Making £50k into income
Discussion
Firstly I apologise for the rambling post, I have had a drink tonight and I have read over my post and it doesn't really make sense.
After divorcing my mental wife, selling my house and moving into my new one, I am left over with about 50 grand (the sum did start a lot larger
). I want to invest the money to provide a little income, to supplement my existing salary.
I was looking at buying a cheapish flat. I live in Northamptonshire and you can pick up a 1 bed flat nearby in Wellingborough for around that price if you look hard, and that will get you around £400 a month. I know there will be ground rent/service charges, insurance and times when you don't have a tenant, or a bad tenant too, so it isn't that easy.
The alternative would be to chuck it down as a deposit on a mortgage for a BTL property but although interest rates are low at the moment, I have no idea what rates will be like in 5 years time, and BTL mortgage rates are pretty crap.
A friend of mine is a financial adviser and she has suggested spreading it over a number of funds but that seems to be more for growth than income. The reason I want the income is that I'm pretty disillusioned with everything at the moment since the divorce. I'm tempted to chuck my house in rent, sell my car and go abroad for a bit. Mid life crisis I know, but it is tempting.
If I took the money and went travelling i would probably come home with nothing, but if I had the income from my house, the income (whatever it is) from my 50k and the twenty grand from my car I reckon that would sustain me for a little while.
Any ideas, tips? I have tried manning up and it didn't work. I appreciate anything you guys can suggest.
After divorcing my mental wife, selling my house and moving into my new one, I am left over with about 50 grand (the sum did start a lot larger
). I want to invest the money to provide a little income, to supplement my existing salary. I was looking at buying a cheapish flat. I live in Northamptonshire and you can pick up a 1 bed flat nearby in Wellingborough for around that price if you look hard, and that will get you around £400 a month. I know there will be ground rent/service charges, insurance and times when you don't have a tenant, or a bad tenant too, so it isn't that easy.
The alternative would be to chuck it down as a deposit on a mortgage for a BTL property but although interest rates are low at the moment, I have no idea what rates will be like in 5 years time, and BTL mortgage rates are pretty crap.
A friend of mine is a financial adviser and she has suggested spreading it over a number of funds but that seems to be more for growth than income. The reason I want the income is that I'm pretty disillusioned with everything at the moment since the divorce. I'm tempted to chuck my house in rent, sell my car and go abroad for a bit. Mid life crisis I know, but it is tempting.
If I took the money and went travelling i would probably come home with nothing, but if I had the income from my house, the income (whatever it is) from my 50k and the twenty grand from my car I reckon that would sustain me for a little while.
Any ideas, tips? I have tried manning up and it didn't work. I appreciate anything you guys can suggest.
BTL is, whatever anyone tells you otherwise, a good investment if you play the long game. However, flats, no no no. I own a few, brilliant but they have their issues
1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
Cheers Hair Flick. I'm not too keen on flats myself, I do like the idea of no mortgage though.
The thing with BTL mortgages is not so much the rate as the ridiculous mortgage fees, and even then after 2/3 years your decent rate goes back to the lenders standard rate which seems to be way too high.
The thing with BTL mortgages is not so much the rate as the ridiculous mortgage fees, and even then after 2/3 years your decent rate goes back to the lenders standard rate which seems to be way too high.
Godiva mortgages are worth a look for BTL but BTL is only worth it to play the long game. I see it as this
If property purchased with 50% deposit makes no profit for 25 years but covers the costs then you've doubled your money (give or take some taxes), if the property goes up you are quids in and if it sinks to the 50% deposit value (a long way to drop) you walk away with little/no loss but you haven't been able to spunk the money.
Quite a simplistic view I know. One property has had a negative value for a few years but I expect it to return, however, that was mortgage free for a long while so in real terms if I sold today with a 15k loss on the original purchase price I'd still be over 30 to 40k up (though I was silly and just spent the money!)
I was mortgage free also for some time and its not all that it is cracked up to be. You are sat there with an asset worth six figures and your cash is tied up in it doing nothing.... assets are great if you don't need liquid cash
If property purchased with 50% deposit makes no profit for 25 years but covers the costs then you've doubled your money (give or take some taxes), if the property goes up you are quids in and if it sinks to the 50% deposit value (a long way to drop) you walk away with little/no loss but you haven't been able to spunk the money.
