Is it still possible to make a profit on BTL???

kissingthepink

RabbitMad wrote: »

I think this highlights the problem people have if they are using a mortgage on a BTL.

However if a person has plenty of equity in their home then taking a mortgage out on their home and buy a BTL with that money and the deposit will provide them with an investment. Will it make a hugh profit, who knows?

How would this stack up from a tax perspective? Currently on a BTL you can deduct mortgage interest as an expense. Can you still do this if you have merely extended the mortgage on your residential home in order to buy a BTL investment?

silvercar

kissingthepink wrote: »

How would this stack up from a tax perspective? Currently on a BTL you can deduct mortgage interest as an expense. Can you still do this if you have merely extended the mortgage on your residential home in order to buy a BTL investment?

Yes, it is the purpose of the loan that is important not where, or if, it is secured.

Sisyphus

prudryden wrote: »

Time to cash in and leave a little on the table for the next guy, who may end up holding the bag.

exactly.

Baron de Rothshild when asked for the key to his financial success supposedly said :
"I don't know, all my friends told me I sold too early.".

RabbitMad

Generali - Absoultely. In the long term I'd expect there to be a reasonable amount of capital appreciation otherwise I myself wouldn't consider it worthwhile.

My calculation was merely to show that you can make money from BTL even if gilts, shares, building society accounts might provide safer investments at a similar income %.

I think when I win the Euro Millions tonight I'll buy myself a few more BTL as I think rents will rise well over inflation for the next few years giving a much better return.

dannyboycey

I think you have answered your own question by not placing a straight 'Yes' in the poll. All your yesses depend on certain variables, thus making it a high risk investment.

Mrs_pbradley936

I have had BTL properties for a while and some of you might find the following
of interest. Two highly respected contributors were answering my question:-

Alright you two answer me this.

I bought 3 flats for 60K each about 11 years ago. I put the mortgage on my own house (which was by then mortgage free) I actually borrowed 150K interest free and offset because I had some money from another source. I get the interest payment off my tax (well at least my accountant says I do). So my original investment of say 30K (the amount of cash I had ) has now become 420K if I sold them at 140K which I am not thinking of doing. If I pay back the mortgage I am left with 270K (420 – 150 =270).

Would I have had 270K if I put 30K in a bank account?


Answer No.1

Your 30K would have risen to 47K given an average of 4% interest rate.

150K + 30K would have given you 127K once you had paid back your 0% borrowings.

(If it's assumed inclusive of tax deductions etc.)

Answer No.2

£30K for 11 years at a compound rate of 5% per annum would have resulted in around £51,000.

You've also invested £150,000 of borrowed money and benefited on the capital increase of that borrowed money (leverage).

So any form of risk free investment wouldn't return anywhere near what you have, the big mistake many people make is assuming what has happened to you, will happen to them, no matter when they enter the market.

As with any investment, timing is everything.

seven-day-weekend

We never made any money from renting out our flat, but it did appreciate in value very quickly (bought in 1998 for £35k, sold in 2005 for £98k). So we made money in the long-term.

But on the whole I would say no, in answer to the question.

BobProperty

Sisyphus wrote: »

exactly.

Baron de Rothshild when asked for the key to his financial success supposedly said :
"I don't know, all my friends told me I sold too early.".

I use a variation on that quote too, I couldn't remember if it was Rothschild or someone else. The version I know is "How did you get rich?" "I sold too soon".

And I've wanted to say this for ages but :rotfl: Sisyphus - haven't you got some work to get back to?

laurence2163

Does anyone else think that a fall in house prices is on the cards?

Given the number of BLT properties held at present. A couple more interest rate rises is bound to make it unsustainable, cashflow wise, for a number of investors. Sudden rush of properties on the market leading to a fall in prices?

Gorgeous_George

There will be some properties in the UK that could return a useful profit as BTL.

From 2008 I'll only be paying 20% tax on my BTL profit (down from 22% - thanks Gordie).

Doing repairs/maintenance yourself saves costs but is time-consuming.

Managing the property yourself saves costs as does doing your own tax returns.

The business plan must consider futue house price inflation/deflation.

None of the options satisfies my view.



GG