Millionaire Challenge

Kayalana99

Just popped on to say my Grandad is a plonker. He doesn't have his op on 3rd of June he has his pre op...basically making sure he is fit and healthy and preparing him for the actual operation. Didn't read the letter properly as he was just waiting for the date of his op lol.

You're so much ahead of me I'm 24 (As facebook keeps reminding me I still think im 23) To be fair my mortgage is about 72k but our house is only worth about 90k (B2L investors are very happy with our house prices lol)

Thank you all for the advice, I realise end day as long as were both married that's the main thing. MIL has upset my OH slightly with some off comment about we have to many board games and their isn't a lot of room... we have given them the job of decorating the room I am wondering if I will regret this decision. (We have about 8 games so not OTT and they are board games...they will go under a table lol) but in the scheme of things I'm not really bothered.

Would love a tread mill esp as it's hard to go out running with two kids but no where to put it unf.

ms_night_ryder

Kay so your grandad can make the wedding? That's great ��

Still here, Chipping away at my debt.

Can't wait for the middle of the month! Now comes the time I have been waiting for. Where I am finally at a point where I can separate my two wages, one I get paid every two weeks and have been using it as my main income, the other is from audits,mystery shopping etc which can now be used as money for my business!!! Yay! Which means I can order all the stuff I need. Just really need to stick to the budget I have set myself and not dip into my business wage so to speak.

I have been waiting to do this and now it's finally time, can't wait to order the stuff, go shopping for a desk (gonna try and get a second hand one, no need to go crazy) and go shopping for some fabrics
Been waiting so long another 3 weeks won't hurt

Broken_Biscuits

http://monevator.com/millionaire-calculator/

probably less useful for you entrepreneurs out there where yearly savings rates can fluctuate.

i found it interesting though, especially how little my million might be worth after inflation.





or

http://candidmoney.com/calculators/retirement-age-calculator

this one for knowing how long left to work.

Broken_Biscuits

I already invest a small amount each month into a commercial property fund and have been doing some research lately on residential property without actually purchasing a buy to let in the traditional way. Im not that handy and don't like the idea of getting late night calls about broken showers etc..

ive been looking at propertymoose.co.uk with an open mind. Im struggling to find any one who has invested in this or anything similar. Been mulling it over for a few months now but havnt invested yet.

now a man is not his forefathers, however, the person in charge of this is the great, great grand son of the Cadbury chocolate legend that created incredible housing opportunities for the working class of his time. I understand that a number of the investors from start up are family and friends - so he has a massive incentive to succeed.
its only been around a year but from what i can see, you put in minimum £500 and you earn 3% until the full amount of the property is ready. At this point property moose pay themselves 5%. In 2-5 years time (the length in time is predetermined) the property is sold and 85% of the profit is divided by the investors. The latest property up is advertised at 8.07% returns from the rent and then 40% returns overall at year 3 when it sells. Obviously these are predicted and not confirmed. If prices fall at sale time a vote is held and majority decide on renting a further year or selling at a loss.
i am not ready to invest here and perhaps never will be but the rates are appealing as is the background and initial efforts of the company.

we have a few btl'ers here. can you tell me what you expect returns wise each year?

the percentages seem a bit too good.

now i understand that they take a property,usually up north, usually in need of some repair and near university towns. They do them up after paying below market rate and then turn say a 3 bed house into a 5 bed student home... Charging 5x per room. Rather than a smaller monthly fee to a family. That's how they get the bigger returns.

ive got the 5% bank account money safe. Then the next level of risk is in ratesetter earning 6.4%. Im looking at property moose as the next step up the risk ladder. 6-8% returns plus a share in profits when its sold at end of term.
oh and i have more again in stocks and shares, but its impossible to give a prediction on returns.

am i being foolish/greedy?

im definitely not talking about putting more than the smallest £500 at first. I think at most over the next 3 years i would go to £2000.

the appeal is sharing in property price rise without having to find a 25-50k deposit. Even if priced stall, 8% is not to be sniffed at.

Kayalana99

I would do your own research and see if you can get them returns on paper, does that make sense?

But for £500 it's a risk I would take.