Quite a simplistic view I know. One property has had a negative value for a few years but I expect it to return, however, that was mortgage free for a long while so in real terms if I sold today with a 15k loss on the original purchase price I'd still be over 30 to 40k up (though I was silly and just spent the money!)
I was mortgage free also for some time and its not all that it is cracked up to be. You are sat there with an asset worth six figures and your cash is tied up in it doing nothing.... assets are great if you don't need liquid cash
Hair Flick said:
BTL is, whatever anyone tells you otherwise, a good investment if you play the long game. However, flats, no no no. I own a few, brilliant but they have their issues
1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
Agreed. I've got 5 BTL's, one of which is (well, was in 2001) a new-build flat with Peverel OM managing it.1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
To be fair, it's always an easy let, it's in a desirable area and is very nice, with balconies to the lounge and bedroom, allocated parking and all that jazz. Whenever a tenant leaves (maybe every 2 to 3 years) I've usually got another one lined up to instantly take posession. I keep the rent at a very competitive level, and don't get greedy, so it always goes within a week of advertising.
As it's a nice property in a nice area, I've never had any tenant or rent issues, and everyone has kept it nicely (so far).
But the bloody management fees are now bordering on a grand a year, and I don't see the return on that generally within the block and the grounds. There are 24 flats in my local area, so that's 24 grand a year to the management company, for basically doing a bit of cleaning, changing a few communal light bulbs, and mowing a small bit of grass and tending to a few bushes outside.
Ok yeah, if the roof blows off one day they'll sort it out, but the whole idea of buying a new build was getting an NHBC certificate and hopefully the benefit of a new block of flats. As it is, 13 years on, it's all still in good shape.
In comparison, my other properties are all freehold, 3 also new-ish build, and one that was 100 years old but that I basically demolished back to it's original brick and flint walls, and re-built with all new materials.
Apart from the odd issue with central heating boilers and fitted appliances like dishwashers playing up (all fixed for maybe a hundred quid by local tradesmen) I haven't had to spend anything like a grand a year in maintenance and repairs on the freehold properties. They've all mostly got maintenance-free exterior fittings, apart from at the 100 year old place, so I just go over every 3 years or so to re-coat the wooden sash windows, door, gate and fencing myself.
So yeah - if you go down the BTL route - for Christ's sake go for a freehold property!!!
HTH
Ray what I absolutely love about OM is that they will send you a nice notification of works required and how they are going through a fair bidding process so why is it an electrician from 60 miles away is always chosen and no one local appears to bid? My gardens are maintained by a company based in Cardiff that's over 100 miles away and the painters seem to come from luton
Their accounts are managed by a 3rd party for independence but.... that company is part of the OM group if you dig deep!
Their accounts are managed by a 3rd party for independence but.... that company is part of the OM group if you dig deep!
I have looked at individual flats before, but the service charges destroy so much profit. However, if you can get a flat for £50k which will rent for £400p.m., that's a 9.6% gross initial yield, which isn't to be sniffed at! It does depend on how much the service charge is though.
They always say that you buy houses for capital appreciation and flats for income, since houses will have a lower initial yield, but flats do not tend to grow as quickly in value (as there is less demand vs. supply). Personally, I think this is a bit simplistic - as the general market rises, so too will flats, on the whole.
My solution has been to buy small blocks of Victorian conversions - so buildings with 3 - 4 flats in. You then control the building, you can deal with other problem tenants in the building, you can control the service charges, and you can decide on what you consider an acceptable standard of upkeep is. I can run a block of three flats for almost the same price as the service charge on a single flat in a comparable block.
The key thing is to find a building where the total initial yield % is more than the cost of the mortgage %. That way, you will be making your yield not only on your deposit, but also on the mortgaged element too. Even if it only covers the additional cost of having the extra flats in the building, in the long term, inflation should increase the rental values, at least as much as interest rates will rise.
The place you select also has to take into account your willingness to do a little work. If you are relatively handy, and can spend evenings and weekends for a month or two upgrading and updating an empty block of flats, you can get a surprisingly healthy yield on total purchase + renovation costs.
