property can in some cases have 2 slices of cake because you get the rental income plus the increase in property value. If you happen to find a property cheap in a non desirable area then 10-20 years down the line its the new trendy area plus you had the 10-20 years rent then its probably pretty hard to do badly.

That's exactly the kind of information that I was after, thank you. I'm sure someone with a brain the size of a planet, and the inclination and time to study the market could have done better with stocks and shares, but for the average chap I think BTL is/was probably the way to go.

This particular property was in a cheap and undesirable area, it still is. It's not become trendy and desirable, in fact only 18 months ago I'd have been lucky to get what I paid for it. With what I know now I wouldn't have bought it.

Edited by oldnbold on Tuesday 24th January 17:47

[nct001]

red_slr said:

Try getting a 10% BLT mortgage now!

I bought it as first time buyer knowing the rental stacked up. But aware a buy to let mortgage would require it tidied up to justify rental plus btl mortgages can be a pain to organise if limited for time / on limits of rental yield and deposit.

I played the btl game and re mortgaged btl and refurb and market growth more than made it an 85 per cent btl.

I would be amazed if it didn't continue to appreciate in value in a similar way over next 10 years.

Bought another similar property two years ago and as you rightly point out needed 30 per cent deposit and even then it was very tight.

[Derek Chevalier]

Storer said:

I would suggest that for a relatively LOW RISK that is a damn good return.

Shares would be much higher risk.

How are you determining risk, and what type of risk are you referring to? On one hand you have a leveraged non-diversified illiquid asset (that is at its highest valuations based on historical data) and on the other hand you have shares.

[WinstonWolf]

This has got me thinking.

I've got £50k in a managed fund, it's performed well but not as well as it appears BTL does.

I own my own house, mortgage free and I *could* move in with my OH and rent mine out giving me probably £900 per month in rent. I'd then have income to pay a mortgage on a BTL property.

This would be to supplement and eventually replace my IT business.

Is now a good time to get into it based on my circumstances? I've been wanting to do something else to move towards retirement in fifteen years, does anyone have any advice or experience to pass on?

[red_slr]

The lenders will only lend if the actual rental income covers the mortgage plus their stress test. They (generally) wont take rental income as "income" if you are a small landlord.

So long as you earn a good salary and have reasonable income / outgoings and have a good deposit (25%+) to put down then getting a BTL mortgage should not be too difficult.

The main thing is finding a good property, middle of the market to avoid voids for the expensive stuff and clowns in the cheap stuff.

[WinstonWolf]

Thanks, so have enough funds to pay mortgage independently and don't buy too cheap. One midrange property is potentially less trouble than two cheapies?

[Storer]

Derek Chevalier said:

Storer said:

I would suggest that for a relatively LOW RISK that is a damn good return.

Shares would be much higher risk.

How are you determining risk, and what type of risk are you referring to? On one hand you have a leveraged non-diversified illiquid asset (that is at its highest valuations based on historical data) and on the other hand you have shares.

I was referring to the OP's case. I would be the last person to suggest putting all your money into property. In my opinion, property is grossly over valued in the South of England.
The figures achieved by the OP would not be the same all over the UK.
House prices in some parts of the UK (eg. Sheffield) have remained virtually static for the last 10 years! Rents are much lower also. Other investments would have looked much more favourable compared to houses in that area.

Shares are much more volatile. BT share price is a good example. Deciding what type of shares your portfolio should contain is the difficult decision.

[Pickled]

fridaypassion said:

Normanton West Yorkshire

Cheers - bit too far north for them.

[WindyCommon]

red_slr said:

FTSE100 is +16% over the last 10yr so you did well with around twice the return.

This isn't right I'm afraid. FTSE100 is a capital only index. The total return version (ie including divs) is +61% over the same period.

[Derek Chevalier]

Storer said:

Derek Chevalier said:

Storer said:

I would suggest that for a relatively LOW RISK that is a damn good return.

Shares would be much higher risk.

How are you determining risk, and what type of risk are you referring to? On one hand you have a leveraged non-diversified illiquid asset (that is at its highest valuations based on historical data) and on the other hand you have shares.

I was referring to the OP's case. I would be the last person to suggest putting all your money into property. In my opinion, property is grossly over valued in the South of England.
The figures achieved by the OP would not be the same all over the UK.
House prices in some parts of the UK (eg. Sheffield) have remained virtually static for the last 10 years! Rents are much lower also. Other investments would have looked much more favourable compared to houses in that area.

Shares are much more volatile. BT share price is a good example. Deciding what type of shares your portfolio should contain is the difficult decision.

Regarding share volatility - that was my point about diversification - FTSE 100 is pretty flat on the week - one share having a bad day shouldn't have too much of an impact on a properly diversified portfolio.

[Hugo a Gogo]

drainbrain said:

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.

My granny lived a couple of hundred yards from there