Buy to let away from where you live?
Discussion
My GF and I have put away enough money put away to be considering investment strategies. I have had good success with equities, but am considering buy to let.
Because we live in London, it would need to be a much cheaper area and managed remotely.
Does anyone have any advice on where to start/things to read? Or what your experiences have taught you?
Because we live in London, it would need to be a much cheaper area and managed remotely.
Does anyone have any advice on where to start/things to read? Or what your experiences have taught you?
Its personal preference of course, but I have a BTL flat which over the last 10 years hasnt been empty for more than a month at a time, brings me a steady income and, with a letting agent only charging me 5% to manage it, means I generally just forget about it.
The advantage of ours is its on a fast line from Essex into Liverpool Street so the potential tenants pool is large.
However don't rent it out to a copper. We did that, and had to get a new door after the Essex plod kicked it in to get the met guy inside!!! Oh and the coppers dont pay for the door either!
The advantage of ours is its on a fast line from Essex into Liverpool Street so the potential tenants pool is large.
However don't rent it out to a copper. We did that, and had to get a new door after the Essex plod kicked it in to get the met guy inside!!! Oh and the coppers dont pay for the door either!
Esotericstuff said:
My GF and I have put away enough money put away to be considering investment strategies. I have had good success with equities, but am considering buy to let.
Because we live in London, it would need to be a much cheaper area and managed remotely.
Does anyone have any advice on where to start/things to read? Or what your experiences have taught you?
You really only need one thing. A connection in the area you want to buy into. Someone to facilitate the search and purchase and ongoing management. If you get that wrong you're fBecause we live in London, it would need to be a much cheaper area and managed remotely.
Does anyone have any advice on where to start/things to read? Or what your experiences have taught you?
ked. And if you get it right you're home and dry. That's it really.
Edited by selmahoose on Saturday 22 December 20:00
markiii said:
if your a 20% tax payer the tax situation ha snot changes so still worth it imho.
40% less so but still better than cash in the bank
3% extra stamp duty hurts but just means you focus on the long term
3% stings but depending on property purchase price 5% will sting and 8% extra will really hurt!40% less so but still better than cash in the bank
3% extra stamp duty hurts but just means you focus on the long term
the OP's tax situation might change if the rental income pushes him into the 40% bracket, also the tax relief on the interest part of the mortgage drops to only 25% being claimable against tax from 2019 then 0% by 2021.
Basics to start OP is what purchase price are you thinking of and will it be 100% mortgage free?
I can't get excited by real estate any more. It is hard to sell, it is time consuming to sell and it costs you real money when it is empty. Contrast this with shares which you can sell a few and get the money in days. Sell the lot and get the money in days. Shares don't need new boilers. Shares don't complain. You don't have to pay council tax on shares when the CEO quits and they are looking for a new one.
I have a BTL in an industrial city in northern England. Gross return is about £7,000 on an £85,000 purchase price. It's relatively easy to rent out. Have not had any duff tenants. Bought it before the stamp duty surcharge. I'd still say.... just buy shares.
I have a BTL in an industrial city in northern England. Gross return is about £7,000 on an £85,000 purchase price. It's relatively easy to rent out. Have not had any duff tenants. Bought it before the stamp duty surcharge. I'd still say.... just buy shares.
creampuff said:
I can't get excited by real estate any more. It is hard to sell, it is time consuming to sell and it costs you real money when it is empty. Contrast this with shares which you can sell a few and get the money in days. Sell the lot and get the money in days. Shares don't need new boilers. Shares don't complain. You don't have to pay council tax on shares when the CEO quits and they are looking for a new one.
I have a BTL in an industrial city in northern England. Gross return is about £7,000 on an £85,000 purchase price. It's relatively easy to rent out. Have not had any duff tenants. Bought it before the stamp duty surcharge. I'd still say.... just buy shares.
If it is hard and time consuming to sell it is because it is not attractive to the people in that northern industrial city - including landlords - who spend a good part of every day looking for something to buy. I have a BTL in an industrial city in northern England. Gross return is about £7,000 on an £85,000 purchase price. It's relatively easy to rent out. Have not had any duff tenants. Bought it before the stamp duty surcharge. I'd still say.... just buy shares.
