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Derek Chevalier
667 posts
42 months
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raptor600
1,356 posts
15 months
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groak said: There's a Harman Healy auction in Kensington Town Hall on Thursday 7th where Lot 73 is guide priced at £8k. It's a 3 bed and will need a few k to turn into first class. Then, in the right hands, it'll produce £600pcm. Within half a mile of that there are the following properties to rent... http://www.rightmove.co.uk/property-to-rent/find.h...The most expensive 3 bed is £495...£450 for the most expensive 2 bed - and these are asking prices - so no doubt will be discounted slightly when the Let is agreed. What makes you think someone would pay £600 for this one? It looks like a slum to me  
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groak
3,254 posts
48 months
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raptor600 said: Within half a mile of that there are the following properties to rent... http://www.rightmove.co.uk/property-to-rent/find.h...The most expensive 3 bed is £495...£450 for the most expensive 2 bed - and these are asking prices - so no doubt will be discounted slightly when the Let is agreed. What makes you think someone would pay £600 for this one? It looks like a slum to me What's the current GCC 3 bed rate? Find out, then multiply by 13 and divide by 12. That's what it'll get. 2-beds get £500+/- so a 3'll be 575-600. Edited to add: Just checked. It's £574.99p pcm. Good guess, eh?
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raptor600
1,356 posts
15 months
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groak said: What's the current GCC 3 bed rate? Find out, then multiply by 13 and divide by 12. That's what it'll get. 2-beds get £500+/- so a 3'll be 575-600.
Edited to add: Just checked. It's £574.99p pcm. Good guess, eh?
Why are the flats I linked to not listed at those prices then?
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groak
3,254 posts
48 months
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raptor600 said: Why are the flats I linked to not listed at those prices then? You mean why are they listed at rents below the level a properly occupied HB tenancy will generate? Why don't you phone the agents and ask them? Try Stu at Keyhome. He'll tell you how it works. George at SmartMove might tell you too. The rest probably don't really know what they're doing, or 'don't take DSS' or what-ev-er... 
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NorthDave
376 posts
101 months
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This is what I am in the process of doing - not in Liverpool but North West. Paying £46kish - up to £10k to renovate and then rent for £425 a month. Better return than being in the bank and I continue to make a profit even if interest rates climb up to 10%. At that rate rents will also rise as so many people will be made homeless and will need somewhere to live.
If you are in it for the long term then a few grand up or down in house prices isn't going to make a difference.
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Red 4
Original Poster
1,361 posts
56 months
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Derek Chevalier said: I haven't read all the report but a quick glance indicates that they are comparing average rents to average property prices. The rental market is the lower end of the market with far higher yields.
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Derek Chevalier
667 posts
42 months
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NorthDave said: This is what I am in the process of doing - not in Liverpool but North West. Paying £46kish - up to £10k to renovate and then rent for £425 a month. Better return than being in the bank and I continue to make a profit even if interest rates climb up to 10%. At that rate rents will also rise as so many people will be made homeless and will need somewhere to live.
If you are in it for the long term then a few grand up or down in house prices isn't going to make a difference. I can't understand how you are still making a profit if base rate is at 10%. You have invested £56k, are getting rent of ~5k pa, and have to pay maintenace. Net yield is not 10% in this case - what am I missing? I also don't understand your logic of landlords being able to charge more as base rate goes up. Who will pay the extra rent?
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NorthDave
376 posts
101 months
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Derek Chevalier said: I can't understand how you are still making a profit if base rate is at 10%. You have invested £56k, are getting rent of ~5k pa, and have to pay maintenace. Net yield is not 10% in this case - what am I missing?
I also don't understand your logic of landlords being able to charge more as base rate goes up. Who will pay the extra rent? Hi Derek. It was meant to illustrate that you aren't out of pocket even if base rates go up to 10%. I assume at that point as so many people will have lost their homes that the rental market will be in great demand meaning rents may rise.
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NorthDave
376 posts
101 months
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NorthDave said: Derek Chevalier said: I can't understand how you are still making a profit if base rate is at 10%. You have invested £56k, are getting rent of ~5k pa, and have to pay maintenace. Net yield is not 10% in this case - what am I missing?
I also don't understand your logic of landlords being able to charge more as base rate goes up. Who will pay the extra rent? Hi Derek. It was meant to illustrate that you aren't out of pocket even if base rates go up to 10%. I assume at that point as so many people will have lost their homes that the rental market will be in great demand meaning rents may rise. P.S. - I dont actually have £56k tied up in that property either. I have a lot less (25% of the value of the property which isn't necessarily £56k) which makes things more attractive.
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DSLiverpool
3,300 posts
71 months
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Guys my missus wants to get a BTL but I know nothing about them. she has found this house http://www.rightmove.co.uk/property-for-sale/find....Has a £30k deposit and has been told it will bring in £550 / £575 a month She does not need an income from it just that the mortgage is covered and a the rent contributes to a small fixer up fund I have no idea / opinion but would never admit that so can anyone give it a thumbs up or down please, it is in a nice area for outer Birkenhead and no hassle no drama is a neccesity.
