Getting Started in Property

JakeHyde

kipperman said:

My first move would be to search this forum for the large number of posts where things have gone wrong for Landlords and ask myself whether the returns I might get would be worth it. 

Buying a first home is probably a sensible move, but again you don't need to pay for any advice from property gurus to do that. The good news though is that you are asking questions and appear to have a healthy cynicism for said gurus. If making money from property is as easy as they claim, why are they not doing this rather than selling you their "knowledge"?

Urgh, you're totally right. I'm dreading the idea of property.  I just don't want inflation to eat away at the money my mum worked so hard for. I need to get more educated. I was advised to speak to a financial advisor, but all they wanted was to get my assets under management, and nothing else, it was quite off-putting. TBH.

theartfullodger said:

Most years I make money from B2L.  But not always.

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from..) who doesn't pay you for 7 months whilst you pay mortgage, legal costs and repairs***??  Phone calls Saturday 9:30 pm about the toilet leak? (Tenant is entitled to your name & ACTUAL address.

*** Repairs?? If landlord isn't fixing things who do you think judge at court eviction hearing will side with??

I've just persuaded my agent to start paying me the rent they've had since last September......

If I wasn't feeling queasy about the whole situation, I do now after reading this! haha 🤢🤣

Schwarzwald said:

before taking your first steps getting into property .... the real question that determines a lot of follow ups is .... WHY do you want to get into property?

I hear so many friends and family speaking about "wanting to get into property" investing thousands of their savings plus borrowing without even being clear around the WHY, WHY, WHY ....

I guess, more than anything, to make my money grow... 'passively', and I'm beginning to get the picture that becoming a landlord isn't as passive as people are making out.  I'm already maxing out my ISA, while the rest of my savings are earning an average of 5%, which isn't doing much against inflation especially when interest rates fall.  But isn't owning brick and mortar a good way to make your assets appreciate?

JakeHyde

RHemmings said:

Schwarzwald said:

before taking your first steps getting into property .... the real question that determines a lot of follow ups is .... WHY do you want to get into property?

I hear so many friends and family speaking about "wanting to get into property" investing thousands of their savings plus borrowing without even being clear around the WHY, WHY, WHY ....

We've had decades of media portraying property investing as the golden money tree. I'm not surprised if there are many people wanting to get into it. Unfortunately, media does have an influence. 

I'm not the OP, but in my case I was considering a single property intended to be gifted to my son, and one part of that was as insurance to make sure that he can get onto the property ladder without needing a mortgage. The renting it out bit was meant to enable the property to wash its own face, rather than be a huge profit-making venture. Rental income would allow maintenance and hopefully improvement of the property over time. 

By all means, please chime in, I'm all about listening to others and learning.  What you want for your son, is what mum wanted for me.  

RE: Stamp duty, I think you got stiffed with £15!?  😮  I want to buy myself a house for like £250/300 which is completely Stamp Duty free as a first time buyer.  But if I bought a little apartment to rent, as a first property, I'd lose a good few grand on SD.  There are loads of Stamp Duty calculators online to test this theory.

JakeHyde

Albermarle said:

I think it is because people feel they understand property. They have their own home, often that will have increased in value significantly. They will have ideas about design and improvements. They will see friends and relatives improving their homes and increasing value, so it all seems rather interesting and exciting. Plus as the previous poster says lots of property p*rn programmes on the TV .
Of course the reality of running a BTL portfolio or property development is somewhat different .

On the other hand investments, pensions etc are scary, and/or a mystery and/or seen as risky . 

I've been dabbling with some investments in my S&S ISA. I'm no expert, but I'm learning as I'm going (School of MSE).  Basically S&P500, and a little in a Global Index (FWRG), via InvestEngine... and a Cash L-ISA.  I'm too old to make any kind of new L-ISA, so stuck with the cash version.

Currently I'm earning literally no income, I'm 'technically' self employed, but losing my dear mum absolutely devastated me, so this year I've just been looking after dad, living under a duvet, and surviving on interest, I haven't even looked at Pensions. I don't know if it's even worth it.  I think the max I can stick in a SIPP is like £3600, am I right?   That's a whole other question I need to research 😅

JakeHyde

Bigphil1474 said:

OP, could you look at buying, improving, then selling houses? The market doesn't seem to have picked up too much recently, so there'll be bargains to be had. Spend a bit of time fixing them up, and by then the market may have picked up again, and you make a tidy profit. If you know what you are doing, it's probably less hassle than becoming a landlord. Having said that, a mate of mine has multiple properties, buys local cheap houses, fixes them up, and rents them out, and he doesn't get too much hassle.