Without knowing anything about it I can tell you that if it's hard or slow to sell then unless it's crap you're overpricing it and need to price it lower to move it; and also the figures you've quoted don't stack up for a northern pro landlord. Not even close.
Is that really the fault of the real estate industry?
Suggestion? Refinance it and buy shares with the drawdown leaving the rent to pay off the refinance which you can do even faster using some of the profit from the shares if you think share ownership will be profitable. That way you can have your cake and eat it too.
Personally I'd sooner burn my balls off with a blowtorch than refinance my properties to buy shares. You've probably noticed there's a fair degree of financial uncertainty instability and volatility currently. But tell me, what impact has that had on your rental income? And what impact do you anticipate even the utmost disastrous Brexit will have on your rental income?
Hmmmm.
Edited by selmahoose on Sunday 23 December 00:26
Saleen836 said:
markiii said:
if your a 20% tax payer the tax situation ha snot changes so still worth it imho.
40% less so but still better than cash in the bank
3% extra stamp duty hurts but just means you focus on the long term
3% stings but depending on property purchase price 5% will sting and 8% extra will really hurt!40% less so but still better than cash in the bank
3% extra stamp duty hurts but just means you focus on the long term
the OP's tax situation might change if the rental income pushes him into the 40% bracket, also the tax relief on the interest part of the mortgage drops to only 25% being claimable against tax from 2019 then 0% by 2021.
Basics to start OP is what purchase price are you thinking of and will it be 100% mortgage free?
https://www.telegraph.co.uk/investing/buy-to-let/n...
markiii said:
Technically true but once it gets to zero it's replaced with a flat 20% tax credit
https://www.telegraph.co.uk/investing/buy-to-let/n...
Interesting article, i was a bit lost on this part though...https://www.telegraph.co.uk/investing/buy-to-let/n...
While the move mainly affects those who already pay higher-rate income tax, it will push some basic-rate taxpayers into the higher-rate bracket once their rental income has been taken into account. Others will lose means-tested benefits.
How is someone with a property they rent out able to obtain means tested benefits??
If you look at Spain, Portugal and Croatia, I am sure that every agent there will assure you of fabulous returns renting out.
But the reality will be that apart from a few weeks in the height of summer (when you would probably like to go yourself) you will more than likely find the place empty. Offset the cost of the place being abused by 24-hour party people, community charges and services, you are unlikely to receive a positive dividend.
As supply always tends to just exceed demand (new properties are always being built) the potential to make a significant capital gain is also limited.
But the reality will be that apart from a few weeks in the height of summer (when you would probably like to go yourself) you will more than likely find the place empty. Offset the cost of the place being abused by 24-hour party people, community charges and services, you are unlikely to receive a positive dividend.
As supply always tends to just exceed demand (new properties are always being built) the potential to make a significant capital gain is also limited.
selmahoose said:
If it is hard and time consuming to sell it is because it is not attractive to the people in that northern industrial city - including landlords - who spend a good part of every day looking for something to buy.
Without knowing anything about it I can tell you that if it's hard or slow to sell then unless it's crap you're overpricing it and need to price it lower to move it; and also the figures you've quoted don't stack up for a northern pro landlord. Not even close.
Is that really the fault of the real estate industry?
Suggestion? Refinance it and buy shares with the drawdown leaving the rent to pay off the refinance which you can do even faster using some of the profit from the shares if you think share ownership will be profitable. That way you can have your cake and eat it too.
Personally I'd sooner burn my balls off with a blowtorch than refinance my properties to buy shares. You've probably noticed there's a fair degree of financial uncertainty instability and volatility currently. But tell me, what impact has that had on your rental income? And what impact do you anticipate even the utmost disastrous Brexit will have on your rental income?
Hmmmm.
The average time to sell real estate in England is about 3 months. That's the nature of the asset, not anything in particular to do with any property. It needs to be vacant when it is sold, otherwise no owner-occupier will be able to get a mortgage on it, so it eliminates a lot of potential purchasers. Even a BTL buyer might want to put in their own tenant, so you eliminate a lot of BTL buyers. Without knowing anything about it I can tell you that if it's hard or slow to sell then unless it's crap you're overpricing it and need to price it lower to move it; and also the figures you've quoted don't stack up for a northern pro landlord. Not even close.
