Overseas property or UK buy to let ?

inmypocketnottheirs

sconieroany wrote:

If we do go down the local flat investment route, do you have any tips on the best way to finance, we have around 160k in equity on our own home and around 20k deposit on an investmant flat ? should I approach my own mortgage lender for the money ?

Thanks again for your time.

As advised above go for an 85% BTL mortgage. This is advised because you will get tax relief on the interest repayments on the mortgage on the BTL property. If you remortgage your primary residence to buy the BTL property cash then you will not get tax relief and will not be able to set off the interest charged against your income.

A lot of people (myself included) have interest only mortgages on the BTL property so that the full mortgage payment is offset against tax. If you opt for a repayment mortgage you will end up paying tax on the repayment element. All this is of course subject to your personal situation and should not be construed as advice. Please check with a qualified accountant.

If you go down the repayment only option, you are clearly banking on the growth of the property to provide funds, rather than the basis of someone else funding the equity.

If you did go down the repayment only route you could still consider the option of an alternative investment to repay the capital at the end of the term.

I suppose ultimatley, one would need to ask the question of what are property values going to be in 25 years time? I think we know the answer - despite the gloom mongerers!!!!

sanfrancisco

inmypocketnottheirs wrote:

I suppose ultimatley, one would need to ask the question of what are property values going to be in 25 years time? I think we know the answer - despite the gloom mongerers!!!!

Do we know this? With ever shrinking birth rate, why are you so sure that this is the case?

Are you happy when your coucil tax goes up? Water bills? Gas/Electricity? Nursary fees? Are YOU being a gloom monger for not wanting these things to go up?

dunstonh

UK Buy to lets (with mortgages) are high risk at present. If you are a high risk investor, then it's fine to consider it. However, do not underestimate the risk involved. Many are and if the cascade of events occurs to create a property crash, you could be looking at a 30% price drop followed by a shortage of people renting. Ignoring potential gains and losses on property value, rental yields are generally too low for the risk you are taking. By the time you pay the rental management company and tax, it's not worth it. You also run the risk of the property being empty for a period or a tenant not paying or doing damage.

The time to do buy to let was 5 to 7 years ago. Unless you are experienced in this field and know what to look for in a property and can get a good deal with good rental yields, or it is for the very long term and no borrowing is involved, I would steer clear.

sconieroany

The property prices are not too bad here (Scotland) and there is demand for rentals from young people working in Glasgow and the surrounding areas with a lot of new retail developments, this as well as a booming Airport and local hospitals does mean a steady supply of clients looking to rent in our quiet village a it is only a short comute by road or rail to the city.

But seven-day-weekend has touched on the type of overseas property I had been considering, very low running costs whether you rent or not, I had looked at build to plan in Spain but had been put off by crime on the costas, a semi rural freehold that is secure in our absence might be worth looking into, just not sure about Spain though ? anyone any thoughts on Rural Italy ? and the best sources to search for good value rural overseas property ?

The other point about increasing council tax and utilities in this country are also worth considering, a few retired collegues have moved to spain on retirement, and thier pension goes a lot further with small council taxes and a lot less utility costs, plus they are out and about in the milder climate more and have a better diet (with the exception of extra intake of wine LOL ).

For those that asked about yield, the property would cost around £80k with around £20k deposit off of that, a two bed unfurnished flat returns around £450 a month here, so I thought that this would cover my re-payment mortgage costs, a local letting agency vetts and contracts the tennants for a one off reasonable cost and I would look after the property myself, this way regardless of future property prices my two young daughters would have a property to live in or sell to give equity on thier own house purchase.

Thanks again.

Conrad

Ive sold my UK B2Ls to invest abroad.

Currently investing in Morocco AHHHHHHHHHH - you cry, no thanks, delhi belly!

Give me a moment to explain:

Many of the worlds biggest developers are building self contained mega resorts but deliberately not going the Spannish route of high rise and high density.

Developers include 'Sandals resorts' Emaar (worlds biggest builder), 'One And Only' brand, Hilton and Fadesa (Spains second biggest).

Huge clean beaches, and the big developments have every modern convienience plus world renowned restaurant and bar names.

