70k to invest, buy to let?
Discussion
After selling a few assets I’ve ended up with around 70k
I know nothing of finance or investments or shares.
I’m not a risk taker just doesn’t sit well with me. I don’t undertsand or would dare buy shares.
If I leave it just sitting in the bank I know enough to realise inflation with deminish it over the years
So that leaves me buying somewhere and renting it.
It’s all I can think of, money has never been one of my motivations I’m thinking get a return and if I need money in future I can sell and probably not lose anything.
Pitfalls, is going into something like that going to be a huge headache for a novice?
I know nothing of finance or investments or shares.
I’m not a risk taker just doesn’t sit well with me. I don’t undertsand or would dare buy shares.
If I leave it just sitting in the bank I know enough to realise inflation with deminish it over the years
So that leaves me buying somewhere and renting it.
It’s all I can think of, money has never been one of my motivations I’m thinking get a return and if I need money in future I can sell and probably not lose anything.
Pitfalls, is going into something like that going to be a huge headache for a novice?
Thanks guys,
A good man knows his limitations, I have mental block when it comes to those sort of things. Shares etc. I’ve tried I admit defeat plus add to scared of losing it all with nothing to show for it. I grew up with very little in a poor area ( get violins out) I’m scared of losing it with nothing to show. It’s going to take a lot of education to get around those mental road blocks I don’t even bet on the national. I don’t think I’ll ever get it.
The way I see it buying a property would leave me with a solid asset that I guess will not lose much maybe even increase in value although round here hmmm maybe not
If it turns out too much of a headache I could always sell it. I’m just worried about the hassles I might get from tenants
So why am I throwing this idea out to strangers on the net obviously where finance is concerned I’m not confident it’s just the way I am.
I have a place in another country that after 5 years is starting to pay for itself but it’s been too much hassle to be honest we’ve had some difficult people in, lots of repairs and lots of hassle.
It’s the hassle I can’t be doing with, just don’t have patience for paper work pretty sure I have some sort of condition or I’m just too stressed whatever
Sort of property you get around here for that is getting around £450 a month. For as little hastle as possible it look like an agency can take care of it for 15% plus I’d be taxed 40% on that. Painting,decorating etc I’m not sure it’s worth it.
Or is it
Oh I don’t know might just buy a grand Cherokee or something.
A good man knows his limitations, I have mental block when it comes to those sort of things. Shares etc. I’ve tried I admit defeat plus add to scared of losing it all with nothing to show for it. I grew up with very little in a poor area ( get violins out) I’m scared of losing it with nothing to show. It’s going to take a lot of education to get around those mental road blocks I don’t even bet on the national. I don’t think I’ll ever get it.
The way I see it buying a property would leave me with a solid asset that I guess will not lose much maybe even increase in value although round here hmmm maybe not
If it turns out too much of a headache I could always sell it. I’m just worried about the hassles I might get from tenants
So why am I throwing this idea out to strangers on the net obviously where finance is concerned I’m not confident it’s just the way I am.
I have a place in another country that after 5 years is starting to pay for itself but it’s been too much hassle to be honest we’ve had some difficult people in, lots of repairs and lots of hassle.
It’s the hassle I can’t be doing with, just don’t have patience for paper work pretty sure I have some sort of condition or I’m just too stressed whatever
Sort of property you get around here for that is getting around £450 a month. For as little hastle as possible it look like an agency can take care of it for 15% plus I’d be taxed 40% on that. Painting,decorating etc I’m not sure it’s worth it.
Or is it
Oh I don’t know might just buy a grand Cherokee or something.
mike9009 said:
I don't have any BTL and as others have said the benefits are slowly being taxed out.
The other issue is you have all your eggs in one big basket, which could turn sour and would be more difficult to liquidate. (For example, recession hits, you lose your job, property markets crashes and you cannot sell the property - never happened before...…;) )
I would look at spreading the investment/ risk somewhere else.
Mike
We yeah now you’ve done it, that’s that idea out the window The other issue is you have all your eggs in one big basket, which could turn sour and would be more difficult to liquidate. (For example, recession hits, you lose your job, property markets crashes and you cannot sell the property - never happened before...…;) )
I would look at spreading the investment/ risk somewhere else.
Mike
Spreading it makes sense what on?
xeny said:
b***hstewie will shortly be offering the "4 day course to equity investing success" , but more seriously, I find buying equities easier, cheaper and less stressful than buying property.
How much is this course I definitely need it.Saleen836 said:
joyless lobotomised parrot said:
Here's the type of thing you need.
http://www.futurepropertyauctions.co.uk/property_d...
Bought separately no tax on the way in, very little annual tax to pay if strategised well, and ditto on disposal too.
Easy to get managed too for 10% of the rent.
Be very surprising if you didn't nett 10% of the price as your annual pocket money.