Is that really the fault of the real estate industry?
Suggestion? Refinance it and buy shares with the drawdown leaving the rent to pay off the refinance which you can do even faster using some of the profit from the shares if you think share ownership will be profitable. That way you can have your cake and eat it too.
Personally I'd sooner burn my balls off with a blowtorch than refinance my properties to buy shares. You've probably noticed there's a fair degree of financial uncertainty instability and volatility currently. But tell me, what impact has that had on your rental income? And what impact do you anticipate even the utmost disastrous Brexit will have on your rental income?
Hmmmm.
Edited by selmahoose on Sunday 23 December 00:26
While it is vacant, you obvs don't get any income but also become liable for things like council tax and utility bills. Often before you sell, you need to paint it or do various maintenance items. If you buy something in the <£100,000 price range with a corresponding relatively modest total rent (like my northern England rental), then any time it is unoccupied the council tax and utilities are a significant proportion of the income you make when it is occupied.
Then real estate sales are non binding in England until very late in the process, so your buyer can pull out for any reason.
Real estate, like shares, can also depreciate. Often the headline drop in house prices you read about is masked by low sales volumes (people who don't need to sell at a lower price, don't) and the real drop in value if you needed to sell is more.
That's not to say shares are ideal either. Shares in any given company can go to zero value and maybe even most companies have severe financial difficulties over a 20 year timescale, so you can't just buy a share portfolio and ignore it. IMHO spending a few hours a month eyeballing your share portfolio is not that onerous.
Overall, having owned 4 x investment properties (not all at once) over a period of about 15 years, I'm quite meh about them now.
Edited by creampuff on Sunday 23 December 12:16
If you want a foreign holiday home then buy it to use and not as an investment but if it’s an investment you want then stick to the U.K.
No problem at all with investing away from your home patch but you will need a reliable team in place to cover everything from sourcing, financing, refurbishing and maintaining your investment.
Being a distant landlord has some real benefits and as you have, many investors consider it a bit risky or not an option to be remote. In reality this is far from the case.
Have you attended any property meets?
First step is to decide on your goals (long term investment or income) and then which strategy (BTL, HMO MiniMo, SA) that you would like to use and then find the area where your goals and strategy will work.
Next is to attend a few meets in both that area and in your home area (London).
London property meets are typically people with cash but without the experience/time as opposed to other areas where there is an abundance of time and experience but the lack of cash.
Often sourcers from other areas will attend the London meets to find investors exactly like you. Failing that you will undoubtedly find sourcers if you visit meets in your chosen area.
If leveraging your pot of investment cash in something like a Buy, Refurb & Refinance (BRR) model is a consideration then you may want to consider a little education but be careful who’s knowledge you pay for.
For free education there are a number of really good podcasts available.
Check out ‘The Property Podcast’ for a start.
Many will say the days of good returns of BTL have gone and while nowadays a little more knowledge is required to be successful compared to the boom days of past when you could almost buy anything and make good returns, starting today will still be better than starting tomorrow.
Apologies if I started rambling, this post suddenly got a lot longer than I’d anticipated and certainly too long for typing on this phone!
No problem at all with investing away from your home patch but you will need a reliable team in place to cover everything from sourcing, financing, refurbishing and maintaining your investment.
Being a distant landlord has some real benefits and as you have, many investors consider it a bit risky or not an option to be remote. In reality this is far from the case.
Have you attended any property meets?
First step is to decide on your goals (long term investment or income) and then which strategy (BTL, HMO MiniMo, SA) that you would like to use and then find the area where your goals and strategy will work.
Next is to attend a few meets in both that area and in your home area (London).
London property meets are typically people with cash but without the experience/time as opposed to other areas where there is an abundance of time and experience but the lack of cash.
Often sourcers from other areas will attend the London meets to find investors exactly like you. Failing that you will undoubtedly find sourcers if you visit meets in your chosen area.
If leveraging your pot of investment cash in something like a Buy, Refurb & Refinance (BRR) model is a consideration then you may want to consider a little education but be careful who’s knowledge you pay for.
For free education there are a number of really good podcasts available.
Check out ‘The Property Podcast’ for a start.
Many will say the days of good returns of BTL have gone and while nowadays a little more knowledge is required to be successful compared to the boom days of past when you could almost buy anything and make good returns, starting today will still be better than starting tomorrow.
Apologies if I started rambling, this post suddenly got a lot longer than I’d anticipated and certainly too long for typing on this phone!
creampuff said:
The average time to sell real estate in England is about 3 months. That's the nature of the asset, not anything in particular to do with any property. It needs to be vacant when it is sold, otherwise no owner-occupier will be able to get a mortgage on it, so it eliminates a lot of potential purchasers. Even a BTL buyer might want to put in their own tenant, so you eliminate a lot of BTL buyers.
While it is vacant, you obvs don't get any income but also become liable for things like council tax and utility bills. Often before you sell, you need to paint it or do various maintenance items. If you buy something in the <£100,000 price range with a corresponding relatively modest total rent (like my northern England rental), then any time it is unoccupied the council tax and utilities are a significant proportion of the income you make when it is occupied.
Then real estate sales are non binding in England until very late in the process, so your buyer can pull out for any reason.
Real estate, like shares, can also depreciate. Often the headline drop in house prices you read about is masked by low sales volumes (people who don't need to sell at a lower price, don't) and the real drop in value if you needed to sell is more.
That's not to say shares are ideal either. Shares in any given company can go to zero value and maybe even most companies have severe financial difficulties over a 20 year timescale, so you can't just buy a share portfolio and ignore it. IMHO spending a few hours a month eyeballing your share portfolio is not that onerous.
Overall, having owned 4 x investment properties (not all at once) over a period of about 15 years, I'm quite meh about them now.
I could agree 'in principle' with everything you said, but I would also disagree with almost all of it in terms of the 'professional' btl market. While it is vacant, you obvs don't get any income but also become liable for things like council tax and utility bills. Often before you sell, you need to paint it or do various maintenance items. If you buy something in the <£100,000 price range with a corresponding relatively modest total rent (like my northern England rental), then any time it is unoccupied the council tax and utilities are a significant proportion of the income you make when it is occupied.
Then real estate sales are non binding in England until very late in the process, so your buyer can pull out for any reason.
Real estate, like shares, can also depreciate. Often the headline drop in house prices you read about is masked by low sales volumes (people who don't need to sell at a lower price, don't) and the real drop in value if you needed to sell is more.
That's not to say shares are ideal either. Shares in any given company can go to zero value and maybe even most companies have severe financial difficulties over a 20 year timescale, so you can't just buy a share portfolio and ignore it. IMHO spending a few hours a month eyeballing your share portfolio is not that onerous.
Overall, having owned 4 x investment properties (not all at once) over a period of about 15 years, I'm quite meh about them now.
Edited by creampuff on Sunday 23 December 12:16
For example, re. sales, I usually look to buy at best possible price which is usually via private contact or sometimes via sourcers so they are off-market purchases at bmv price points. And I am never averse to selling cheap what I bought cheap which considerably eases and speeds up the sale process.
What drives my purchases is arithmetic. The same arithmetic others in my game in my area use. So if selling I'm offering something below market value to another landlord to whom it will make the same sense to buy as it did to me.
Many, indeed most, will be happy or even prefer to buy it with tenant in situ especially a good tenant of lengthy standing who has no reason to move. Why not? It can even be a selling point.
If I know the buyer well and especially if we have done satisfactory business before then I might ask for some or all the money in advance of the paperwork being completed. There are at least half a dozen people I know who I could- and have- done this with both as the buyer and seller. (in fact, on one singular occasion it dawned on me 10 years after I'd paid him that we'd never actually done the conveyancing!! 642 Balmore Rd G22 2nd floor right).
So, far from being illiquid, BMV btls can be and in the real world are liquidated very quickly indeed. And in a market far removed from mainstream estate agency operations which are really what you're describing.
