Sell my propery - rent - but buy to let with proceeds.

getmore4less

Thrugelmir wrote: »

The gross income suggested per house is £9,500. On a purchase price of £37,500 thats still a gross yield of 25%.

To good to be true......?

Woops missed the £75 per room.

No brainer if that is the genuine return.

I would try to talk to one of the other landlords in the area.

At that money you might as well gear up and get 8 (25% down) and spread the costs of being a landlord.

How much are 4bed detached might be worth moving I could definately retire if they are cheap as chips.

Thrugelmir

1957999 wrote: »

The down side is, they will not rise in value much.

You can't really expect both a 25% yield and capital growth.

High yield reflects the perceived risk. As professional investors will have weighed up the opportunities of such an investment.

Thrugelmir

Conrad wrote: »

Furthermore Bank spreads have never been higher - that is, lending has never been so profitable.

Maybe before your time. But back in the dark ages of sensible banking (in particularly mortgage lending). Standard SVR was 2% above base and retail deposits received averagely around 2% below base. So a 4% spread.

Following the credit boom years (2003-2007) there is plenty of outstanding debt which is now losing the banks money. As the gross cost to the banks of funding/servicing the debt outweighs the income received.

The banks in general (other than HSBC and Standard Chartered) have some way to go before reducing and shrinking their balance sheets to more manageable proportions.

1957999

Thrugelmir wrote: »

You can't really expect both a 25% yield and capital growth.

High yield reflects the perceived risk. As professional investors will have weighed up the opportunities of such an investment.

Unless you invest though, and take your chances you are never going to be a professional invester are you?

With the properties I am looking at, the yield is in the rental, they are never going to increase in value much, unless the area gets redeveloped (who knowss)?

There is nothing wrong with these properties, and 'the professionals' do buy them, it is a case of who gets their offer in first, I will also be able to compete, as I will be a cash buyer - the rental for these properties is there, and the price is right, if you know where to look.

This is an area which has no large industry and what jobs are available are mainly in retail and tourism, so wages are not good and people (apart from the students) what low priced rental.

Buying and renting is not rocket science, so long as you have your figures, are aware of your potential market, get the property at the right price, (and not one that needs under pinning or something equally as expensive), a good team of workers to hand, and operate within a fast turn around, you should be ok. If, you screw that up, then you do not deserve to make it work and pay for you.

Thanks

1957999

getmore4less wrote: »

Woops missed the £75 per room.

No brainer if that is the genuine return.

I would try to talk to one of the other landlords in the area.

At that money you might as well gear up and get 8 (25% down) and spread the costs of being a landlord.

How much are 4bed detached might be worth moving I could definately retire if they are cheap as chips.

In some ways the 'buy to let' in the area, I am looking to invest has sort of 'fixed' the prices of many of the properties.
Seller/buyers and agents now all know that this area and the surrounding area has a large population of student accommodation, which a 'private' owner might not find desirable for living in.

I shall certainly investigate the best way to get more for my investment:)

Thanks

Thrugelmir

1957999 wrote: »

Unless you invest though, and take your chances you are never going to be a professional invester are you?

If you've spent time fully understanding the local market that you are considering investing in. Then more than taking a chance, you've identified a good opportunity and mitigated the downside risk.

You've not given any specific details in your posts. Not that I think you should by the way. So its only possible to comment on the facts as given. So a 25% yield in an enviroment of low base rates, low gilt yields, low equity yields and low corporate bond yields is exceptionally good.

So with my finance hat on. I have to ask myself why have investors allowed yields to drift up so high? The yield suggests that there is anticipation of a downward movement.

dopester

Conrad wrote: »

IGNORE NOISE, examine landscapes.

Here's a very old treble portrait for you Conrad. My memory is not so good on this one, but I think it was a gift from an French king to an England king, representing a warning if they broke away from the Catholic Church or something.

In that spirit I send it to you.. except for me the man on the left represents the investor all in cash savings, the man on the right represents the investor who is a mix of cash savings and a little in shares and bonds.... and the blurred shape represents the BTL property investor.



(Tip: Go look at the painting from the far right of your monitor, at a sharp angle)

getmore4less

If these properties are genuine and yielding 20%+ then there might be a cartel with the agents pro landlords otherwise they would bid prices up a bit.

How do you get in without paying more?

If this is a mature market for student lets area then why are these properties coming on the market.

Who is selling them?

1957999

getmore4less wrote: »

If these properties are genuine and yielding 20%+ then there might be a cartel with the agents pro landlords otherwise they would bid prices up a bit.

How do you get in without paying more?

If this is a mature market for student lets area then why are these properties coming on the market.

Who is selling them?

I am not sure when the properties in this area started to be bought as rentals, maybe because of the type of house, and the coming of the Uni to the area 10+ years ago.

Does not every area have its cheaper quarters, in this case it sits nicely for the students.

Who is selling them, well this is an older part of Town, so it does have an elderly population, younger people upgrading, right across the spectrum really.

I was reading that there is real shortage of properties to let nationally, and this is set to get worse as more people sell up, or are evicted, and looking to rent.

Until I actually try and buy one, I do not expect I will find out, whether it is a 'closed shop' so to speak - if that is the case, then I will have to look at other avenues (no pun intended):D

Thanks

getmore4less

1957999 wrote: »

Does not every area have its cheaper quarters.

I am sure most place do but how many have 20%+ yields.

Students could almost buy a place during their time at UNI.

A few get together max out their student loans get a bit of help from bank of M&D and hey ho.


Looking at our town room based lets seem around the same price £70-£80 or upto £100 inc bills.
Cheapest houses
Studios/1beds £60k-£100k
2bed £100k+
3bed £130k+
4bed £160k+ (these are rough parts of town decent stuff is more like £280k+

Found one investor 3/4bed sell at £165k with a £1200pm income so an 8% gross.

There is a 5bed house share which is looking for around £80pp cheapest 5bed is £270k so that is grossing around 7.8%

There is also a much larger HMO refurb for auction, at guide before repairs will gross around 10%

With more research and a deal I would think 10%-15% might be acheavable.