How is there no tax on the way in by buying seperately?http://www.futurepropertyauctions.co.uk/property_d...
Bought separately no tax on the way in, very little annual tax to pay if strategised well, and ditto on disposal too.
Easy to get managed too for 10% of the rent.
Be very surprising if you didn't nett 10% of the price as your annual pocket money.
Edited by joyless lobotomised parrot on Saturday 16th June 15:31
I was looking at this. Just down the road
http://www.rightmove.co.uk/property-for-sale/prope...
I can stretch to 80 cash just wanted to have a little buffer in the bank for toys and issues
croyde said:
Pesty said:
I’m wondering that
I was looking at this. Just down the road
http://www.rightmove.co.uk/property-for-sale/prope...
I can stretch to 80 cash just wanted to have a little buffer in the bank for toys and issues
F me!! £80k for a house. I know it's oop North but what else is wrong with it I was looking at this. Just down the road
http://www.rightmove.co.uk/property-for-sale/prope...
I can stretch to 80 cash just wanted to have a little buffer in the bank for toys and issues
I doubt that'd buy me a parking space round here. The tiny 1.5 bed flat I'm renting is about £600k to buy in a not brilliant area of SW London.
It’s a s
ty area of Doncaster so double sty or st squared however they are doing lots of new builds and bringing the area up a bit. Similar has happened in villages nearby it’s old pit council house area. That one just looked in reasonable nick. I walk the dogs on the moors right behind there so I might take a look.Hmm prices have been up and down.
fk it those Jl wranglers look nice never bought a new car
Think I’ll look into those isa things
Had a little peak of that in the place abroad. Breaking things fking up pool filter £800quid.
One woman angry that taxi fares were high from airport because she forgot her suitcase and had to go back made three trips so blocked all toilets and left all air cons on all week.
Erm
How much is coke and hookers these days?
k it those Jl wranglers look nice never bought a new carThink I’ll look into those isa things
Had a little peak of that in the place abroad. Breaking things f
king up pool filter £800quid. One woman angry that taxi fares were high from airport because she forgot her suitcase and had to go back made three trips so blocked all toilets and left all air cons on all week.
Erm
How much is coke and hookers these days?
Edited by Pesty on Saturday 16th June 21:28
Thanks guys
Some good reading there even if I don’t understand a lot of it.
I’m one of the most impulsive and quick at making decisions people you could ever meet except when it comes to money I need a gun to my head. It’s strange I can see me researching this and then being scared to do anything.
I like the sound of these isa where you can adjust the risk
Some good reading there even if I don’t understand a lot of it.
I’m one of the most impulsive and quick at making decisions people you could ever meet except when it comes to money I need a gun to my head. It’s strange I can see me researching this and then being scared to do anything.
I like the sound of these isa where you can adjust the risk
Jon39 said:
Property values have doubled recently, and as you say you are not a risk taker, so it just seems perfect. ~
What could possibly go wrong?
Property is a market, so not very different from other business ventures. The exception in domestic property is our sole main residence, which is usually purchased with a mortgage (therefore the gearing magnifies profits ), and importantly any profit is tax-free.
All that I can suggest, is to learn as much as you can about the property rental market, and in particular the risks that you will be taking. If the unexpected happens, at least you will have been prepared.
Wil they go lower?possible but it won’t be the crash other places will see. Who knows.
That whole second paragraph might have been speaking greek to me. Gearing magnifies profits?
NRS said:
It'll be even worse, as during those 12 years if you invested elsewhere you will have (generally) made a lot more money too. So it's not even just the price drop of the properties.
As for the gearing bit he mentions - since you take out a mortgage then any price increases (or decreases) will be on the amount your mortgage is, not the downpayment you make. So you have your 70k deposit. If you invest that in stocks you will make say 10% a year, so that would be 7k profit. However you could use your 70k as a deposit on a house for say 140k. House prices in this example also go up 10% in that year. Since the 10% increase is on the house price and not your mortgage then you make 14k instead (although of course you pay a bit of interest on the mortgage loan). So the loan acts as a multiplier for any increase or decrease, as in this case you are gearing at 2x your actual money.
It's why so many people feel they have benefited from house ownership. You can make far bigger gains than you would elsewhere. It's also why you can get stuck in negative equity for years too if things go wrong. In the example above if it drops 10% then you will lose 14k by owning the house instead of 7k for having 70k of stocks/savings etc. However this is if you realise it (actually sell). In general this happens a lot with stocks - they might drop 4% in a day. In general though if you wait then they will go back up and increase more. So it's best not to panic sell when you make a paper loss.
