Btl's possibilities but what would you do and why?
Discussion
Hello all,
I am hoping to possibly get into btl investments, I have a few possibilities and I am just curious what you all would do and why.
I currently have a relatively small mortgage on a two bed house (semi) where me and my partner live (it's far to big for us) near East croydon.
Option 1)
I have saved up 100k and my original intention was to buy 2 flats or 1 house (hmo) to then rent out using my savings as a deposit. (Most likely somewhere north) and stay living in my current two bed home.
Option 2)
Move out of the two bed house and make the downstairs living room into two seperate bedrooms so this would become a 4 bed bedsit. Then with my 100k deposit buy a property to go and live in for 5 years and then swap back when we are ready to start a family.
Now the curve ball! In my two bed house there currently is 4 classic cars stored in the garage built on the side. I do feel uncomfortable leaving these however access to these by tenants would be made impossible.
What are you thoughts?
I am hoping to possibly get into btl investments, I have a few possibilities and I am just curious what you all would do and why.
I currently have a relatively small mortgage on a two bed house (semi) where me and my partner live (it's far to big for us) near East croydon.
Option 1)
I have saved up 100k and my original intention was to buy 2 flats or 1 house (hmo) to then rent out using my savings as a deposit. (Most likely somewhere north) and stay living in my current two bed home.
Option 2)
Move out of the two bed house and make the downstairs living room into two seperate bedrooms so this would become a 4 bed bedsit. Then with my 100k deposit buy a property to go and live in for 5 years and then swap back when we are ready to start a family.
Now the curve ball! In my two bed house there currently is 4 classic cars stored in the garage built on the side. I do feel uncomfortable leaving these however access to these by tenants would be made impossible.
What are you thoughts?
I think you should keep your home separate from your BTL. If you have £100k saved, buy a property outright in Scotland or put £50k deposit down on 2 properties with 2 BTL mortgages. The reason I suggest Scotland is that the apartments are not leasehold. A £100k property in Scotland will bring in around £600 per month.
I glanced through an article in the Personsl Finance section of todays Telegraph.
There is a tale of a big time long standing BTL operator, who has now had enough. Is trying to dispose of his properties, but there are sitting tenants, so he even made cut price offers to his tenants, but with little success.
Another article about a smaller operator, also quite long term, who has suddenly experienced tenants not paying rent. He has to pay his mortgages, but the tenants are not concerned about that. The landlord did not have that problem during the 2008 financial crash, or the pandemic, but the present period of inflation is causing his tenants problems. One said not leaving, until the bailiffs arrive. There is rent insurance available, but those premiums have apparently now sharply increased.
Would tread carefully be an appropriate suggestion ?
Timing is relevant to any type of investment, particularly one involving gearing. Property has had a strong upward run for quite some time. Far in excess of inflation and average incomes.
I am not trying to put you off, but simply emphasising the importance of investigating every aspect that could be involved.
Edited by Jon39 on Saturday 4th June 16:30
Williambridge said:
What are you thoughts?
My first thought, having been a landlord only once and it didn't end well, is that you're running a bath with the plug out. Much simpler just to invest the £100K wisely in the markets and enjoy a hassle-free return. Being a landlord isn't a cash cow, it's a job that needs knowledge and it can get ugly.My second thought is that you have twice as many classic cars as bedrooms in your house. That alone is a laudable achievement!
If you want exposure to property without the faff then there are property based ETFs you can put in an ISA. They're a nice steady alternative to stocks and shares, and without the hassle of buying individual properties.
Arguments for;
Exposure to property if that is what you are after, without having all your eggs in one basket (property).
Will include residential, commercial and retail.
Tax efficient as can be wrapped in an ISA.
Professionally managed portfolio.
Arguments against;
Withdrawals can be blocked if too many people try and withdraw at once.
Arguably an inefficient use of cash as money needs to be set aside to pay for withdrawals, instead of being 100% invested in the underlying assets.
Can't put business expenses through an ETF like you can with a BTL.
Not that I'm suggesting this fund in particular, but things like this are available.
https://www.hl.co.uk/funds/fund-discounts,-prices-...
Arguments for;
Exposure to property if that is what you are after, without having all your eggs in one basket (property).
Will include residential, commercial and retail.
Tax efficient as can be wrapped in an ISA.
Professionally managed portfolio.
Arguments against;
Withdrawals can be blocked if too many people try and withdraw at once.