Im going for a Brittish developer called LeJardinDeFleur within a huge but low rise / green resort called Saidia (which is surrounded by nature reserve and has skiing less than 1 hour drive away). Three 18 hole courses, a 7km private beach and every possibile facility including a hospital.

3 hour flights (stick to the Med coast). Ryan air and Easyjet announced over 20 routes.

EDIT TO ADD: The big resorts such as Saidia which includes Olympic sports facilities, international supermarkets, three top golf courses and designer brand shops should attract year round rent. The mediterranean coast has a 12 month season and not subject to Atlantic wind and sand blast!

The 8 hotels being built within Saidia will give huge exposure to the rental properties, indeed one hotel (Aparthotel) let you buy an apprtment from them and then manage it year round!

The LJDF property within Saidia which I am buying will be let by an on site up market Swiss rental company.

Capital growth I predict will be 25%+ pa each year for the next 5 years. The villa I reserved has already gone up £30000 since I reserved 3 months ago, and I have only put down the first 20%!

People dismiss this just as freinds of mine dismissed me when I was into UK B2L in the mid nineties. Its all about recognising simple opportunity.

PoorDave

My suggestion would be UK holiday lets.

You can buy a house through a house purchase/mortgage system you understand, as it's all in English, and the same as when you bought your main residence. Less confusing!

Probably more money to be made than from resdiential BTL though.

Just a thought

Tassotti

PoorDave wrote:

My suggestion would be UK holiday lets.

You can buy a house through a house purchase/mortgage system you understand, as it's all in English, and the same as when you bought your main residence. Less confusing!

Probably more money to be made than from resdiential BTL though.

Just a thought

More money yes, if its a decent property in a decent area.

More managing required.

sconieroany

PoorDave wrote:

My suggestion would be UK holiday lets.

You can buy a house through a house purchase/mortgage system you understand, as it's all in English, and the same as when you bought your main residence. Less confusing!

Probably more money to be made than from resdiential BTL though.

Just a thought

Not realy a goer in my area, people up north want to get away to drier sunny weather more of the year round, thanks for the advice though.

Jim_B_3

sconieroany wrote:

For those that asked about yield, the property would cost around £80k with around £20k deposit off of that, a two bed unfurnished flat returns around £450 a month here, so I thought that this would cover my re-payment mortgage costs, a local letting agency vetts and contracts the tennants for a one off reasonable cost and I would look after the property myself, this way regardless of future property prices my two young daughters would have a property to live in or sell to give equity on thier own house purchase.

Thanks again.

So that's what, about 5.5 percent after tax but before charges/maintenance/voids/etc.? What will the mortgage rate be? I see a lot of them round about the 5 percent fixed rate mark. A couple of shaky months would see you making losses - can you cover those losses? Are you sure that it will increase in value? Even if the long term trend is to increase, what happens if your daughters need money at the bottom of a trough in house prices?

sconieroany

Jim_B wrote:

So that's what, about 5.5 percent after tax but before charges/maintenance/voids/etc.? What will the mortgage rate be? I see a lot of them round about the 5 percent fixed rate mark. A couple of shaky months would see you making losses - can you cover those losses? Are you sure that it will increase in value? Even if the long term trend is to increase, what happens if your daughters need money at the bottom of a trough in house prices?

All good points, I have around £500 in which I can spare each month on an investment property, the way I see it is if I buy a BTL local, I can almost quarantee rental and if I make overpayments I can clear the debt quicker, I have around 20yrs before my daughters would require any equity, but as the village is short of building space and property is highly sought after, if the whole market continues to climb, I would expect a decent final return, if I don't invest in property now, I will be faced with having to find a lot more cash for each of my daughters in the future to give them a start on the property ladder.

As much as I would like an overseas home, the logistics of managing the property whilst in the UK, without a lot of monthy managment charges and a less quaranteed rental income would mean my £500 each month would be going out to finance the property, so it looks like I may start with a UK BTL and then if that seems selfe financing perhaps look abroad.

Thanks fo all your time and replies, there is no right or wrong answers as everone has thier own set of property goals, a lot of informative posts.

Cheers.