come into some money - BTL to secure my future?

The-mouth-of-the-south

I have recently come into some money and property - the property is secured and I plan to live in it as its all paid off (I was renting before) - the money should filter its way to me over the next 12 months. Its enough cash to buy a another house with (even after I tax deductions) - would it be wise to buy a house and then rent it out - the kinds of houses i would be looking at would fetch around £750 - £1000 a month or so. I could live off that without to much of a problem (as long as I have someone living there) - with IR rates being so low there doesnt seem to be much else to invest in at the moment.

Its funny how things change - 12 months ago I was hoping for a crash but now my situation has changed and i feel very lucky and just hope to escape the rat race.
:money::beer:

Linton

If the money is substantial, which it must be to buy a house, I suggest you would be much better off seeing an IFA and buying a range of unit trusts etc. A lot less hassle.

IveSeenTheLight

Linton wrote: »

If the money is substantial, which it must be to buy a house, I suggest you would be much better off seeing an IFA and buying a range of unit trusts etc. A lot less hassle.

A lot less hassel maybe, however does it have the same security.

Certainly the way the country is shaping up, there will be an increasing demand for rental property

System

If you're buying the BTL for cash I don't really see how you can lose, unless you're one of the specials who think it'll be worth 50% less soon.

abaxas

Small example.

Grandparents house sold in 1973 as they moved into a council bungalow.
Money invested in rather boring market trackers. (always using any tax free systems around)
Father died 9 months ago.

One outperformed the other by about 3x.

I'll let you guess which.

92203

I'd wait a few months until interest rates have gone up a little and the 2 year cap on SMI payments arrives, you may be able to pick up a few bargains.

You should do what my uncle does- Buy a 3-4 bed houses in OK areas and turn them into bed sits. He has them let out to Polish and Lithuanian farm workers. The neighbours aren't too keen, but it makes him more money than it would letting the house out to a single private individual/familiy.

He also has a property which he has contracted out to the probation service, and this makes him big money. I believe recently released sex offenders are placed here to help them get used to parole.

There'll always be demand for bedsits and properties of such ilk , and it helps avoid big voids.

Pimperne1

There are some excellent deals out there at the moment (mostly repossessions or depressed sellers who are desperate to sell) so now would not be too bad a time to get into the market. I am certainly not trying to be hard faced (and recently turned away from a repossession because it was being bought by a non investor so I do have morals) but someone is going to buy them and why should you not be one of them. As a cash buyer you would be most welcome and you will already have covered any potential drops in price which could develop in the future by getting it "Below Market Value" although some experts on here would have you believe that whatever price you pay is "Market Value".

From my point of view, with your relative inexperience in the market, I would be tempted to purchase a property with a mortgage (say, put down a 30% deposit) and see how it goes - obviously this removes from you the benefit of being a cash buyer but nothing is really selling at the moment so you will still be in a strong position (bit of a stalemate between buyers and sellers which I don't think is going to change anytime soon)). If you like it then you could consider buying more (and you ought to as it is a fairly sound long term business plan) but if you don't you can just sell up.

I would say that being a landlord can be a royal pain in the @rse and the fly boy inexperienced investor hardly exists in this profession - no matter what you read on these sites.

geneer

Pimperne1 wrote: »

There are some excellent deals out there at the moment (mostly repossessions or depressed sellers who are desperate to sell) so now would not be too bad a time to get into the market.

Quite right too.
In fact we know a certain BTL market wizard who's simply desperate to offload the two BTL flats he bought in the summer of 07.
Don't we pimp.

Pimperne1

geneer wrote: »

Quite right too.
In fact we know a certain BTL market wizard who's simply desperate to offload the two BTL flats he bought in the summer of 07.
Don't we pimp.

I've bought and sold lots of properties over the past 10 years and the vast majority have made money (anyone could have done that though). I bought a couple of small flats (using some profit from previous purchases/sales and one of them being to move my daughter upmarket) and expect to make a small loss on them next year when I sell (and if the realised loss is not small then I shall keep them as they pay for themselves and BtL mortgages are no longer easy to come by). If anyone had seen my admission that I might lose some money on property (refreshing Eh?) they will see that I am only selling them because they cause me some hassle being one of the only interested owners round the area and I get called for all minor repairs/problems (the management company being worse then useless).

Geneer, on the other hand, has never bought a property (when he admits he could and should have).

wageslave

92203 wrote: »

He also has a property which he has contracted out to the probation service, and this makes him big money. I believe recently released sex offenders are placed here to help them get used to parole.

I like money as much as the next person but I draw the line at pa edphiles.

Call me picky.........

92203

Just had a further conversation with my uncle. He's advised that if you split your capital between multiple properties (and have the rest of their value covered by a buy to let mortgage), you can get tax relief on the rental income you make from them. One of his most recent purchases (repo)has a 70% mortgage on it, and he gets to keep a good 10% of the rent even after paying the mortgage.

As I mentioned earlier, splitting houses into bed sit or house share type arrangements is the best way to maximise yield and minimise the risk or impact of void periods.

If you want a tenancy contract with the Home Office/Probation Service, let me know and I'll forward you their details. The only stipulation they have when leasing properties is that they must not have windows over looking any playgrounds or schools in the area.

To be honest, I envy your position. My uncle says that property prices only ever go up, and that in years to come, due to low levels of house building etc and immigration/population increases, demand for accommodation will drive prices so much that in the next 10-15 years, the average man on the street will only be able to afford to live in a bed sit. Family homes will be a thing of the past, couples (and their children) will have to share with other families to split the rent.