Assuming all your btl investments are much the same as each other, whilst I totally understand and can respect and appreciate that version of landlording, it's also easy to understand why you come to feel "meh" about it.
In my case it's almost the opposite. I really would like to find other ways to make even 2/3rds of what I make from property investing without considerably more input/hassle/volatility and what I call risk. But I can't. Not yet anyway.
Edited by selmahoose on Sunday 23 December 14:46
Saleen836 said:
markiii said:
Technically true but once it gets to zero it's replaced with a flat 20% tax credit
https://www.telegraph.co.uk/investing/buy-to-let/n...
Interesting article, i was a bit lost on this part though...https://www.telegraph.co.uk/investing/buy-to-let/n...
While the move mainly affects those who already pay higher-rate income tax, it will push some basic-rate taxpayers into the higher-rate bracket once their rental income has been taken into account. Others will lose means-tested benefits.
How is someone with a property they rent out able to obtain means tested benefits??
I would have thought the asset value though would cancel our means tested benefits. But again guessing perhaps a 100% BTL mortgage could mean you have no asset either.
Rather bizzare though
creampuff said:
1)How do you find or network with BTL investors when you buy and sell things?
2)I could be convinced to re-look at it myself if I could find an easier way to buy and sell.
1) and 2) are really very different things. The "real" btl guy doesn't have "sell" in his vocabulary. He buys to LET. And what he wants is max income from renting out his purchases. Having spent the time money and effort to get a btl he isn't going to be keen to part with it, is he? What a btl guy is interested in is building a portfolio of income producing properties. the btl guy only wants easier ways to BUY.2)I could be convinced to re-look at it myself if I could find an easier way to buy and sell.
It's the 'flipper' who wants both buy and sell ease, especially BUY because getting the right stock is always the flipper's biggest problem. In my opinion - and I flipped many properties over about a 10 year period - whilst there has been a time when flipping was easy, now is not that time and there probably hasn't been a harder time to be flipping for a living since WW2. I have one associate who still buys and sells continually and makes a very good income from it indeed. But he is massively experienced and connected and whilst relatively young has been in and around the property business since he was a young kid playing in his dad's property office which was started by his grandad before him.
If I were you I'd leave 'flipping' until prices indicate a period of prolonged steady rise if you really do want to both buy and sell "easily'.
1) is another matter. Do you mean "you" as in me or as in "one"? Well if you mean me, then I simply use the contacts I've made over going on 5 decades (omigod!) of buying and selling and renovating and even building but always renting property.
If I am definitely 'shopping' I'll phone the guy I mentioned above. "Hi R it's me, what've you got"? He knows me very well (he is my business friend) and he knows the type of thing to offer me. He will tell me his list and he will be guaranteed one of three reactions. a) no thanks don't fancy any of them. b) yes please I'l have that one. In which case he'll want it settled completely inside a calendar month c) hmm tell me a bit more about that one. Which will then lead back to a) or b) or, occasionally, give me a couple of hours to get back to you, in which case that is exactly what I'll do.
I am also inclined to give him a call if I come across something I don't want or can't take on myself but know he can work with. That's a "favour". And a favour begets a favour. etc etc etc. And very occasionally someone might contact me looking for something and I'll phone him on their behalf but only if I'm certain it's real because in the property dealing world most - almost everyone - is an earhole bender looking for a favour you don't owe or a break they've no real reason to expect you to provide.
That would be typical "networking" for me. And I have a dozen numbers of different qualities of source for dealing in my patch.
And of course networking is not by any means the only way to find good stock to buy or sell tho' it is a good way.
How "ONE" (like the OP) should go about it is different.
I certainly wouldn't particularly suggest the method suggested above - ie go to property meets and hope to bump into a sourcer. No way. Because that is a sourcer who's looking for new unknown randoms to supply. Fresh meat. Why? Why would you travel, say, from Edinburgh to London to meet new people to supply property to? What's wrong with supplying the contacts you've established in Edinburgh rather than complete strangers who are unlikely to have already made any supply contacts otherwise they wouldn't be there hoping to bump into some sourcer they don't know from Adam? The odds on that working out are pretty long. Years ago I actually worked the London market by placing a repeat lineage ad in the Evening Standard. It got plenty of response which became a colossal waste of time until I (quite quickly) learned how to weed out the time wasters and then it just became a waste of a smaller amount of time until I just stopped it. Pointless and unnecessary.