Thank you.As for the gearing bit he mentions - since you take out a mortgage then any price increases (or decreases) will be on the amount your mortgage is, not the downpayment you make. So you have your 70k deposit. If you invest that in stocks you will make say 10% a year, so that would be 7k profit. However you could use your 70k as a deposit on a house for say 140k. House prices in this example also go up 10% in that year. Since the 10% increase is on the house price and not your mortgage then you make 14k instead (although of course you pay a bit of interest on the mortgage loan). So the loan acts as a multiplier for any increase or decrease, as in this case you are gearing at 2x your actual money.
It's why so many people feel they have benefited from house ownership. You can make far bigger gains than you would elsewhere. It's also why you can get stuck in negative equity for years too if things go wrong. In the example above if it drops 10% then you will lose 14k by owning the house instead of 7k for having 70k of stocks/savings etc. However this is if you realise it (actually sell). In general this happens a lot with stocks - they might drop 4% in a day. In general though if you wait then they will go back up and increase more. So it's best not to panic sell when you make a paper loss.
Edited by NRS on Tuesday 19th June 22:44
I actually understood that pretty well.
DonkeyApple said:
The boner over property was that you could borrow at near 100 times leverage at one point so put down £1000, borrow £99,000 and if the value of the property went up £10,000 that was your return on a £1k punt. Leverage at those levels is toxic which is why it’s extremely good for all that it has been wound in on the BTL market.
But, in terms of risk, 2 times gearing is actually pretty negligible in most markets. Put down 50, borrow 50, lenders are generally chilled as the market is not likely to fall much more than 30% statistically in a hard sell off. So the risk doesn’t really vary if you gear up 2 fold but your return does double and this is still the big raw advantage of property over other investments where the cost of borrowing tends to be much higher and downsides also higher.
The next thing is your local property market. You say values haven’t risen. That’s not a bad thing. You’re investing primarily for yield not speculating for capital gain. If values haven’t gone up then they aren’t going to come down so hard in a fall. The key in your locale is rents. If you are investing for yield then it’s the rents that are vital first and foremost. The Local Authority underpins the rental market and wages define the rental rates. Rents aren’t directly linked to property values, that’s kind of secondary.
In short, you need to set down what local rents are, what local values are and from that work out the average yields. Recognise that you can double your yield from borrowing 50% and then look very honestly as to whether you want to rent and deal with the type of monumental, dirty, moronic you’re likely to end up having a direct, personal relationship with.
And that’s really the nub of it. Do you like the idea of welcoming and absolute turd muncher into your life in exchange for a few quid a month when you could just feed the money into some global trackers and know that you won’t be getting a call at 2am from some semi retarded fktard about a bulb having blown. Because the very harsh reality about owning low end BTL is that you are paying money to enter land and you will be making yourself one of their carers.
Interesting about rents I didn’t know that.But, in terms of risk, 2 times gearing is actually pretty negligible in most markets. Put down 50, borrow 50, lenders are generally chilled as the market is not likely to fall much more than 30% statistically in a hard sell off. So the risk doesn’t really vary if you gear up 2 fold but your return does double and this is still the big raw advantage of property over other investments where the cost of borrowing tends to be much higher and downsides also higher.
The next thing is your local property market. You say values haven’t risen. That’s not a bad thing. You’re investing primarily for yield not speculating for capital gain. If values haven’t gone up then they aren’t going to come down so hard in a fall. The key in your locale is rents. If you are investing for yield then it’s the rents that are vital first and foremost. The Local Authority underpins the rental market and wages define the rental rates. Rents aren’t directly linked to property values, that’s kind of secondary.
In short, you need to set down what local rents are, what local values are and from that work out the average yields. Recognise that you can double your yield from borrowing 50% and then look very honestly as to whether you want to rent and deal with the type of monumental, dirty, moronic
you’re likely to end up having a direct, personal relationship with. And that’s really the nub of it. Do you like the idea of welcoming and absolute turd muncher into your life in exchange for a few quid a month when you could just feed the money into some global trackers and know that you won’t be getting a call at 2am from some semi retarded f
ktard about a bulb having blown. Because the very harsh reality about owning low end BTL is that you are paying money to enter land and you will be making yourself one of their carers. The last part yes that’s what I worry about.
Been very busy at work serious issues yet again. Sigh
Anyway not caught up with last couple of pages but here is where I am,it’s just going through now.
Whilst looking at shares and still looking around at houses I found a house in a lot nicer area for only a little more percentage wise. It just popped up and seemed too good a deal to pass up.
If you remember the 80k house I found estimated rent at 400-450 in a not great area.
well I found a house in a nicer area but a little tired inside, so good price for area. Kitchen and bathroom very good though rest of house needs gutting.
It was only a little more but estimated rent is 650 so made sense to me, only little bit more down initially much better return. Seemed quite logical to me.
Yep it’s a risk and yes worry about tenants although thinking about what you guys said this being in a nicer area with higher rent I expect it’s a better bet.
