Buying a Property to Rent Out - How to Own it?

socrates

pid2004 wrote: »

Hi, we have put a silly offer in:rotfl:, the house was up for £205k. They have a higher offer in but first time buyers etc and have gone with us. But hasnt the yield gone on the rental market? Is anyone really getting any where near a 10% return? sorry maybe I am not doing the maths right?

What is the property - a flat, house..

What is the first part of the postcode i.e EN6

I can give you a better idea about yields/rent

pid2004

silvercar - thanks re the advise about company etc.
pasturesnew - and what if in 10 years time, the house has doubled in price? It wont do that in the bank will it? Also, we put the offer in, the seller had the choice to who they wanted to go with. They decided that they wanted less money, then thats our advantage right?
socrates - postcode is

socrates

A house - how many bedrooms and what approx part of SL - I need the next part ie EN6?

pid2004

Hi, sorry, am going mad, it is a three bed house and hope thats better info

socrates

That particular property should be £1000 pcm without any problems at all - just under 7% yield - if you can live with that and the property is ready to go - apart from the LL requirements - then its not a bad investment

Geenie

PasturesNew wrote: »

So you're a new BTL LL pricing FTBs out of the market ... that's not very nice is it.

OK, so savings rates right now aren't great, but they will be again.

How will you feel if in 2 years' time the house is worth £140k, savings rates are at 6% and the only way you can get a tenant in is at 30% of today's rent price because there are so many spare houses to rent? Or what if you've had the tenant from hell in there for a year and it's trashed?

Perhaps you can rent it to that FTB couple, they'll thank you for it in 2 years' time when they move out to buy something better/cheaper.

I think this is quite harsh PasturesNew, and I normally agree with your posts. The OP is using their own money to buy a house. They are not borrowing from savers via a mortgage, so as a LL they would be excellent. No threat to the tenant being evicted because of arrears, and they are getting a decent return compared to keeping the cash in a saving account at present.

I would do the same in their position and wanting a long term investment. If they pick the right area and do their research I am sure they will be OK. The fact is that not everyone wants to buy a house, but are happy to rent.....something that seems to get lost at times.

ncooper1974

silvercar wrote: »

Problem with having a company is getting money in and out of the company.

Say you open a company (cost about £100), then you want to lend the company money so that it can by property. So either the company pays you interest on the money (and you pay income tax on the interest received) or the company will make a profit and pay corporation tax.

The long term hope is that the value of the property increases. So now the company has money that you want to get your hands on. To withdraw money from the company you will take a small salary and declare dividends (most tax efficient way), so you still have the tax to pay.

We did look at it a couple of years ago. It really isn't worth the hassle.

Not entirely true.
If you lend your company money, then its a directors loan. You can withdraw this at any time WITHOUT incurring any tax liability.

You dont even have to pay yourself any interest on this - its your choice. It totally depends on how you want to run your company.

OP - if you are only intending to buy 1 property, then there is no point putting it into a SPV. The additional expenses - like CT, accountants, end of year returns, etc pretty much eat into your profits.
If, however, you intend to purchase say 3 or more, then I would say this is the way to go.

For what its worth, this is what I do. I've 'lent' my company money to buy some property. If i need the money, and there is sufficient capital in the company, then I can just draw down on this loan.
If the company makes money, then I can draw a dividend from this also. You dont need to worry about paying yourself a salary as this is just not neccessary.

ncooper1974

PasturesNew wrote: »

So you're a new BTL LL pricing FTBs out of the market ... that's not very nice is it.

Totally disagree with this!
How is he pricing out a FTB? If anything, he is pushing the price of property down (asking price £205k, selling price £175k).

Or would you rather the property remains unsold?

Nosht

Put it into a trust, pricey at start but never pay any tax again.



Regards,


N.

socrates

I think PasturesNew's comment was a bit tongue in cheek - to be fair....