Arguably an inefficient use of cash as money needs to be set aside to pay for withdrawals, instead of being 100% invested in the underlying assets.
Can't put business expenses through an ETF like you can with a BTL.
Not that I'm suggesting this fund in particular, but things like this are available.
https://www.hl.co.uk/funds/fund-discounts,-prices-...
Landlord with 5 properties, and just selling the last of them, and glad to see the back of them.
Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
Condi said:
If you want exposure to property without the faff then there are property based ETFs you can put in an ISA. They're a nice steady alternative to stocks and shares, and without the hassle of buying individual properties.
Having been caught by the Aviva Property Fund (I mean, property, what can go wrong?) I wouldn't be quick to invest again - unless things have changed radically or that fund was just unlucky.Simpo Two said:
Having been caught by the Aviva Property Fund (I mean, property, what can go wrong?) I wouldn't be quick to invest again - unless things have changed radically or that fund was just unlucky.
What happened to the Aviva Property Fund? Property funds have generally done very well over the last 6 months and are a nice alternative to having a portfolio entirely in stocks. Condi said:
Simpo Two said:
Having been caught by the Aviva Property Fund (I mean, property, what can go wrong?) I wouldn't be quick to invest again - unless things have changed radically or that fund was just unlucky.
What happened to the Aviva Property Fund? Property funds have generally done very well over the last 6 months and are a nice alternative to having a portfolio entirely in stocks. As a small professional landlord for thirty years I have seen considerable changes
.
Decide what type of tenant you are going to specialize in (eg. young professional, student, DSS, family etc.) then purchase the property accordingly - I have let to them all and they all come with problems.
Your option2 may not meet HMO standards:
Before you decide on any HMO, make sure you are fully aware of all the legislation (and this includes non licencable HMOs)
.
Decide what type of tenant you are going to specialize in (eg. young professional, student, DSS, family etc.) then purchase the property accordingly - I have let to them all and they all come with problems.
Your option2 may not meet HMO standards:
Before you decide on any HMO, make sure you are fully aware of all the legislation (and this includes non licencable HMOs)
Simpo Two said:
Well that was my thinking back in the late 90s. I put £6K in; by 2020 it had staggered up to £9K. I was about to sell it; my accountant said 'leave it until year end' - but a month later the fund was suspended, with all investors getting a fixed proportion back in stages. About £7K in my case. A complete donkey.
Accountants are expected to use their knowledge, to provide guidance about tax law to their clients.
Your accountant seemed to go beyond that, 'leave it until year end', apparently straying into giving investment advice.
You were ready to receive £9,000, but your accountant's unhelpful intervention reduced that by £2,000.
Hope he knocked that off your fee.
Trying to forecast economic future, is hit and miss for anyone.
bearman68 said:
Landlord with 5 properties, and just selling the last of them, and glad to see the back of them.
Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
A 10% return is useless? Where else could you get close to that with a similar risk and effort profile?Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
dmahon said:
bearman68 said:
Landlord with 5 properties, and just selling the last of them, and glad to see the back of them.
Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
A 10% return is useless? Where else could you get close to that with a similar risk and effort profile?Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
Jon39 said:
Accountants are expected to use their knowledge, to provide guidance about tax law to their clients.
Your accountant seemed to go beyond that, 'leave it until year end', apparently straying into giving investment advice.
You were ready to receive £9,000, but your accountant's unhelpful intervention reduced that by £2,000.
We were going to do CGT calcs just before year end and I think he didn't want unexpected sums arriving before that. Yes I should have followed my instinct and sold, but then, as I'd had the fund for 20+ years, didn't think a few months more would make much difference. My bad judgement.Your accountant seemed to go beyond that, 'leave it until year end', apparently straying into giving investment advice.
You were ready to receive £9,000, but your accountant's unhelpful intervention reduced that by £2,000.
bearman68 said:
Landlord with 5 properties, and just selling the last of them, and glad to see the back of them.
Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
Tbh the biggest gains I've had from BTLs is the massive capital growth but I guess that depends on which area you buy them and also when you bought them.Tenants not paying rent, houses that need constant attention, and as someone else said, like running a bath with the plug out. Stagnant rent inflation as the tenants stayed years, and were very resistant to price increases, insurance PITA. I'm in Wales so Her Van Drakeford has seen the private landlord as the devil incarnate and regulated and costed to suit. HRMC issues, tax returns to fill in, etc etc etc, just so much of a PITA it just makes life miserable and pointless.
