BTL Strategy

MoneySaverMick

Hey Everyone,

UPDATE;
Posted here in the summer about venturing into property as an investment. Got quick a bit of negative comments which made me go away and think about my whole strategy, I've educated myself a lot in the last 3 months, must have spent over £100 on books, spoke to property investors/landlords and attended some webinars in my free time.

Currently in the process of re-mortgaging my residential property and taking £45k out of this, my current mortgage company would only let me go to 15% LTV but my mortgage broker took me to another lender which is to 10% and a better rate than I'm currently on fixing for 5 years as well. So keeping the same term but borrowing an extra £45k has only pushed my payments up by £90 a month. I also have £25k savings now so roughly £70k to invest as I expected to have by end of this year. I may also have access to more funding if needed.

Currently considering doing a couple of flips to get my capital up before then going down the strategy of BTL, specifically BRR. So buying, refurbing, renting then refinancing on a BTL mortgage to take most of my money back out of the deal. Looking like my first purchase will be Dec/Jan and already starting assessing potential houses. Main aim is to increase cashflow so I can continue to acquire more properties, although quite highly leveraged at first I do intend to then start paying the mortgages down at some point whilst always having a plan B if anything doesn't go my way.

So much more information online, books etc. rather than Homes under the Hammer which don't show half the costs and just show the fancy big number with no humps in the road.

Will keep you guys posted on progress but happy to hear any comments!

sal_III

£100+ on books and seminars and still can't get your head around equity and LTV* doesn't bod well.

Anyway, GL with your venture.



* by the sound of it your initial lender was only offering 85% LTV (15% equity) while the new one offers 90% LTV (10% equity) Happy to be corrected if I misunderstood the situation.

AnotherJoe

Good luck !

MoneySaverMick

sal_III wrote: »

£100+ on books and seminars and still can't get your head around equity and LTV* doesn't bod well.

Anyway, GL with your venture.



* by the sound of it your initial lender was only offering 85% LTV (15% equity) while the new one offers 90% LTV (10% equity) Happy to be corrected if I misunderstood the situation.

You're correct!

grumiofoundation

One comment (may just be semantics) but if 70k is all the funds you have you don’t/shouldn’t have 70k to invest.

Obviously keeping an emergency fund is very sensible in all circumstances but if you want to become a landlord you need even higher cash reserves.

[Deleted User]

How is the tax situation going to hit you? Are you doing them in a LTD company but not withdrawing the money until used for new purchase?

Do you know which lenders are happy to do BTL on a refurb? Most require it to be rentable on day1
Of those which do it in a LTD company?
And then what happens when you become a portfolio landlord? Your lenders reduce again


You sound like you have done your research on the costs, just curious what barriers you forsee for the mortgage side of things?


Good luck though, its a risk for sure but sounds like a risk you have calculated and thats better than most who get in to this business

tom9980

MoneySaverMick wrote: »

Hey Everyone,

UPDATE;
Posted here in the summer about venturing into property as an investment. Got quick a bit of negative comments which made me go away and think about my whole strategy, I've educated myself a lot in the last 3 months, must have spent over £100 on books, spoke to property investors/landlords and attended some webinars in my free time.

Currently in the process of re-mortgaging my residential property and taking £45k out of this, my current mortgage company would only let me go to 15% LTV but my mortgage broker took me to another lender which is to 10% and a better rate than I'm currently on fixing for 5 years as well. So keeping the same term but borrowing an extra £45k has only pushed my payments up by £90 a month. I also have £25k savings now so roughly £70k to invest as I expected to have by end of this year. I may also have access to more funding if needed.

Currently considering doing a couple of flips to get my capital up before then going down the strategy of BTL, specifically BRR. So buying, refurbing, renting then refinancing on a BTL mortgage to take most of my money back out of the deal. Looking like my first purchase will be Dec/Jan and already starting assessing potential houses. Main aim is to increase cashflow so I can continue to acquire more properties, although quite highly leveraged at first I do intend to then start paying the mortgages down at some point whilst always having a plan B if anything doesn't go my way.

So much more information online, books etc. rather than Homes under the Hammer which don't show half the costs and just show the fancy big number with no humps in the road.

Will keep you guys posted on progress but happy to hear any comments!

original thread https://forums.moneysavingexpert.com/discussion/6006592/potential-venture-into-the-property-market

For the record i am a Landlord.

1. You plan to gear to the highest degree at a time of uncertainty.
2. At a time when we haven't had a recession in 10 years.
3. Just before Brexit.
4. When house price growth looks unlikely especially when factoring inflation.
5. You don't seem to be leaving yourself contingency funds for bad tenants, voids, and non paying tenants. (a problem if the worst happens)
6. When both Labour and conservatives are fighting for the votes of renters and introducing policies such as abolishing s21 eviction notices and who knows maybe even right to buy for private tenants.

On the positive side the decreasing rental stock is increasing rents.

00ec25

as mentioned above, if you intend to portfolio via high gearing then why are you not doing this via a SPV Ltd company?

Cakeguts

What I would suggest is you read up on what experienced landlords are saying about the potential loss of section 21.



Then when you have done that read up about the rent acts.

Tiners

All that research and you still haven't figured out the way the wind is blowing when it comes to highly leveraged, amateur, wannabe ''property entrepreneurs''

sal_III

Tiners wrote: »

All that research and you still haven't figured out the way the wind is blowing when it comes to highly leveraged, amateur, wannabe ''property entrepreneurs''

How could he, when all the promoters/lecturers are raking it in from doing seminars how easy and lucrative it is and keep hyping it. Same for book writers etc. They are not going to kill their golden goose, by admitting the ship has sailed on the DIY BTL empires.

And all the experienced LLs should be grateful that there will be enough gullible hyped up newbies to offload their portfolios to if/when the manure hits the fan.