So here's what we did recently:
Nearly two years ago now my good associate and ex-partner and friend heard rumours of good deals to be done in a certain European capital. Not unlike Berlin of 2000-2005 where we've done (and do) very well. So did I fancy it? (nope, can't be assed. Too old and fed up travelling about). He's 20 years younger than me, and not unlike the guy above, is a second generation property guy. Almost entirely btl never flipping tho' sells one or two occasionally. So off he goes. Spends a week sniffing around all the agents he can find who're dealing in the types of property we want. Sits down and talks to them. "Interviews" them if you like. Explains he's there to do business. Explains what's needed ie "the arithmetic" and the full effective management etc Makes clear that he's not interested in being skimmed and wants to do some hefty business which could make them many sales commissions and then ongoing letting commission PLUS as a centre of influence what he needs he has friends who also need.
Now there are all kinds of people in business. But they really aren't all stupid. And they really aren't all interested in making a quick buck today rather than a long steady repeat buck over years. So my friend chooses the agent he thinks he can work with and buys the first two units. The purchases (€10-20k apiece) are in Euros raised by refinancing Berlin property. And the game commences. Agent begins the letting process. Couple of months later a phone call to go and inspect another couple of properties. And so on and so forth until 20 units are now happily bought and occupied generating just a tad over 10% of cost price nicely and steadily under the management of a delighted agent. We brought another guy in too. He did buy a couple but then started getting hard and trying to lowball the agent and his sellers and that didn't really work.
Unfortunately a rush of buyers (predominantly Russian and Chinese) have now virtually ended this 'game' in this particular location and it is now much much harder to get any more stock, though the odd one does crop up but not really of the same quality or price as when the thing began. It's game over now really.
But the CRUCIAL part of the enterprise is in making the right connection who knows what they are doing, knows what you need, sees benefit to themselves in supplying it, and is prepared to facilitate it. And this is exactly the same as what the OP needs. And it is the same WHEREVER he wants to own property, from his own patch to the other side of the world.
He (or anyone else) needs to approach the agent in the selected area who deals in the type of stock (selling or letting and preferably both) that the stranger wants. And he should be able to see it in 'real time'. When I was sourcing letting concerns for portfolio builders it was normal to open up the computer files on actively managed properties so that the potential buyer could see in 'real time' how the figures worked, and had worked sometimes over a lengthy period. Why not? If my agent has a client and phones me to ask if its ok if they show him one or other of my properties' files why would I object? Helps him out and ensures I keep getting invites to the office party!
Now of course there are many agents/sourcers/salesmen etc for whom the quick killing is all important so the essential is to deal only with people who want to play the long game. Referral can help this. Or even ask them to put you in touch with someone (or two) they're already dealing with and listen to their opinion. Avoid people who aren't keen or won't even discuss the downside risks or the exit line etc. Nothing ALWAYS goes perfectly so drill down into the contingencies in place to rescue and reverse bad scenarios. How do they deal with maintenance support both minor and major? How about rent default? Mandatory paperwork? Even speedy offloading? s
t is definitely going to happen. So a serious player shouldn't be reluctant to discuss what happens when it does. ...and I think that's enough as this is threatening to become a book.
And tbh there's nothing really in it that isn't just basic common sense. Thanks for all of the replies! Really appreciate the candid advice.
I've got about 50k to put towards a purchase, I realise this probably limits me to something pretty modest. I have good links with Manchester, including friends in the area with experience of property maintenance.
I figured the main reason for BTL being worthwhile was leverage? I don't need income, at least not currently. Do many people opt for repayment mortgages on BTL?
Once again thanks for the advice.
I've got about 50k to put towards a purchase, I realise this probably limits me to something pretty modest. I have good links with Manchester, including friends in the area with experience of property maintenance.
I figured the main reason for BTL being worthwhile was leverage? I don't need income, at least not currently. Do many people opt for repayment mortgages on BTL?
Once again thanks for the advice.
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