BTL here or overseas

catoutthebag

Hi

I have a small amount of cash, live solo, have my first place and no debt or dependents, plus I hsve pension ( self employed)

I have always wanted a property investment as part of retirement.

I would prefer to buy in uk and in the city I'm in. I know the areas well, I've followed prices. I grew up here.

Issue is - I don't have the full 25℅ for deposit.
I have a relative who may be interested, possibly another too, both have some experience. One lives abruad, which would mean specialist broker etc. We would have an equal holding of 2-3 shares. I can see some hassle in making it a reality especially if I'm doing all the paperwork here.

Other option is - a group of relatives, I think 7 bought a condo overseas with cash. Was 50k USD and 5 years later is 80k.

I have been offered to buy a share as the agreement would have been that each member has to keep their share for a minimum 5 years and a couple members are now leaving after the 5 years.

Anyway, works out that those who bought 5 years ago I think for 5-6k £ a holding', now have £2500 each profit (£500/year each). The property has Tennant and is making gross profit.

So not sure what to do

Overseas property

+ all managed on your behalf
+ No debt
+ I would need about half what I need for a uk property deposit with another 1-2 family members, so some cash left over
+ Appears to make profit

- the number of members and profit too small for what I'd like (though opportunity to buy 2 shares which would equal my full deposit towards a uk property with other family members)
- decision on property already made, ahd I like some control
- I can't easily see the property. It's 7-8 hours away on plane, so may as well be an invisible find

Uk property
+ Smaller group, more expensive property, more potential for growth especially drop in interest rates
+ would make a serious potential for tangible profits and real effect, especially given continued property rises (yes i know anything can go down)

- even with another 1-2 members, it would stretch my finances/savings (not as issue, as I've been wanting it a while and accept the risks)
- would have to do all paperwork and work etx as other 1-2 family members likely to be involved would be overseas with discussion I've had (not an issue. Used to doing my accounts given I'm self employed, bought my own/first place last yeae so fully versed on purchasing and have researched what's involved in BTL)

I make a bit of cash buying high end goods and selling. But a goal of a second property/share in has been my aim. Realistically I won't have funds on my own for a few years maybe, so which of the above options should I consider.

peter_we

Have you really investigates the changes to BTL, because it doesn't seem so.Its going to return a negative return because of the tax changes. You and your relatives may wall have to continue to pay more in, so you better take that into account because you will be individually liable for any tax debt. If they decline to pay you will have to pay the entire bill.

As for house price growth, we are entering a recession and have voted to reduce the UK immigrant population (or have we..). Near negative interest rates and falling population brings the Japanese situation - decade long falling property prices. Remember that in theory banks can do a margin call and make you reduce the mortgage debt and LTV in a falling market. 'Sharing' that risk with your relatives ... not a good idea. How much control will you really have?

If you really want to do a UK BTL, raise the 25% and do it by yourself, but I think you have missed that boat with the additional Stamp duty, tax changes and falling market.

catoutthebag

The property we would be considered would be a small flat around 80-90k. I think even with the SD + tax it could be viable.
The areas looked at have a higher non migrants population (not that I think either eu or non EU migration population will drastically fall)
I'm not sure there is a boat to catch - people enter and exit market all the time and there's always opportunity somewhere.

If you think uk BTL is s bad idea, would you go for my other option?

AnotherJoe

Any profit on this foreign BTL sounds very low. Is it entirely based on selling in five years time during which your money is inaccessible ? Do you get payments every year as well ? What percent of your investment would it be? It would also be highly dependent upon exchange rates. And what happens if you can't find a buyer for your share of what in effect is an amateur foreign property fund in five years time ?

You could Invest in property right now , both abroad and in the UK, by investing in property funds.
You can invest as much as you want, have no hassle with being a landlord,and get your money out whenever you want, and shelter from CGT by buying within an ISA or your pension. Also your money is spread over multiple properties, so you are,not at the mercy of a single bad tenant.

