So who makes a living from property?

So who makes a living from property?

Author
Discussion

TheLordJohn

Original Poster:

5,746 posts

145 months

Tuesday 21st February 2017
quotequote all
Hi all.

Not looking for 'employees' as such but people who have self employed/employer experience in all things to do with property?
I am 28, own 2 houses which are both let out. I want to take this big, as big as I can.
I have a half decent amount of equity in one house, and the other has a bit in it, too.
I read, a lot, and I reckon from practical experience I am at about 5% on the knowledge scale in this game. Maybe 15% including the theory side of it.
My main question is how did you learn what to do? When and where to do it?

Naysayers need not reply.

Thanks, Stuart.

kiethton

13,883 posts

179 months

Tuesday 21st February 2017
quotequote all
I hate to say it but given the recent changes and state of the market your currently in the wrong half of the property market.

The driver for the majority of success for any property company is timing, no point in piling in or selling out at the wrong time.

Unless your equity rich (or set-up via a corporate vehicle , and even then) now is not the time for residential....that boat has gone given stamp, interest deduct-ability etc. Hell even most of the commercial markets are in a post brexit no-go sit on hands at a low yield mode, with what's available being far too rich to add anything meaningful to.

Why build up a big portfolio when all that really matters is gross/net operating margins, which with a smaller numerator will result in a far worse return after all deductions vs. just parking it in a listed german resi stock giving a decent 4.5%+ dividend.

mdianuk

2,890 posts

170 months

Tuesday 21st February 2017
quotequote all
So where is the money in property right now? I assume stamp duty doesn't apply to those that already owned two or more properties, or does it? Is there money in bespoke, small scale home building?

KevinCamaroSS

11,555 posts

279 months

Tuesday 21st February 2017
quotequote all
Stamp duty is on purchase only. An extra 3% if it is not your main dwelling.

Yipper

5,964 posts

89 months

Tuesday 21st February 2017
quotequote all
Costs are very high. Most BTLs are vanity purchases. Only semi-certain way to make good money on UK residential property today is multi-occupancy flats or houses. Take a 3-bed house, convert it to 5-bed, cram 5-10 people inside, and you might make 5% net yield if you're lucky.

mike74

3,687 posts

131 months

Tuesday 21st February 2017
quotequote all
You've definitely missed the boat... S24, Basel 3, tax changes etc etc

There are far easier ways of getting the same or better returns than BTL.

Edited by mike74 on Tuesday 21st February 17:27

TheLordJohn

Original Poster:

5,746 posts

145 months

Tuesday 21st February 2017
quotequote all
mike74 said:
There are far easier ways of getting the same or better returns than BTL.

Edited by mike74 on Tuesday 21st February 17:27
Indulge me...

PS - if the ship has sailed, why are people still building houses to let or sell.


Edited by TheLordJohn on Tuesday 21st February 17:53

mdianuk

2,890 posts

170 months

Tuesday 21st February 2017
quotequote all
mike74 said:
There are far easier ways of getting the same or better returns than BTL.
Pray tell what these may be?

Terminator X

14,922 posts

203 months

Tuesday 21st February 2017
quotequote all
TheLordJohn said:
mike74 said:
There are far easier ways of getting the same or better returns than BTL.

Edited by mike74 on Tuesday 21st February 17:27
Indulge me...

PS - if the ship has sailed, why are people still building houses to let or sell.


Edited by TheLordJohn on Tuesday 21st February 17:53
Because very roughly if you can sell a house for £100 it only costs £33 for the land and £33 to build it. The other 33% is profit.

TX.

PS Yes I realise it only adds up to 99% wink

kiethton

13,883 posts

179 months

Tuesday 21st February 2017
quotequote all
TheLordJohn said:
Indulge me...

PS - if the ship has sailed, why are people still building houses to let or sell.


Edited by TheLordJohn on Tuesday 21st February 17:53
Because they've bought the land to develop in either a scale not possible for your average investor or historically when prices were depressed. For smaller developers it's all about the people you know and greasing the right palms or taking a significant risk (planning/legal/market) which may or may not pay off.

Volume housebuilders have also got their own tradesmen/lead contractors so construction costs are fractions of what you'd be able to get, smaller builders also have trusted, longstanding relationships with the trade.

It's not an impossible market to crack but would take either ££ (multiple millions) to do anything meaningful or to know the correct people.

Separate to this there are also very, very real market concerns re. Transaction volumes (how can you get out at the end or will you rent?) but also the current stretched sale values making yields awful if your forced to hold.