And on top of that, the returns are poor. I think even a very positive assessment would yield 10% ROC. That's hopeless.
It can and does work, I’ve got multiple apartments and houses I let, been doing this for about six years now. Just purchased another two houses and two more apartments.
For BTL a decent deposit is needed to make the figures work, these are two examples of my most recent ones:
Apartment Purchase price 140k
Deposit 70k
Rent 750pcm, 9kpa
Mortgage at 2.59% 1,813
Service charge 900
Ground rent 100
Net pa 6,187
House Purchase price 240k
Deposit 90k
Rent 1,100pcm, 13,200pa
Mortgage 3,885
Insurance 260
Net pa 9,055
Fixed rates for 5 years.
The key things for me are purchasing the right property, low maintenance, low service charges (for the apartments with a local management company), good EPC Rating and most of all, getting the right tenants.
Most of mine are top end apartments in nice areas which attract young professionals, who look after the properties.
Capital appreciation over the six years is sizeable but doubt this will continue for the next few years, I see prices staying pretty flat for a while.
It’s worked for me and I’m continuing to invest.
I’ve personally avoided HMO’s, higher returns yes, but more legislation, compliance and hassle.
The fly in the ointment will be if we get a change of government in 2024 and the hammering of Landlords kicks off….
For BTL a decent deposit is needed to make the figures work, these are two examples of my most recent ones:
Apartment Purchase price 140k
Deposit 70k
Rent 750pcm, 9kpa
Mortgage at 2.59% 1,813
Service charge 900
Ground rent 100
Net pa 6,187
House Purchase price 240k
Deposit 90k
Rent 1,100pcm, 13,200pa
Mortgage 3,885
Insurance 260
Net pa 9,055
Fixed rates for 5 years.
The key things for me are purchasing the right property, low maintenance, low service charges (for the apartments with a local management company), good EPC Rating and most of all, getting the right tenants.
Most of mine are top end apartments in nice areas which attract young professionals, who look after the properties.
Capital appreciation over the six years is sizeable but doubt this will continue for the next few years, I see prices staying pretty flat for a while.
It’s worked for me and I’m continuing to invest.
I’ve personally avoided HMO’s, higher returns yes, but more legislation, compliance and hassle.
The fly in the ointment will be if we get a change of government in 2024 and the hammering of Landlords kicks off….
Williambridge said:
Hello all,
I am hoping to possibly get into btl investments, I have a few possibilities and I am just curious what you all would do and why.
I currently have a relatively small mortgage on a two bed house (semi) where me and my partner live (it's far to big for us) near East croydon.
Option 1)
I have saved up 100k and my original intention was to buy 2 flats or 1 house (hmo) to then rent out using my savings as a deposit. (Most likely somewhere north) and stay living in my current two bed home.
Option 2)
Move out of the two bed house and make the downstairs living room into two seperate bedrooms so this would become a 4 bed bedsit. Then with my 100k deposit buy a property to go and live in for 5 years and then swap back when we are ready to start a family.
Now the curve ball! In my two bed house there currently is 4 classic cars stored in the garage built on the side. I do feel uncomfortable leaving these however access to these by tenants would be made impossible.
What are you thoughts?
My thoughts areI am hoping to possibly get into btl investments, I have a few possibilities and I am just curious what you all would do and why.
I currently have a relatively small mortgage on a two bed house (semi) where me and my partner live (it's far to big for us) near East croydon.
Option 1)
I have saved up 100k and my original intention was to buy 2 flats or 1 house (hmo) to then rent out using my savings as a deposit. (Most likely somewhere north) and stay living in my current two bed home.
Option 2)
Move out of the two bed house and make the downstairs living room into two seperate bedrooms so this would become a 4 bed bedsit. Then with my 100k deposit buy a property to go and live in for 5 years and then swap back when we are ready to start a family.
Now the curve ball! In my two bed house there currently is 4 classic cars stored in the garage built on the side. I do feel uncomfortable leaving these however access to these by tenants would be made impossible.
What are you thoughts?
It's unusual for someone to describe a two bedroom semi-detached home as "far too big for us"
Is your current house abnormally large relative to number of bedrooms?
What are your goals for a btl? Do you want to make money off the property, make money off the rent or both?
You mention starting a family in 5 years' time. Will you want to get out of your BTL(s) then to move to a bigger house?
Gassing Station | Finance | Top of Page | What's New | My Stuff