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jonno990
384 posts
47 months
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Red 4
Original Poster
1,361 posts
56 months
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DSLiverpool said: Guys my missus wants to get a BTL but I know nothing about them. she has found this house http://www.rightmove.co.uk/property-for-sale/find....Has a £30k deposit and has been told it will bring in £550 / £575 a month She does not need an income from it just that the mortgage is covered and a the rent contributes to a small fixer up fund I have no idea / opinion but would never admit that so can anyone give it a thumbs up or down please, it is in a nice area for outer Birkenhead and no hassle no drama is a neccesity. Check what other properties have sold for in the area. Rightmove sold house prices or zoopla. It's empty so might be a repossession. Make a low bid. Don't believe what estate agents tell you about rents of sold prices. Do your homework. £90K purchase price bringing in £500ish rent isn't a great yield. It's a new(ish) build though so maintenance costs should be low. If you're in it for the long term and just want your costs covered it seems OK. But do your homework and factor in interest rate rises, etc. Did I mention do your homework ? 
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DSLiverpool
3,300 posts
71 months
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Red 4 said: Check what other properties have sold for in the area. Rightmove sold house prices or zoopla. It's empty so might be a repossession. Make a low bid. Don't believe what estate agents tell you about rents of sold prices. Do your homework. £90K purchase price bringing in £500ish rent isn't a great yield. It's a new(ish) build though so maintenance costs should be low. If you're in it for the long term and just want your costs covered it seems OK. But do your homework and factor in interest rate rises, etc. Did I mention do your homework ? Cheers - she is checking sold prices now
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Red 4
Original Poster
1,361 posts
56 months
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jonno990 said: Looks like it needs a roof. Maybe not, only a viewing will determine that. Damp on the pics. Thanks for the link. I know the area. Not the best, not the worst. I think I'll be going for houses though rather than flats (unless I can find some which are excellent value). £20k though, assuming they'll take a bid, and a few grand (maybe) to refurb and it looks OK. Thanks again for the link
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blueg33
10,730 posts
93 months
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Are you looking at net initial yield or gross yield?
Now is a good time in my opinion, although you need to think about your target tenant and their ability to pay, plus take account of a sensible void rate.
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Red 4
Original Poster
1,361 posts
56 months
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blueg33 said: Are you looking at net initial yield or gross yield?
Now is a good time in my opinion, although you need to think about your target tenant and their ability to pay, plus take account of a sensible void rate. Repairs/ improvements can be off-set against tax. But yes, gross yield And the way the DWP pay housing benefit these days (ie direct to the tenant) means quite a few of them do the bunk with the rent. I think it was changed to avoid the "ghost" tenants and unscrupulous landlords. It can still be diverted direct to the landlord though. I take your point 100% about the quality of the tenants which is half the battle.
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blueg33
10,730 posts
93 months
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Red 4 said: Repairs/ improvements can be off-set against tax.
But yes, gross yield
And the way the DWP pay housing benefit these days (ie direct to the tenant) means quite a few of them do the bunk with the rent. I think it was changed to avoid the "ghost" tenants and unscrupulous landlords. It can still be diverted direct to the landlord though.
I take your point 100% about the quality of the tenants which is half the battle. Look at tenant classes where the benefit rent is paid direct to the landlord (you may need to make mods to the property if they are disabled) also look for tenants that stay longer eg older people as this will reduce voids. For comparison you should use net initial yield and deduct your costs eg SDLT, legal fees etc, you can then benchmark against other real estate investments.
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jonno990
384 posts
47 months
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Red 4 said: jonno990 said: Looks like it needs a roof. Maybe not, only a viewing will determine that. Damp on the pics. Thanks for the link. I know the area. Not the best, not the worst. I think I'll be going for houses though rather than flats (unless I can find some which are excellent value). £20k though, assuming they'll take a bid, and a few grand (maybe) to refurb and it looks OK. Thanks again for the link Just had a quick look from the outside. You're right it does need a roof, windows and a fair bit of brickwork on the steps leading to the door. I am also thinking of BTL in the L20/L21 area, plenty of 3 bed properties for £50k not needing any work. Will be November until I get the deposit together. What are peoples views on letting agents? I know they don't do a lot for their %10 but I'm thinking because of the type of tenants at this price range it might save me some hassle?
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Red 4
Original Poster
1,361 posts
56 months
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jonno990 said: What are peoples views on letting agents?
I know they don't do a lot for their %10 but I'm thinking because of the type of tenants at this price range it might save me some hassle? They're unlikely to vet them properly Luck of the draw I suppose. Better if you can meet the tenant face to face imo. There are still decent people in the "lower class" (sorry, don't mean to sound snobby but you know what I mean) areas Kirkby isn't a bad area. Property is a little bit pricier though. Also Anfield looks set for a regeneration. Problem is it will probably go back to how it is now in a few years. You need to choose the right street/ road to protect your investment.
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