LaurasOtherHalf

21,429 posts

195 months

Tuesday 21st February 2017
quotequote all
Shock Horror, there is a property market outside London and you may be able to make a living from it wink

Second time buyers are my target market, couples in their late 20s/30's who may already own one or possibly two properties but want to move up the ladder. As per usual with this demographic they want everything now and on the tick.

I've identified an aspirational area in my home town where they want to buy where crucially there are a number of positive factors;

1 Houses available that require total refurb for circa £100-£150k
2 Houses that can be retailed at circa £200-£250k once refurb'd
3 Enough local infrastructure to provide employment where a £250k house is affordable

The market just don't want the hassle of doing up their house so we fully refurb the house to a high standard which still allows a margin.

Good base knowledge is key, I used to be in the building trade so I can within an hour or so have a back of a fag packet calculation on what the spend is going to be on a property. I taught myself (very) basic design skills so I can provide drawings for the development.

Even with all this finance is still an important factor, being able to offer a cash sale to be able to purchase below retail values.

TL;DR
take your money and move north, if you can roll over two properties a year a net £60k+ is easily achievable

surveyor

17,768 posts

183 months

Tuesday 21st February 2017
quotequote all
Am / Have been a Chartered Surveyor for over ten years... Probably not what the OP meant though....

I had a few years experience, did a degree, and two years professional work experience, submitted a report, and attended an interview to get that status...

TheLordJohn

Original Poster:

5,746 posts

145 months

Tuesday 21st February 2017
quotequote all
LaurasOtherHalf said:
Shock Horror, there is a property market outside London and you may be able to make a living from it wink

Second time buyers are my target market, couples in their late 20s/30's who may already own one or possibly two properties but want to move up the ladder. As per usual with this demographic they want everything now and on the tick.

I've identified an aspirational area in my home town where they want to buy where crucially there are a number of positive factors;

1 Houses available that require total refurb for circa £100-£150k
2 Houses that can be retailed at circa £200-£250k once refurb'd
3 Enough local infrastructure to provide employment where a £250k house is affordable

The market just don't want the hassle of doing up their house so we fully refurb the house to a high standard which still allows a margin.

Good base knowledge is key, I used to be in the building trade so I can within an hour or so have a back of a fag packet calculation on what the spend is going to be on a property. I taught myself (very) basic design skills so I can provide drawings for the development.

Even with all this finance is still an important factor, being able to offer a cash sale to be able to purchase below retail values.

TL;DR
take your money and move north, if you can roll over two properties a year a net £60k+ is easily achievable
Thanks for replies, gents.
I'm from Carlisle anyway, so I'm far from blinkered that the only place to make money is down south.
There's a nice little place out the back of Banners for sale at the minute, been up a while. Going to view it end of this month.

You've hit the nail on the head. So many of Joe Public would rather have £50k higher mortgage for £20k's worth of work done already.

drainbrain

5,637 posts

110 months

Tuesday 21st February 2017
quotequote all
mdianuk said:
mike74 said:
There are far easier ways of getting the same or better returns than BTL.
Pray tell what these may be?
Can you pass it on to me too, because I'm sick of just buying more property with the surplus profit from the portfolio.

TheLordJohn

Original Poster:

5,746 posts

145 months

Tuesday 21st February 2017
quotequote all
drainbrain said:
Can you pass it on to me too, because I'm sick of just buying more property with the surplus profit from the portfolio.
Was hoping you'd show your face at some point...
You've taken the time to send me a very comprehensive email reply a good few months ago, so thanks for that.

drainbrain

5,637 posts

110 months

Tuesday 21st February 2017
quotequote all
TheLordJohn said:
Was hoping you'd show your face at some point...
You've taken the time to send me a very comprehensive email reply a good few months ago, so thanks for that.
You're very welcome.

Unfortunately the thing that made more for me from property than anything else no longer exists. A corporate bank manager who wanted to do business, and had the autonomy to be able to do it.

They don't exist any more. And any that do have been castrated.

Here's my latest, by the way. Take it over on March 7th. Middle flat on right as you look at the building. Pic's a few years old. All the scaffolding and building stuff have long gone and the street's really quite nice now.

https://www.google.co.uk/maps/place/12+Dunphail+Dr...

Buy in at £35k inc costs. 2 bed with long term DSS tenant in place. LHA rate currently £116.53 per week.


Edited by drainbrain on Tuesday 21st February 22:57

BoRED S2upid

19,644 posts

239 months

Wednesday 22nd February 2017
quotequote all
drainbrain said:
You're very welcome.

Unfortunately the thing that made more for me from property than anything else no longer exists. A corporate bank manager who wanted to do business, and had the autonomy to be able to do it.

They don't exist any more. And any that do have been castrated.

