BTL after CV

[Phooey]

Just interested in peoples thoughts. With the recent talk in the media of Interest rates going negative, stock market inflated and predicted low growth, job securities etc - will investors accept the lower yields of BTL as the safest place to invest cash? A few people I've spoken to recently feel safest putting their money into bricks and mortar than any of the usual alternatives on offer

[Phooey]

rockin said:

Phooey said:

A few people I've spoken to recently feel safest putting their money into bricks and mortar than any of the usual alternatives on offer

That's because they haven't realised it's about the most highly taxed place you can put your money in UK today.

These aren't stupid people


I admit I personally know very little about the BTL game, but imagine you have a pot of cash sitting in the bank. Do you leave it to erode to inflation, take the risk of an even more serious downturn in the economy, throw it into the stock market, or stick to the security of owning bricks and mortar. I just wonder if there's more people happy to accept a 4-5% yield today (standard 2/3 bed resi's) than there was 12 months ago when a lot of amateur / accidental landlords were feeling the pain of the anti-BTL government.

[Phooey]

anonymous said:

[redacted]

Yes and no. Mortgages could become harder to obtain, larger deposits, reduced LTV's etc. Job security could well mean tenants defaulting yes, but equally I think many potential first time buyers will continue renting or look to renting due to unknown job security.

[Phooey]

dogz said:

BTL has done well for me so far, whilst I have some stocks and shares, a pension and cash, BTL has given me by far and away the best returns

I agree BTL isn't for everyone but its definitely for me. I've got a solid near guaranteed income when I retire and the mortgages are cleared. Its not without its hassles but look at the current annuity rates and tell me they are appealing

That's good to hear! Out of interest what type of properties do you have?

[Phooey]

My gut feeling is the BTL market will remain very strong, if not stronger.

2 and 3 beds (mainly modern semi's) rent very quickly in my local area - good demand. The yields are approx 4-5% max (fully let and self-managed). I think if I could buy them outright (no mortgage) it could still be worthwhile given the alternatives. I just can't get my head around whether it's best doing it through a limited company or not. And I really wouldn't want to manage them myself - so i'd have to factor in (10%?) management fees. In an ideal world I'd like enough to bring in £30-40k/yr which equates to approx 4-5 properties.

[Phooey]

dogz said:

Typically 2-3 bed semis or detached let to professional tenants / families

I've also got a couple of flats but service charge destroys the profitability

I usually look for distressed sales

Cheers dogz. Good idea re distressed sales - I wouldn't know where to start to find these today.. but I suppose with experience you learn this.

[Phooey]

Has anyone recently done any research into which lenders are offering the best rates? I can easily find information for a standard residential mortgage online, but not for BTL. I'm trying to get an idea of how much per £100k of borrowing a repayment (Capital + Int) would roughly cost per month over a 15 and 20yr term.

Example property I've found is a 3 bed @ £230k which would rent for £900/mth. 4.5% yield before costs / voids. Before applying or wasting anyones time, I want to get an idea in my head of how much per month the mortgage will be? I'm not interested in discounted terms.. just looking for total cost of borrowing.

Cheers

[Phooey]

dogz said:

Go onto compare the market as a starter for 10 and search on BTL's. Enter the property value, deposit and term and out will come the number. Just be careful as often the lowest APR isn't the best overall once you factor in fees

Once you have found a few lenders you like, look on their intermediary websites to understand lending criteria, rental cover etc and see what other products are available.

I’ll do that, thanks. What I did earlier was a search for residential mortgages and then just added a bit on. I’m trying to refine it by total costs rather than introductory etc. Also need to find a lender which accepts dividends as income. The rest shouldn’t be a problem as no further debt and a good credit history.

[Phooey]

dogz said:

Go onto compare the market as a starter for 10 and search on BTL's. Enter the property value, deposit and term and out will come the number. Just be careful as often the lowest APR isn't the best overall once you factor in fees

Once you have found a few lenders you like, look on their intermediary websites to understand lending criteria, rental cover etc and see what other products are available.

Just had a play on it - good site and exactly what I wanted. 100k over 15yrs is around £600/mth and over 20yrs roughly £470/mth.

[Phooey]

Pretty much the same thinking as me.

I'm not interested in HMOs or student/multi let properties. I was thinking along the lines of 3 bedroom modern semi-detached houses (seem more of a shortage over 2 beds) for approx 230k each. Rent will be approx £900/mth give or take. LTV them at approx 50-60% over 15yrs - repayment. Tennant is paying the mortgage effectively. Rinse and repeat x 4or5 = £40-50k/yr pension. Something for hopefully my daughter to inherit.

Ideally I would want to see a tax specialist who can advise whether the above^^ would be better to put into a Ltd co (SPV?) or not.

In theory should be simple, but because the gov don't like BTL, it needs to be set up correctly from day 1.

[Phooey]

LooneyTunes said:

If you’re going down that route, do your sums carefully!

Cost of setting up a structure may not be low, and running a ltd structure isn’t free. Transaction costs will eat most of your first year’s income from each property you add. Ltd mortgages won’t be cheap either, if you can get one. Managing to get all that done in a way that works for inheritance is even harder (= more expensive)... but is possible.

Yes, would need to sit down with someone who knows this stuff inside out. I appreciate the game has changed significantly (for the worse) in the UK, I'm just mindful it's going to change again. But at the end of the day - there's always going to be demand for rented property - so you'd think (hope!) the gov don't tip the scales too far that it backfires on them.

[Phooey]

re commercial - I currently rent a couple of units (combined size 5000sq/ft) and around my way there's definitely a shortage of small warehouse units. Try finding an out of town, accessible, clean/dry, secure sub-1000sq/ft warehouse unit. You''ll find plenty of farms, but dedicated sites are thin on the ground. They are in demand for a wide variety of uses. Admittedly I've not given it too much thought, but if you could find a site where you build or convert lots of small units combining a few serviced offices you'd be onto a winner. Even better (i think) if you can get some of the units to come under £2899 rateable value.


I don't think I'd be touching anything too heavy in commercial atm.