If you think the UK property market is a good place to invest, many UK property finds took a hit right after Brexit so now would be a good time to buy,

If that doesn't appeal and you still fancy being a landlord with all the restrictions, legalities, taxes and complications, save up some more. The foreign BTL sounds like a bad idea and also doesn't fit what you started out as wanting a BTL in your home city.

catoutthebag

Hi

To answer your points- if you want to go out after 5 years, another family member is on hand to buy your stake. I also argued that the profit was too small for me. I make that cash from home with another hobby. However, I thought it would have been a good idea to plough cash direct into a property. I understand the profit gets reinvested into a pot like a dividend, of which you take your share if you leave. I would need to find out if there is a time when it gets sold. It is ongoing. Yes cash inaccessible for 5 years (though they would make an exception for an emergency). One share is about 50% of my cash savings , ie half of my potential 12.5% towards a joint UK BTL.

I think either way, to do it sooner rather than later, I would need at least a family member in with me to share the burden to make the full deposit and costs.

I haven't really looked into property funds. I have a SS ISA Vanguard with a small £1000 in. My own property has risen 15% in as many months. Can I get this type of return on property funds? If you had say 50k to invest in a property, would you still go for funds rather than a BTL? Are there any good guides on property funds? Guess I would invest in residential property?

iantojones40

And here's me thinking that the current and proposed changes to BTL were aimed at deterring the over leveraged amateur chancers who fancy themselves as some kind of property entrepreneur despite little or no knowledge or research.

AdrianC

"Overseas" is a very big place. More than 99% of the human race live there. You might like to think a bit harder about narrowing your target down, so that you can do some half-sensible research into the basics - legislation, currency risks, financial stability - you know, all that boring stuff.

AnotherJoe

catoutthebag wrote: »

I haven't really looked into property funds. I have a SS ISA Vanguard with a small £1000 in. My own property has risen 15% in as many months. Can I get this type of return on property funds? Yes. Or less. Or more. Just like you could on a property. Whose to say your property wont be worth less in a years time?
If you had say 50k to invest in a property, would you still go for funds rather than a BTL?
Having been a landlord, and that at the easy end of the spectrum, I would never be one again.
Too much hassle, too much risk, too much worry. Its bad enough when something needs doing on your own house.
That more than doubles when you have another one (more than doubles because there is stuff you may put up with as an owner and fix in your own good time you cant with a tenant.

Are there any good guides on property funds? Not that I know, I just did a lot of reading. Guess I would invest in residential property?

You can invest across a broad spectrum of property but purely residential is less common but there are a few companies that do this..
You could have some in a foreign property fund. Some in UK. Some in UK builders and suppliers to the construction industry as a "proxy" for UK house prices. You can do all of those. With one BTL you have all your assets in one inflexible place.

You seem to have as an article of faith that you'd make money from being a landlord. Have you done any work to see if this is the case? have you noted all the ongoing expenses? Its not easy money any more. Most reckon that 5% return is good (aside whatever happens to rising prices and when you sell if the gain is high, you'll pay tax on that. Contrast that to dividends and rises in value all tax free with funds (by 'funds' I mean all manner of investment types)

catoutthebag

AdrianC wrote: »

"Overseas" is a very big place. More than 99% of the human race live there. You might like to think a bit harder about narrowing your target down, so that you can do some half-sensible research into the basics - legislation, currency risks, financial stability - you know, all that boring stuff.

You've not understood me.
The overseas propery is purchased.
I know where it is, I just don't wish to disclose. Has that cleared that?

AdrianC

catoutthebag wrote: »

You've not understood me.
The overseas propery is purchased.
I know where it is, I just don't wish to disclose. Has that cleared that?

I've understood you. You've not understood me.

Do you have the first clue about the myriad of issues that may apply? If you aren't even willing to disclose what continent, let alone country, it's on, then how do you expect sensible and informed answers?

catoutthebag

iantojones40 wrote: »

And here's me thinking that the current and proposed changes to BTL were aimed at deterring the over leveraged amateur chancers who fancy themselves as some kind of property entrepreneur despite little or no knowledge or research.

I know plenty of people with second property. They're not chancers and it's running well for them.
So yeah let's have this club exclusive for cash entrepreneur shall we? No mate.