Best way to finance property valued under 50k

[Deleted User]

AdrianC said:

holyrottweiler said:

Competsoph said:

Throwing in my 2p, how does anyone make money in property if that is the case? I think BTLs are a vision for many in the future, but it’s true there is a huge amount of consideration to be done before jumping the gun.

Yeah, I was thinking the same. BTL seems like a lot of stress.

AdrianC - am curious. Any chance you could enlighten us on this?

It helps massively by not being heavily leveraged, and not paying others to run your business.

That apart, people don't usually actually do the sums, and people have historically been saved by capital growth.

We've got a net pre-tax return of ~4% over 6yrs on ours, but that's down to self-management, minimal requirement for maintenance so far (that'll change), no leveraging, and a large dose of pure good luck. Neither are showing much signs of growth. Would I buy them again now? No.

Interesting stuff. Congratulations on making the business work. Understand that hindsight is a wonderful thing, but do you feel that all the investment/stress was worth it?

Before I was pondering whether to buy a BTL property to give myself some retirement income when I retire (not looking to make profit on it or anything - playing a long game) but not anymore....

AdrianC

holyrottweiler said:

Interesting stuff. Congratulations on making the business work. Understand that hindsight is a wonderful thing, but do you feel that all the investment/stress was worth it?

Yes, with reservations.

The flat had an s20 notice, which turned out not to be needed - the work came out of the sinking fund in the end. The service charge has steadily risen and risen (by more than 60%, now closing on the equivalent of one month's rent every three months). The current head-leaseholder wants to get rid of it, but nobody wants to take it on. The tenant wants to do a lot of internal work, which he'll fund - not necessary, but he's happy to fund it because he wants to be there long-term. I've told him whenever he can afford it, he can buy it.

The bungalow has had minor roof issues - and a new roof on the garage, gained a new spring in the garden which flooded next door's garage, and I suspect it's going to need a new oil boiler before long.

And we've been very, very lucky.

ProDave

I don't think anyone has mentioned the EPC rating of the property.

Landlords are avoiding properties with a very poor EPC because there will come a time when you will not be allowed to let a property worse than a certain level, and the cost of upgrading the property will be disproportional to it's value.

I personally would not buy anything worse than an EPC C now.

AdrianC

ProDave said:

I don't think anyone has mentioned the EPC rating of the property.

Landlords are avoiding properties with a very poor EPC because there will come a time when you will not be allowed to let a property worse than a certain level...

It already is.
EPC F or G cannot be let since the start of April this year, subject to various caveats.
https://www.gov.uk/guidance/domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance

silvercar

ProDave said:

I don't think anyone has mentioned the EPC rating of the property.

Landlords are avoiding properties with a very poor EPC because there will come a time when you will not be allowed to let a property worse than a certain level, and the cost of upgrading the property will be disproportional to it's value.

I personally would not buy anything worse than an EPC C now.

If the government put that into effect there would be a lot of homeless people!

Competsoph

Thank you @AdrianC for your wise insight!

[Deleted User]

AdrianC said:

holyrottweiler said:

Interesting stuff. Congratulations on making the business work. Understand that hindsight is a wonderful thing, but do you feel that all the investment/stress was worth it?

Yes, with reservations.

The flat had an s20 notice, which turned out not to be needed - the work came out of the sinking fund in the end. The service charge has steadily risen and risen (by more than 60%, now closing on the equivalent of one month's rent every three months). The current head-leaseholder wants to get rid of it, but nobody wants to take it on. The tenant wants to do a lot of internal work, which he'll fund - not necessary, but he's happy to fund it because he wants to be there long-term. I've told him whenever he can afford it, he can buy it.

The bungalow has had minor roof issues - and a new roof on the garage, gained a new spring in the garden which flooded next door's garage, and I suspect it's going to need a new oil boiler before long.

And we've been very, very lucky.

You say that you've been "very, very lucky" - are you implying that a lot of other landlords tend to have more problems compared to your case? Or were you anticipating something far worse?
Sounds like a tough business to be in!

EDIT: I agree with above poster - thank you for your insight. Really informative.

Grumpy_chap

This.

holyrottweiler said:

Sounds like a tough business to be in!

Why can't more people understand this?

Doesn't help that politicians and press see landlords as punch bags.

sgun

I live in the NE and have rented out properties in both NE England and Scotland very successfully, I know my stuff pretty much although there is always more to learn. I also know the sub 40k regions of the NE very well and actually used to live in one until about a year ago. A 12% yield is unrealistic. I know lots of people who have rented out properties in them and not one has had a trouble free experience. Now, this is mostly because they were "accidental landlords" or thought they could make money investing in cheap property which would gain value (it never did btw).I would say if you have your heart set on this just be aware that you need to think of it as a business rather than an investment. It will potentially take up a lot of your time and you need to know the legal bits inside and out. 

AdrianC

holyrottweiler said:

AdrianC said:

holyrottweiler said:

Interesting stuff. Congratulations on making the business work. Understand that hindsight is a wonderful thing, but do you feel that all the investment/stress was worth it?

Yes, with reservations.

The flat had an s20 notice, which turned out not to be needed - the work came out of the sinking fund in the end. The service charge has steadily risen and risen (by more than 60%, now closing on the equivalent of one month's rent every three months). The current head-leaseholder wants to get rid of it, but nobody wants to take it on. The tenant wants to do a lot of internal work, which he'll fund - not necessary, but he's happy to fund it because he wants to be there long-term. I've told him whenever he can afford it, he can buy it.

The bungalow has had minor roof issues - and a new roof on the garage, gained a new spring in the garden which flooded next door's garage, and I suspect it's going to need a new oil boiler before long.

And we've been very, very lucky.

You say that you've been "very, very lucky" - are you implying that a lot of other landlords tend to have more problems compared to your case?

Absolutely! Just one change of tenant in one property, the same tenants in the other. No major expenditure on either property.

Or were you anticipating something far worse?

Anybody who isn't is deluding themselves.

Sounds like a tough business to be in!

It certainly can be...
We have a friend who rented their mother's house out while she was in care. They're currently taking the ex-tenants through court for tens of thousands of pounds in unpaid rent and damage.