What I do notice it's very nicely set up so they make money regardless, for every £500 you put in, they take 5% (this is impression I'm under) and then they give you back 3% per year 'out of this 5%' (until its rented?) but 3% is more or less what you would get in a savings account.

Then they get 15% if it pays off..so no matter what happens they win. I would def do your research anyway.

lessonlearned

BTL yields seem to vary across the regions.

On cheaper properties, especially in certain parts of the Midlands or the.north, then yields can reach easily reach double digit figures. You do need a combination of Cheap properties and high rental demand to achieve good yields.

HMOs will always give. Higher returns than letting to say Families, couples or single professionals. I notice the company
you mention do feature heavily in HMOs up north.

But of course working out yields is not that straightforward because there are other cost variables to take into account, eg apartments might look attractive but might feature a hefty service charge.

Then there is the issue of capital growth, again depending on where you are. In London and the SE capital growth can be very good on apartments, whereas traditionally up north flats do not tend to hold their value.

New build apartments are notorious for plummeting in value, in fact some lenders refuse to lend on them for that very reason.

Yields are usually worked out basing rental returns against the purchase price. However, there is another way of working out yields which takes into account how much money you have actually invested yourself rather than using the purchase price.

With a btl mortgage you do not fund the whole of the purchase price yourself, the tenant typically funds 75 per cent. The tenants rent funds the 75 per cent mortgage, you only fund the 25 per cent deposit.

So for ease let's say £100k purchase, with a rental of £500 pcm, gives a gross yield of 6 per cent.

However, say price is £100k, with a deposit of £25k, plus fees and purchase costs of £2500. This makes your total investment £27,500.

Again assume a gross rental of £50O pcm.

After paying the Mortgage, management fees, repairs, maintenances and insurance let's assume a pre tax profit of £200 pcm.

This gives an annual return of £2400 making an annual gross yield of 8.7 per cent.

There are several of these property investment companies, some have had a very bad press but some seem to be doing ok. Given the sort of amounts you are considering investing I think it's worth taking a punt. even if it went pear shaped you are only talking about a small part of your investment portfolio.

I think it's fair to say that the risk free investments are showing such pitiful returns at the moment that we do have to consider some riskier options. It all depends on how comfortable you are with risk.

At the moment I reckon I would be comfortable with risking up to about 10 per cent of my capital, but even then I would probably split that over two or three different types of investment.

I realise that BTLs can be risky. You could end up with the tenant from hell who defaults and then trashes the place.

It does happen so you do need to have a contingency fund and take out decent landlord insurance.

Once I meet my goal this year I shall certainly be looking at other forms of investment and I would definitely consider putting a small amount into a property investment group.

Ps just edited to add, no idea where that question mark in the header csme from. It was just a mistake and doesn't signify anything....

Karmacat

Thanks for that, LL - the different ways of calculating the yield, because the tenant is paying your mortgage - thats really helpful.

Kayalana99

Oh yes believe me I've seen the mess they can leave behind. I was the screaming child wanting a teddy being chucked in the bin out one of the houses but my Dad wouldn't let me have it purely due to the state the tenants had been living in!

...but doesn't put me off at all as it's part and parcel.

5 days!!

Broken_Biscuits

cheers for the responses.
property moose buy hmo's mostly up north so high rental returns but not sure on the likely increase in value at the end of a 3 year term.
prices are unlikely to soar - 10% over 3 years? Add that to 6-8% rents a year and for a minimal risk of capital and effort - it looks attractive.

because the platform is only a year old i have concerns. Most of my research has been positive though. If it was a bit longer standing id just pile in now. I still may still get involved... I too have a certain amount of capital im willing to take higher risks on. Been looking at Brazilian 10 year bonds and a few other out of the box ideas that give the promise of double figure returns. i think as long as you have the majority in slow and steady safer bets then you can take a few risks!

LL, just been called a loon because of you!
was stood out in the wind and rain checking my roof and guttering after something you said a few months back. All good!!

lessonlearned

Better to be a loon than have rain pouring in through the roof.:eek:

Yes storms are on the cards tonight.

Oddly enough we've just had to gutters cleaned, lead flashings replaced and some pointing done last week.

We're all ship shape here......:rotfl: