hushpower Posted June 8, 2013 Report Share Posted June 8, 2013 (edited) Any advice would be most welcome from you knowledgeble pw members. I am thinking of having a dabble in the property market again,and try and build a property portfolio .To make things simple just supposing say i had a spare £100.000 for investing, is it best to say buy aproperty out right then remortgage against that property and use that equity up, to purchase a 2nd property, or put four lots of £25.000 down on four propertys hope fully with the rent paying the mortgage .Thanks for looking . Edited June 8, 2013 by hushpower Quote Link to comment Share on other sites More sharing options...
Rupert Posted June 8, 2013 Report Share Posted June 8, 2013 It depends on your strategy, If you have 100k and houses are 50k rents are 450 pcm You earn 900 pcm or 10800 pa Market grows by 10% so you gain 10k in capital value This is how we do it If you have 100k and houses are 50 k rents are 450pcm put 30% deposit down 15k and buy 6 houses you earn 6x450 =2700 pcm rent BUT mortgages are 1200 so net rent is 1500pcm or 18k pa BUT if market goes up by 10% you gain 30k in capital growth OR the deposits for two more houses All figures are for illustration only We have a couple we keep mortgage free for a cushion against big expenditures and voids but you get the idea. Quote Link to comment Share on other sites More sharing options...
hushpower Posted June 8, 2013 Author Report Share Posted June 8, 2013 Thanks ever so much Quote Link to comment Share on other sites More sharing options...
al4x Posted June 8, 2013 Report Share Posted June 8, 2013 It's a way of loosing a lot of money rapidly if you aren't pretty clued up, interest rate hikes and empty properties are things you need to consider. We have one with no mortgage and that's a pain in the backside, I'm far happier renovating and selling property as you know where you are Quote Link to comment Share on other sites More sharing options...
pimpkiller Posted June 8, 2013 Report Share Posted June 8, 2013 in this day and age i would keep the money safe and see what happens for a bit, but im an idiot who doesnt know anything about the housing market. Have you thought about a money lending business? Quote Link to comment Share on other sites More sharing options...
happypig Posted June 8, 2013 Report Share Posted June 8, 2013 And I have a lovely one bed flat for sale in Hampshire if you are looking for a property! Quote Link to comment Share on other sites More sharing options...
overandunder2012 Posted June 8, 2013 Report Share Posted June 8, 2013 the rental markets massive now at least in the south it is. very unlikely property's stay empty and you can insure against that. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 Forget cap growth. 25% deposit, interest only mortgage. Get accurate rental val prior to purchase and go for the highest yield of those you see. Buy with tenant if possible and buy with your head not your heart. Quote Link to comment Share on other sites More sharing options...
unapalomablanca Posted June 8, 2013 Report Share Posted June 8, 2013 Forget cap growth. 25% deposit, interest only mortgage. Get accurate rental val prior to purchase and go for the highest yield of those you see. Buy with tenant if possible and buy with your head not your heart. 'interest only mortgage' i am no investor, but even i can see that this advice is plainly wrong. Who wants to pay forever and end up with nothing, oh please dont tell me you know the house price will quadruple over the years of paying the never ending loan. Quote Link to comment Share on other sites More sharing options...
Rupert Posted June 8, 2013 Report Share Posted June 8, 2013 (edited) 'interest only mortgage' i am no investor, but even i can see that this advice is plainly wrong. Who wants to pay forever and end up with nothing, oh please dont tell me you know the house price will quadruple over the years of paying the never ending loan You sell or die to pay the loan. Forget cap growth. 25% , buy with your head not your heart. If you only want a couple of lets to top up the pension I agree,changes things when you get a few and make a business from it.Cap growth is the icing on the cake. Last bit is hard to do in the beginning. Edited June 8, 2013 by Rupert Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 (edited) 'interest only mortgage' i am no investor, but even i can see that this advice is plainly wrong. Who wants to pay forever and end up with nothing, oh please dont tell me you know the house price will quadruple over the years of paying the never ending loan.Clearly you are no investor as approximately 85% of BTL properties are financed that way (edit - probably higher than this on second thoughts) With regards to the property quadrupling I think you will find I specifically say to forget capital growth If you only want a couple of lets to top up the pension I agree,changes things when you get a few and make a business from it.Cap growth is the icing on the cake. Last bit is hard to do in the beginning. Couldn't agree more. Edited June 8, 2013 by LondonLuke Quote Link to comment Share on other sites More sharing options...