I spoken with an estate agent who does this kind of thing and all in for 10% of the rent which seems about fair for this area. They excpect a working family and they don’t have any houses in that area and s expect it to be popular.( we will see although they seemed genuine.)
They could have made it 8% but for the extra they will do it didn’t make any sense to me to penny picnh that’s much.
Another reason I went this route.this house will be paid off and in my name only. It’s a decent popular area.
I’m thinking of it as a worse come to the worse I have a bolt hole in a nice area I could always live in if everything else goes wrong. I like to have a fall back plan.
Will update with nightmare stories or indeed impecible pay on time and keep place nice tenants.
Anyway not caught up with last couple of pages but here is where I am,it’s just going through now.
Whilst looking at shares and still looking around at houses I found a house in a lot nicer area for only a little more percentage wise. It just popped up and seemed too good a deal to pass up.
If you remember the 80k house I found estimated rent at 400-450 in a not great area.
well I found a house in a nicer area but a little tired inside, so good price for area. Kitchen and bathroom very good though rest of house needs gutting.
It was only a little more but estimated rent is 650 so made sense to me, only little bit more down initially much better return. Seemed quite logical to me.
Yep it’s a risk and yes worry about tenants although thinking about what you guys said this being in a nicer area with higher rent I expect it’s a better bet.
I spoken with an estate agent who does this kind of thing and all in for 10% of the rent which seems about fair for this area. They excpect a working family and they don’t have any houses in that area and s expect it to be popular.( we will see although they seemed genuine.)
They could have made it 8% but for the extra they will do it didn’t make any sense to me to penny picnh that’s much.
Another reason I went this route.this house will be paid off and in my name only. It’s a decent popular area.
I’m thinking of it as a worse come to the worse I have a bolt hole in a nice area I could always live in if everything else goes wrong. I like to have a fall back plan.
Will update with nightmare stories or indeed impecible pay on time and keep place nice tenants.
Edited by Pesty on Monday 9th July 21:55
NickCQ said:
Pesty said:
I’d know what to do with 1 million 
I appreciate you were probably joking, but what would you do? Pretty much the same but with less fear.
I grew up poor, I have no fear of it but I don’t want to go back there.
I’m in a great position as it is.
But with 1 million I’d happily invest much more in the schemes mentioned in this thread and not worry if I lost some as I’d always have a decent house in the uk tonfall back on.
Doing or not doing isn’t my issue, it’s risk I’m averse to. With more cash there is less risk of ending with nothing.
Put it thus way I’m driving around in a hyundai terracan I bought from eBay for 2k and I love it.
It does everything I need. I might buy a land cruiser or g wagon with 1 million but I wouldn’t go flash.
I’d just invest more and not worry if it paid off.
I’d certanly retire t my villa in Spain
bernhund said:
There'd be a lot to consider. The most important probably being your age as £1m isn't like it used to be! Here in the south east you wouldn't be buying the flashiest of houses before you ran out of cash. Retirement could be for many years too, so I actually think it would be a much more difficult decision to make than for the £70k, though of course a nice problem to have!
I’m working out how to retire now without a million I wouldn’t buy another house mine is good enough for my needs.I could do it but I’d need to rent this house out and she won’t leave her mum sigh.
As I’ve said I am more that willing to live carefully. Stuff us just stuff
JulianPH said:
Only on PH can someone talk about how they would invest a newly found million before mentioning they have a villa in Spain!!!
Villa is a bit if a stretch. I don’t know why they call them villas. It’s a nice little place and I’m very lucky, don’t imagine some huge ostentatious place. It suits my needs.
I’m just trying to work out how to spend some time there.
Croutons said:
This is turning into the "if I win the lottery" thread...
How's the purchase progressing op?
And is your agent quoting 10%, 10% + vat, or 10% + vat + tenant finding fee?
Doh err hmmm sHow's the purchase progressing op?
And is your agent quoting 10%, 10% + vat, or 10% + vat + tenant finding fee?
t didn’t ask that. I’ll get back to you
Update soon things are progressing.
Work is wry busy at the moment so leaving most of the arrangements to other half.
A quick fag packet calculation when I saw this property I’m spending 19% more than the origional 70 I was proposing ( the shogun I was mulling over will wait terracan is fine) but this will increase ‘ yield’ is that the right word? Anyway rent for that extra 19% down goes up 38% over the 400 that I would have got from that other property
That wasn’t the main reason as I said above it’s a lot nicer area higher rent meaning less likely to see the issues mentioned earlier in the thread hopefully. But mainly I’ll have a property in my name only. This gives me a quite a lot of peace of mind. This is a long term investment
Prices may go down but as I won’t be selling this it’s shouldnt effect me. Eventually it will pass onto my children. That’s the plan anyway.
Edited by Pesty on Sunday 29th July 00:00
Gassing Station | Finance | Top of Page | What's New | My Stuff