Buying house for BTL

movingpot

How about buying a house for BTL with cash ,no mortgage.

Is it still good idea?

dannyboycey

Depends how much cash you're talking. If you are buying outright, then it's a no brainer.

movingpot

We are looking for the house buying for outright.
It seems there are a lot of problems for BTL these days.
We have a house in mind but can't make our mind up.
because we are not experienced , it is a worry.

Generali

If you're paying cash rather than borrowing then you remove a lot of risk (as well as potential return) available from 'leverage' (borrowing).

Simplistically, if you put down a 15% deposit and house prices rise 5% you made a 33% profit. If they fall 5% you've made a 33% loss. If you buy for cash and prices rise 5% you've made 5%, if they fall 5% you've lost 5%. It depends on your attitude to risk which is better but I'd be looking to protect against any fall in house prices personally.

Massive_2

dannyboycey wrote: »

it's a no brainer.

Indeed it is a no-brainer. You can buy outright, pay 20% (or more) income tax on every penny you earn in rent, and leave no capital to invest elsewhere.

Or you can buy with a mortgage, pay around 6% interest on the loan, but get every penny you subsequently pay in mortgage interest tax free.

You're only taxed on the profit you pocket, and you get to keep most of your capital to do with as you please.

How much you choose to borrow depends upon the wisdom of your investment. Why is your chosen property desirable, and why will it appreciate in value?

If you're going to buy, then you must have reason to believe it's a good investment. In that case it would be unconventional and counterproductive to buy outright when the system provides such means to preserve your capital, whilst making borrowed money work to your advantage.

jyonda

Use your capital to form many deposits and buy yourself a property portfolio. Take the hassle out of being a property magnate by buying new build off plan all on the same development. For some good advice on building your portfolio I hear 'Inside Track' come highly recommended.:rotfl:

Massive_2

jyonda wrote: »

Use your capital to form many deposits and buy yourself a property portfolio.

For some good advice on building your portfolio I hear 'Inside Track' come highly recommended.:rotfl:

Now whilst the first comment has merit in the hands of a wise investor, please do note the ironic smilies following the second remark...

movingpot

Thank you very much for all your advice.
They are very helpful.
and
What is 'Inside Track'?

tomstickland

"Inside Track" is a wonderful way to riches, so I'm told*.

*ironic joke.

Do a search on them.

Massive_2

tomstickland wrote: »

Do a search on them.

...and then delete them from your history, cos you won't want to be going there again.

Gorgeous_George

I smell a troll but aplologies if I'm wrong - again!

I don't really understand Generali's reasoning. Regardless of percentages, it's £££s that are lost or gained.

The answer is to do the sums. Say the house is £150K and you intend to pay cash. £150K invested in safe, hassle-free investments should return about £5K - £6K so that is what your BTL needs to return BEFORE you make a profit. So, rent needs to be £750 per month to make it worth even considering.

House prices are regarded to be too high by many people. If prices fall by 10% you would see the value of your BTL fall by £15K. That's £15K of your money.

Good luck.



GG