Bleeh Posted June 8, 2013 Report Share Posted June 8, 2013 the rental markets massive now at least in the south it is. very unlikely property's stay empty and you can insure against that. With the new build buying scheme, and the fact that rents have peaked (you might as well get a mortgage at current prices), at some point the prices will start to go down. I wouldn't base what people are paying today with what they'll be paying next year. Quote Link to comment Share on other sites More sharing options...
unapalomablanca Posted June 8, 2013 Report Share Posted June 8, 2013 Clearly you are no investor as approximately 85% of BTL properties are financed that way (edit - probably higher than this on second thoughts) With regards to the property quadrupling I think you will find I specifically say to forget capital growth Couldn't agree more. oh, is that the case, so you explain to me then how you end up owning it, if you never pay off capital, 85%, dont make me laugh, havent you heard whats been happening in the last 5 years. I think you might be mixing up today, with yesterday, when an interest only loan sufficed, because the rises were spectacular and you got in and out with a nice lump. Not sure you are an investor. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 oh, is that the case, so you explain to me then how you end up owning it, if you never pay off capital, 85%, dont make me laugh, havent you heard whats been happening in the last 5 years. I think you might be mixing up today, with yesterday, when an interest only loan sufficed, because the rises were spectacular and you got in and out with a nice lump. Not sure you are an investor. This is an industry I've worked in for the best part of ten years so yes it's an industry I know well. You are missing the point. You do not end up owning it. You are doing this for an income that is produced in the most tax efficient way. All interest can be written off against profit so as a rule you want the highest borrowing you can against the property. You mention that you are in and out with a lump sum. That's not how the sector works at all, BTL is a ten year plus commitment This is from someone more eloquent (and patient) The interest only route is usually more popular with professional landlords and property investors for two main reasons. Firstly, with an interest only strategy the investor's aim is usually to continue building a sizeable portfolio of property. By choosing this strategy the investor has the cashflow to re-gear their property capital in order to increase their number of properties. This is usually a long term strategy. At the end of the mortgage term, the property is usually sold to repay the initial advance. Secondly, there are certain tax advantages as interest due on buy to let mortgages can be off-set against tax. We recommend that you seek professional advice from a qualified accountant regarding the tax incentives available. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 Further more, an article from the FT less than six months ago Most loans issued for buy-to-let purchases are assessed on an interest-only basis and criteria has not changed. http://app.ftadviser.com/2013/01/31/mortgages/mortgage-products/how-buy-to-let-differs-from-residential-mortgage-advice-EXZ4QLZjzJIaFhDuEa6zMO/article.html Quote Link to comment Share on other sites More sharing options...
Amazed Posted June 8, 2013 Report Share Posted June 8, 2013 I run my first house as a rental and it can be a welcome saving pot for the future paying for its self until the mortgage is payed off. But as an investment I would think there could be better ways and an adviser may be worth talking to first as we all know what fun the housing market can be I do believe its 30% capital needed in the property for intrest only buy to let. And 20% for a buy to let. your lender my not value the property as it was when you bought it. So even if you did get it at market value with a 25% deposit you may not get the mortgage you require. Quote Link to comment Share on other sites More sharing options...
unapalomablanca Posted June 8, 2013 Report Share Posted June 8, 2013 This is an industry I've worked in for the best part of ten years so yes it's an industry I know well. You are missing the point. You do not end up owning it. You are doing this for an income that is produced in the most tax efficient way. All interest can be written off against profit so as a rule you want the highest borrowing you can against the property. You mention that you are in and out with a lump sum. That's not how the sector works at all, BTL is a ten year plus commitment This is from someone more eloquent (and patient) The interest only route is usually more popular with professional landlords and property investors for two main reasons. Firstly, with an interest only strategy the investor's aim is usually to continue building a sizeable portfolio of property. By choosing this strategy the investor has the cashflow to re-gear their property capital in order to increase their number of properties. This is usually a long term strategy. At the end of the mortgage term, the property is usually sold to repay the initial advance. Secondly, there are certain tax advantages as interest due on buy to let mortgages can be off-set against tax. We recommend that you seek professional advice from a qualified accountant regarding the tax incentives available. i am not missing the point, whether or not you are in a climate of rising prices which is not now, the goal is to end up with an asset that you own. I think you have just posted a load of stuff you googled. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 (edited) i am not missing the point, whether or not you are in a climate of rising prices which is not now, the goal is to end up with an asset that you own. I think you have just posted a load of stuff you googled. If you think I would bother to google a random subject and post as if knowledgeable you are out of your tree. I admit that it CAN be the aim to end up with an asset that is mortgage free but this is not a professional landlord nor the most tax efficient approach. Edited June 8, 2013 by LondonLuke Quote Link to comment Share on other sites More sharing options...
