Is there money to be made in 2nd/3rd properties?
Discussion
Hi all,
I've recently paid the CGT on my wife's old house that we recently sold. We rented the property for 6 years, she owned it for a total of 10 years, and seeing what we had to pay for CGT ... is there real money to be made in 2rd / 3rd properties nowadays ?
We didn't really make much during the rental of the property due to ongoing maintenance, mortgage costs, insurances, costs. What ever was made she was hit with tax, letting agent costs, etc. On selling the property the fact that she lived there for a while meant she received private rental relief which reduced the CGT.
We plan to invest this money and the idea is to buy another property to rent although a lot closer to where we now live. However, I just don't see how big money can be made in this current world. Firstly a 2rd mortgage, which will be a B2L type, will be required for the property, it will need painting / cleaning up which I can off set via costs during renting, rental costs, non more mortgage relief, and what ever is left is taxed. Seems small beer considering the high risk of tennants doing a runner, or refusing to pay / going and the process of taking them to court.. Eventually when it comes to sell I will be hit for full CGT, this time with no PRR.
Am I wrong ? Am I now looking at this incorrectly ? The only way I see making money on houses is to buy one, live in it, do it up, sell it and move up the ladder that way. Perhaps buy one in my kids name ?
These dudes that have 5/10 flats, or 2 additional houses, how di you guys make money ?
I've recently paid the CGT on my wife's old house that we recently sold. We rented the property for 6 years, she owned it for a total of 10 years, and seeing what we had to pay for CGT ... is there real money to be made in 2rd / 3rd properties nowadays ?
We didn't really make much during the rental of the property due to ongoing maintenance, mortgage costs, insurances, costs. What ever was made she was hit with tax, letting agent costs, etc. On selling the property the fact that she lived there for a while meant she received private rental relief which reduced the CGT.
We plan to invest this money and the idea is to buy another property to rent although a lot closer to where we now live. However, I just don't see how big money can be made in this current world. Firstly a 2rd mortgage, which will be a B2L type, will be required for the property, it will need painting / cleaning up which I can off set via costs during renting, rental costs, non more mortgage relief, and what ever is left is taxed. Seems small beer considering the high risk of tennants doing a runner, or refusing to pay / going and the process of taking them to court.. Eventually when it comes to sell I will be hit for full CGT, this time with no PRR.
Am I wrong ? Am I now looking at this incorrectly ? The only way I see making money on houses is to buy one, live in it, do it up, sell it and move up the ladder that way. Perhaps buy one in my kids name ?
These dudes that have 5/10 flats, or 2 additional houses, how di you guys make money ?
A neighbour a few doors up from me is a property developer / builder. He mentioned to me a while ago that he's long come out of the residential world and only now focuses on commercial. Tennants sign up for 10 years, have to manage their own maintenance and as its their own shop / business they will tend it keep it in good condition. He deals mainly with commercial units, trading estate locations etc and wouldnt consider shops on the high street anymore.
blueg33 said:
We have just bought a place to use as a furnished holiday let.
Rent is high, but so are costs and vpoid risk. It will just wash its face. For us its a long term play hoping thet the value will increase. It has the benefit of no CGT on sale and no Council Tax during operation
Hi Blue, forgive my ignorance but what is vpoid stand for ? Do holiday lets have no CGT / council tax ? Rent is high, but so are costs and vpoid risk. It will just wash its face. For us its a long term play hoping thet the value will increase. It has the benefit of no CGT on sale and no Council Tax during operation
Thanks guys for all your thoughts and opinions. I havent added much since asking the original question as Im finding it interesting what you guys think / suggest.
I'm starting to feel that my expectations are perhaps what are at fault here. The days of buying a house for £400K doing it up and selling for £600K are either over or seller / estate agents / developers have this so well sewed up now that ordinary joe public dont have a look in. Many of you see what's provided via the current interest rate levels in ISAs, or other financial vehicles, that the 3/4% return yields from rentals make you more money, plus your capital investment is growing. Perhaps all these property programmes have given me a false expectation.
I liked the idea from the guy who provided an example of a Glasgow house for £60K. He would buy that sight unseen and just rent in via a local agent ? Then give it a year and sell on. That seems via hassle free.
However CGT still plays a part on any option you choose, unless FHL ( I didnt know what that meant either :-)). Is CGT still the case with limited company setups i.e. what the guy above me was planning to do ? This is an idea I was considering for my kids, set up a limited company, buy a few houses and pass it over to them to run / manage. I also saw this as another way of potential stopping at future ex partners trying to get half their homes in the event of splitting. Possible ?
Just a quick nod to Eric. Eric has helped me before on the CGT advice and his point about watering down jargon to this level of audience is spot on. He's got me sussed so any explanations need to be in `I have 2 apples, you have 3, how many apples are there ? ` level :-)
Again, many thanks for all your help.
I'm starting to feel that my expectations are perhaps what are at fault here. The days of buying a house for £400K doing it up and selling for £600K are either over or seller / estate agents / developers have this so well sewed up now that ordinary joe public dont have a look in. Many of you see what's provided via the current interest rate levels in ISAs, or other financial vehicles, that the 3/4% return yields from rentals make you more money, plus your capital investment is growing. Perhaps all these property programmes have given me a false expectation.
I liked the idea from the guy who provided an example of a Glasgow house for £60K. He would buy that sight unseen and just rent in via a local agent ? Then give it a year and sell on. That seems via hassle free.
However CGT still plays a part on any option you choose, unless FHL ( I didnt know what that meant either :-)). Is CGT still the case with limited company setups i.e. what the guy above me was planning to do ? This is an idea I was considering for my kids, set up a limited company, buy a few houses and pass it over to them to run / manage. I also saw this as another way of potential stopping at future ex partners trying to get half their homes in the event of splitting. Possible ?
Just a quick nod to Eric. Eric has helped me before on the CGT advice and his point about watering down jargon to this level of audience is spot on. He's got me sussed so any explanations need to be in `I have 2 apples, you have 3, how many apples are there ? ` level :-)
Again, many thanks for all your help.
Edited by sbk1972 on Wednesday 3rd March 15:20
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