They always say that you buy houses for capital appreciation and flats for income, since houses will have a lower initial yield, but flats do not tend to grow as quickly in value (as there is less demand vs. supply). Personally, I think this is a bit simplistic - as the general market rises, so too will flats, on the whole.
My solution has been to buy small blocks of Victorian conversions - so buildings with 3 - 4 flats in. You then control the building, you can deal with other problem tenants in the building, you can control the service charges, and you can decide on what you consider an acceptable standard of upkeep is. I can run a block of three flats for almost the same price as the service charge on a single flat in a comparable block.
The key thing is to find a building where the total initial yield % is more than the cost of the mortgage %. That way, you will be making your yield not only on your deposit, but also on the mortgaged element too. Even if it only covers the additional cost of having the extra flats in the building, in the long term, inflation should increase the rental values, at least as much as interest rates will rise.
The place you select also has to take into account your willingness to do a little work. If you are relatively handy, and can spend evenings and weekends for a month or two upgrading and updating an empty block of flats, you can get a surprisingly healthy yield on total purchase + renovation costs.
yes the estate we have with OM is really clean and very well maintained but our charge for the flat is typically 100 pcm
now that does include maintenance of the flat, roof, general electrics, lighting, car parks, building insurance etc so it is not in the realms of unreasonable but it did cost me a sale 4 years back but people are still buying
MY issue with OM is the mend and make do rather than replace. Our entrance door has, for 6 years been repaired every 2 or 3 months, why not just replace it with a door that doesn't warp? If I see the door still not locking due to this when I next inspect the flat I'll just do the job myself. Its the way they ALWAYS get contractors from miles away. One example to change a bulb we had a sparky from Reading, are they suggesting within the Swindon area there is no one that can change a bulb?
A faulty automated light in the communal area was not working, it was reported, after several inspections from their sparky it was a major fault and looking at a big bill from all tenants. Fed up, I got a ladder out and changed the bulb its worked flawlessly since.
On another site we have Thomas homes which are much cheaper. Pay around 60pcm for the same service
now that does include maintenance of the flat, roof, general electrics, lighting, car parks, building insurance etc so it is not in the realms of unreasonable but it did cost me a sale 4 years back but people are still buying
MY issue with OM is the mend and make do rather than replace. Our entrance door has, for 6 years been repaired every 2 or 3 months, why not just replace it with a door that doesn't warp? If I see the door still not locking due to this when I next inspect the flat I'll just do the job myself. Its the way they ALWAYS get contractors from miles away. One example to change a bulb we had a sparky from Reading, are they suggesting within the Swindon area there is no one that can change a bulb?
A faulty automated light in the communal area was not working, it was reported, after several inspections from their sparky it was a major fault and looking at a big bill from all tenants. Fed up, I got a ladder out and changed the bulb its worked flawlessly since.
On another site we have Thomas homes which are much cheaper. Pay around 60pcm for the same service
Interest-only BTL. £50K will get you a deposit on 2x 3-bed terrace houses, possibly semis.
You should look at paying up to £125K max (no stamp duty) and get as at least 2 double bedrooms. Garage optional and not necessary. I have 4x BTLs and only one has a garage which has been a pain since the roof needed replacing.
At the mo, I reckon you can earn £300-£400 per property, based on a monthly income of £650 per house. Try to rent to people who look after your house (Poles) and you'll be fine NOT to engage an agent (who will do nothing when desperately needed anyway). People think you'll be inundated with problems. It's not true if you buy wisely.
Keep the income until after the tax year ends. Pay your tax, and then spend half of the remaining. The other half should be kept as contingency for when repairs are needed.
Find a friendly general purpose builder. Don't try to cut him down and he will be available for you whenever you need him, often at short notice.
Pay British Gas for a full-service maintenance contract. This comes off your tax liability, as does the cost of any repairs by your builder.
Off 2x houses I reckon you'd get a safe £200/month in your pocket, with a pot of cash piling up for occasional BONUS withdrawal.
You should look at paying up to £125K max (no stamp duty) and get as at least 2 double bedrooms. Garage optional and not necessary. I have 4x BTLs and only one has a garage which has been a pain since the roof needed replacing.
At the mo, I reckon you can earn £300-£400 per property, based on a monthly income of £650 per house. Try to rent to people who look after your house (Poles) and you'll be fine NOT to engage an agent (who will do nothing when desperately needed anyway). People think you'll be inundated with problems. It's not true if you buy wisely.
