Property Investing Newbie Questions

Blade200

Hi, I've literally just started doing some research on property investing. I've been watching some videos on youtube from people like Samuel Leeds and Jamie York. I have some questions to ask to make sure I'm understanding the basics really. I'll lay out an example and hopefully you can keep me right!

So as I understand it to raise the money to put a deposit down on a rental property I need to remortgage my property and borrow more. My property is currently worth aprrox £180k with a remaining balance of £90k. So If I was to borrow £35k (for deposit on rental property) my mortgage is now actually £125k thus increasing monthly payments by about £275 over 20 years.

The rental property is £115k and with my £35k deposit I will need a BTL mortgage for £80k which over 25 years on interest only is approx £250pm. The property will be able to pull in around £750pm. That's an annual income of £9k which will be taxed on which works out at £1800. So when you take that out, the £250 BTL mortgage, monthly fees and the £275 for the extra loan on my own property that doesn't leave a whole lot of cash from the rental. Am I missing something? 

Thank your for any help.

user1977

You're missing all your other costs for maintenance, insurance, voids, bad debts, etc. Also, that £275 is (I presume) including capital repayments - it's only the interest which is really an additional cost for you.

There isn't necessarily a huge yield to be had, but in the long term you will/should/might have capital appreciation in the value of the property too.

Blade200

Ah yes I understand now. The equity I used from my current property goes in to the second property. That's why I'm technically only paying the interest on that loan. Yes def not expecting massive returns initially but it a 15 - 20 years time project.  

london21

Blade200 said:

Hi, I've literally just started doing some research on property investing. I've been watching some videos on youtube from people like Samuel Leeds and Jamie York. I have some questions to ask to make sure I'm understanding the basics really. I'll lay out an example and hopefully you can keep me right!

So as I understand it to raise the money to put a deposit down on a rental property I need to remortgage my property and borrow more. My property is currently worth aprrox £180k with a remaining balance of £90k. So If I was to borrow £35k (for deposit on rental property) my mortgage is now actually £125k thus increasing monthly payments by about £275 over 20 years.

The rental property is £115k and with my £35k deposit I will need a BTL mortgage for £80k which over 25 years on interest only is approx £250pm. The property will be able to pull in around £750pm. That's an annual income of £9k which will be taxed on which works out at £1800. So when you take that out, the £250 BTL mortgage, monthly fees and the £275 for the extra loan on my own property that doesn't leave a whole lot of cash from the rental. Am I missing something? 

Thank your for any help.

I will take some videos from YouTube with some further research/due diligence.

Some of the videos are overly optimistic and sell you their courses/training.

FreeBear

user1977 said:  There isn't necessarily a huge yield to be had, but in the long term you will/should/might have capital appreciation in the value of the property too.

Historically, property prices have increased over the long term. Sure, there have been dips, but these have only lasted 5-10 years. What will take a huge chunk out of the capital investment is Capital Gains Tax - How much you will end up paying will depend on changes in government policy over the years you keep the property.

In the meantime, interest rates are going to eat in to the already meager monthly/yearly rental payments as will all the maintenance costs.

If you are after a long term investment vehicle, look at bunging as much as you can in to a pension.

theartfullodger

I wouldn't trust the claims spouted in those videos any further than I could throw a house.

Look up Vanessa's campaign on property tribes....
https://www.propertytribes.com/samuel-leeds-bringing-multiple-court-cases-guardian-article-t-127657435.html

In particular the terrible death of Danny Butcher...

Best regards to all

SAM78998779

Hello

I have to side with @theartfullodger , i would not trust the claims made in them videos also.

When i first entered the property market , i decided to opt to buy property in Dublin , just based on the rent i could achieve there was far higher than in sheffield where im based.

I think its important to do alot of due dilligence , and make your own assumptions.

But its also great to consult the experts i used a company called Leornard Keenan Wilson (LWK.IE) and a gentlemen called patrick answered all my queries and questions about buying investment properties.

dimbo61

It's all about timing and Now is not a good time.
I could talk about the joys of being a Landlord and all the fun laws, rules and regulation.
Selective license 

diggingdude

SAM78998779 said:

Hello

I have to side with @theartfullodger , i would not trust the claims made in them videos also.

When i first entered the property market , i decided to opt to buy property in Dublin , just based on the rent i could achieve there was far higher than in sheffield where im based.

I think its important to do alot of due dilligence , and make your own assumptions.

But its also great to consult the experts i used a company called Leornard Keenan Wilson (LWK.IE) and a gentlemen called patrick answered all my queries and questions about buying investment properties.

I would be careful of anyone who name drops, especially an Irish company on a UK site, who has only posted twice 

theartfullodger

diggingdude said:

SAM78998779 said:

Hello

I have to side with @theartfullodger , i would not trust the claims made in them videos also.

When i first entered the property market , i decided to opt to buy property in Dublin , just based on the rent i could achieve there was far higher than in sheffield where im based.

I think its important to do alot of due dilligence , and make your own assumptions.

But its also great to consult the experts i used a company called Leornard Keenan Wilson (LWK.IE) and a gentlemen called patrick answered all my queries and questions about buying investment properties.

I would be careful of anyone who name drops, especially an Irish company on a UK site, who has only posted twice 

Classic tactics for scammers.  But ....

sidneyvic

Why would any of these property guru's who have made millions want to mess about making you tube video's trying to entice the vulnerable to part with their hard earned to attend so called property seminars.

Don't forget the 10% your going to give a managing agent for doing very little and when your tenant hits hard times and decides you can shove your rent the thousand's in lost rent and eviction fee's.....