Here's my latest, by the way. Take it over on March 7th. Middle flat on right as you look at the building. Pic's a few years old. All the scaffolding and building stuff have long gone and the street's really quite nice now.

https://www.google.co.uk/maps/place/12+Dunphail+Dr...

Buy in at £35k inc costs. 2 bed with long term DSS tenant in place. LHA rate currently £116.53 per week.


Edited by drainbrain on Tuesday 21st February 22:57
That's a decent return brings back memories of the good old times when I had a 5 bed student terrace bought for less than £50k.

The properties are still out there, very good returns can still be made you just need the appetite for it.

Ignore those that say you can't make more than 5% they have the wrong properties in the wrong locations.

Good luck OP. Liverpool is a good city with loads of solid terrace houses to choose from.

kiethton

13,883 posts

179 months

Wednesday 22nd February 2017
quotequote all
I've not said that you can't make more than 5%, just that returns over 5% on a risk adjusted basis (CAPM) are very difficult to come by....be it tenancy risk, obsolescence, R&M obligations etc.

LaurasOtherHalf

21,429 posts

195 months

Wednesday 22nd February 2017
quotequote all
TheLordJohn said:
LaurasOtherHalf said:
Shock Horror, there is a property market outside London and you may be able to make a living from it wink

Second time buyers are my target market, couples in their late 20s/30's who may already own one or possibly two properties but want to move up the ladder. As per usual with this demographic they want everything now and on the tick.

I've identified an aspirational area in my home town where they want to buy where crucially there are a number of positive factors;

1 Houses available that require total refurb for circa £100-£150k
2 Houses that can be retailed at circa £200-£250k once refurb'd
3 Enough local infrastructure to provide employment where a £250k house is affordable

The market just don't want the hassle of doing up their house so we fully refurb the house to a high standard which still allows a margin.

Good base knowledge is key, I used to be in the building trade so I can within an hour or so have a back of a fag packet calculation on what the spend is going to be on a property. I taught myself (very) basic design skills so I can provide drawings for the development.

Even with all this finance is still an important factor, being able to offer a cash sale to be able to purchase below retail values.

TL;DR
take your money and move north, if you can roll over two properties a year a net £60k+ is easily achievable
Thanks for replies, gents.
I'm from Carlisle anyway, so I'm far from blinkered that the only place to make money is down south.
There's a nice little place out the back of Banners for sale at the minute, been up a while. Going to view it end of this month.

You've hit the nail on the head. So many of Joe Public would rather have £50k higher mortgage for £20k's worth of work done already.
Wasn't aware you were local wink

If you'd like to take a peek at our latest project just get in touch.

XMT

3,779 posts

146 months

Thursday 23rd February 2017
quotequote all
LaurasOtherHalf said:
TheLordJohn said:
LaurasOtherHalf said:
Shock Horror, there is a property market outside London and you may be able to make a living from it wink

Second time buyers are my target market, couples in their late 20s/30's who may already own one or possibly two properties but want to move up the ladder. As per usual with this demographic they want everything now and on the tick.

I've identified an aspirational area in my home town where they want to buy where crucially there are a number of positive factors;

1 Houses available that require total refurb for circa £100-£150k
2 Houses that can be retailed at circa £200-£250k once refurb'd
3 Enough local infrastructure to provide employment where a £250k house is affordable

The market just don't want the hassle of doing up their house so we fully refurb the house to a high standard which still allows a margin.

Good base knowledge is key, I used to be in the building trade so I can within an hour or so have a back of a fag packet calculation on what the spend is going to be on a property. I taught myself (very) basic design skills so I can provide drawings for the development.

Even with all this finance is still an important factor, being able to offer a cash sale to be able to purchase below retail values.

TL;DR
take your money and move north, if you can roll over two properties a year a net £60k+ is easily achievable
Thanks for replies, gents.
I'm from Carlisle anyway, so I'm far from blinkered that the only place to make money is down south.
There's a nice little place out the back of Banners for sale at the minute, been up a while. Going to view it end of this month.

You've hit the nail on the head. So many of Joe Public would rather have £50k higher mortgage for £20k's worth of work done already.
Wasn't aware you were local wink

If you'd like to take a peek at our latest project just get in touch.
on a related topic I have noticed that too. I have been looking for a house myself and the trend certainly seems to be anything that is "walk in condition" to a high standard seems to go for a price (I feel) is too high for the house but as has been said if people can mortgage it they dont care.

Many people dont have a spare 20k in the bank to even update kitchens and bathrooms to a half decent level.
I have seen a house local to me up for 245k, I think it needs updating to a tune of 25k and houses on the street that have sold previously which were very nice sold for 300-310k. However I am st scared of playing on a hunch with that much money.