Keep the income until after the tax year ends. Pay your tax, and then spend half of the remaining. The other half should be kept as contingency for when repairs are needed.
Find a friendly general purpose builder. Don't try to cut him down and he will be available for you whenever you need him, often at short notice.
Pay British Gas for a full-service maintenance contract. This comes off your tax liability, as does the cost of any repairs by your builder.
Off 2x houses I reckon you'd get a safe £200/month in your pocket, with a pot of cash piling up for occasional BONUS withdrawal.
Ray Luxury-Yacht said:
Hair Flick said:
BTL is, whatever anyone tells you otherwise, a good investment if you play the long game. However, flats, no no no. I own a few, brilliant but they have their issues
1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
Agreed. I've got 5 BTL's, one of which is (well, was in 2001) a new-build flat with Peverel OM managing it.1.) Management companies, basically dick turpin without masks. Charge what they want and its usually a lot for little. Unfortunately one of mine is under Peverel/OM whatever they call themselves these days.
2.) Management companies.
Flats are typically easy to let but can be difficult to shift compared to houses (smaller market of single/young professionals and not always tempting to the young family).
50k, that's enough to get a business up and going. I'm looking at releasing a similar amount to buy some woodland and develop a little retreat in the middle of a few acres, enjoy it for a few years then sell at double the price.
To be fair, it's always an easy let, it's in a desirable area and is very nice, with balconies to the lounge and bedroom, allocated parking and all that jazz. Whenever a tenant leaves (maybe every 2 to 3 years) I've usually got another one lined up to instantly take posession. I keep the rent at a very competitive level, and don't get greedy, so it always goes within a week of advertising.
As it's a nice property in a nice area, I've never had any tenant or rent issues, and everyone has kept it nicely (so far).
But the bloody management fees are now bordering on a grand a year, and I don't see the return on that generally within the block and the grounds. There are 24 flats in my local area, so that's 24 grand a year to the management company, for basically doing a bit of cleaning, changing a few communal light bulbs, and mowing a small bit of grass and tending to a few bushes outside.
Ok yeah, if the roof blows off one day they'll sort it out, but the whole idea of buying a new build was getting an NHBC certificate and hopefully the benefit of a new block of flats. As it is, 13 years on, it's all still in good shape.
In comparison, my other properties are all freehold, 3 also new-ish build, and one that was 100 years old but that I basically demolished back to it's original brick and flint walls, and re-built with all new materials.
Apart from the odd issue with central heating boilers and fitted appliances like dishwashers playing up (all fixed for maybe a hundred quid by local tradesmen) I haven't had to spend anything like a grand a year in maintenance and repairs on the freehold properties. They've all mostly got maintenance-free exterior fittings, apart from at the 100 year old place, so I just go over every 3 years or so to re-coat the wooden sash windows, door, gate and fencing myself.
So yeah - if you go down the BTL route - for Christ's sake go for a freehold property!!!
HTH
Apart from the maintenance charge you can be stung for other repairs as well, and this can be big money. One of my flats had a 1.5k maintenance charge, yet a survey of the block was done by the MC, and they came up with a huge amount of repairs. The cost to each flat was many thousands.
The MC could quite easily just get the work done, and bill the owners, its as simple as that. In the end they just agreed to to the urgent stuf, and thats when I decided to sell. The other stuff all still needed doing, so its just been delayed.
i was having a chat with a letting agent a few days ago . he was telling me about a rent guarantee scheme that they sell . how it works is that the potential tenant is credit checked before they move in . if they pass then the property is eligable for the scheme which costs £120 p.a.
will post more details when i know them but you might find something similar
will post more details when i know them but you might find something similar
jas xjr said:
i was having a chat with a letting agent a few days ago . he was telling me about a rent guarantee scheme that they sell . how it works is that the potential tenant is credit checked before they move in . if they pass then the property is eligable for the scheme which costs £120 p.a.
will post more details when i know them but you might find something similar
Some of those are a bit of a con. Read the small print. I think they have to default on 2 or 3 months before you can claim the money through those policies. will post more details when i know them but you might find something similar
Gassing Station | Finance | Top of Page | What's New | My Stuff