unapalomablanca Posted June 8, 2013 Report Share Posted June 8, 2013 If you think I would bother to google a random subject and post as if knowledgeable you are out of your tree. I admit that it CAN be the aim to end up with an asset that is mortgage free but this is not a professional landlord nor the most tax efficient approach. you believe what you want, i am strictly 'old school'. regards. Quote Link to comment Share on other sites More sharing options...
Rupert Posted June 8, 2013 Report Share Posted June 8, 2013 i am not missing the point, whether or not you are in a climate of rising prices which is not now, the goal is to end up with an asset that you own. I think you have just posted a load of stuff you googled. The goal is never to end up with the asset.Just end up wjth the wage.As I said before you sell or die to pay the loan,either way you have the income until this happens. Capital growth is the bonus,not guaranteed and not to be banked on.Many landlords of considerable standing will be in negative equity,but as long as they service the loans, A landlord I know (full time)is in mega negative equity but he still enjoys an income in excess of 80k pa . The numbers and risks are not for everyone but,the grief from a big portfolio can be huge but done right its a good business. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 you believe what you want, i am strictly 'old school'. regards. Good to know. I prefer to consider the wider picture than to have a tick box definition My apologies to the OP. for derailing somewhat into a petty argument of views. Welcome to PM me for anything. Quote Link to comment Share on other sites More sharing options...
unapalomablanca Posted June 8, 2013 Report Share Posted June 8, 2013 The goal is never to end up with the asset.Just end up wjth the wage.As I said before you sell or die to pay the loan,either way you have the income until this happens. Capital growth is the bonus,not guaranteed and not to be banked on.Many landlords of considerable standing will be in negative equity,but as long as they service the loans, A landlord I know (full time)is in mega negative equity but he still enjoys an income in excess of 80k pa . The numbers and risks are not for everyone but,the grief from a big portfolio can be huge but done right its a good business. id rather clean latrines, than have all that debt and negative equity, plus tenant aggro for a minimal return and no end asset, I am sorry, but to say the goal is never to end up with the asset is just plain daft,like saying black is white, i wont post anymore on this, as i end up being rude and then cranfield blocks my posts. All the best to you sir. Quote Link to comment Share on other sites More sharing options...
LondonLuke Posted June 8, 2013 Report Share Posted June 8, 2013 id rather clean latrines, than have all that debt and negative equity, plus tenant aggro for a minimal return and no end asset, I am sorry, but to say the goal is never to end up with the asset is just plain daft,like saying black is white, i wont post anymore on this, as i end up being rude and then cranfield blocks my posts. All the best to you sir. £80,000 a year is a minimal return Now I've heard everything Quote Link to comment Share on other sites More sharing options...
harrycatcat1 Posted June 8, 2013 Report Share Posted June 8, 2013 (edited) id rather clean latrines, than have all that debt and negative equity, plus tenant aggro for a minimal return and no end asset, I am sorry, but to say the goal is never to end up with the asset is just plain daft,like saying black is white, i wont post anymore on this, as i end up being rude and then cranfield blocks my posts. All the best to you sir. edited to say I think you have missed the point mate Edited June 8, 2013 by harrycatcat1 Quote Link to comment Share on other sites More sharing options...
Rupert Posted June 8, 2013 Report Share Posted June 8, 2013 Harry,nail,head,hit etc Unapalomablana,i would clean latrines for 9ph 24/7 365 days a year.Thankfully closed minds leave richer pickings for those who will take the bull by the horns. Quote Link to comment Share on other sites More sharing options...
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