I love 'Homes under the hammer', and often thought it would be a great thing to do. But.. I'm not good at DIY, and I'm an incurable procrastinator, if we're being real here. If there was a way to get trustworthy people who know what they are doing, without being absolute cowboys, and make some kind of profit from it, I'd consider it.

Schwarzwald said:

that is the point i am getting to, they "feel" things.
Business and making money is not about "feelings".
and making money in property isnt as simple as portrayed in "Homes under the Hammer".
if you want to get into property in oder to make money, your benchmark is at least 10% yield that you can get by simply putting your money into the S&P 500, without taxes if you do it via ISA.
so how do you outperform a 10% yield (potentially net of taxes) in property?
it's not easy.
if you compound at 10% p.a. in S&P 500 you double your money every 7 years.
without any tenant calling you up on the weekend.
without having to coordinate builders.
without the risk of getting fined for forgetting to send EPC certificates.

if you want to get into property so you can tell your friends that you made it in life that's also fine, just be aware that it could be a quite costly vanity project.

If I could get away with doing this, I would in a heartbeat! 

The biggest issue, is 'only' being able to put in £20k a year. Meanwhile the rest of the savings/inheritance are out in the cold. And if I were to stick £100k in the S&P500 outside of an ISA I wouldn't even know how to calculate the Capital Gains I'd need to pay.  Oooph, that feels like another question I'm going to have to compose on here! haha

All these American 'Gurus' talking about leveraging good debt etc, and how rich people never pay tax etc. Sounds so amazing-ly complicated!😖

propertyrental

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

user1977

JakeHyde said:

All these American 'Gurus' talking about leveraging good debt etc, and how rich people never pay tax etc. Sounds so amazing-ly complicated!😖

Different economy, different taxes, and likely to be snake-oil nonsense even for Americans.

ManuelG

If you don't own your own house to live in, use your inheritance to buy your own house. I assume it means you'll have a reasonable deposit as a result, so you'll have a relatively small mortage (if any) so you'll save on the rent you're paying now. Put the money you would be paying on rent away as investment.

If you want a challenge, buy a house to fix up. If you can do basic DIY, painting etc then that will save you costs for workmen, and you'll end up with the house as you want it, it'll really be yours. Be aware however that whatever you think it might cost to fix up, double it... and add some extra on that for good measure(!) I wish Homes Under the Hammer would show more where it doesn't work out with a nice fat profit... but if it's yours to live in as long as you break even once done on value vs investment, then you've got the sense of achievement too.

Actually, as I've written that it sounds tough, so I'd just focus on getting your own house

Herzlos

JakeHyde said:

Has anyone had any real world experience with the likes of Touchstone Education. I see a lot of these property gurus online, and I get strong snake oil salesman vibes from all of them

It's all snake oil. Why would a successful investor waste time (a) running training courses and (b) giving their competition ideas?

In terms of advice, because I've got no skin in the game, you're best buying your own home first because otherwise you're wasting money on rent and not building any equity. If you later want to invest in a rental property then speak to a letting agent to get an idea of what's popular in your area and what the costs involved are. You can always pay a management company to do the day to day part of managing the rental but it'll cost you a chunk of profit and management companies don't have a great reputation in general.

 But realistically unless you're buying the rental outright you're probably best looking to invest elsewhere.


You're talking about maxing out ISAs, putting £100k into S&P500 and living off the interest, so I suspect you've got a completely different size of inheritance here than most of us are assuming. In which case yeah you definitely need a recommended financial advisor.

Albermarle

 and a Cash L-ISA.  I'm too old to make any kind of new L-ISA, so stuck with the cash version.

IN theory you should be able to transfer a cash LISA to a S&S LISA, even if you are over 40. However in practice the handful of S&S LISA providers seemed unwilling to accept the transfer.

I think though that now A J Bell ( and their low cost version DODL) will accept them.

 I think the max I can stick in a SIPP is like £3600, am I right?   

If you have no earnings, then the max you can add is £2880 and the pension provider will add £720 tax relief.

RHemmings

JakeHyde said:

RHemmings said:

Schwarzwald said:

before taking your first steps getting into property .... the real question that determines a lot of follow ups is .... WHY do you want to get into property?

I hear so many friends and family speaking about "wanting to get into property" investing thousands of their savings plus borrowing without even being clear around the WHY, WHY, WHY ....

We've had decades of media portraying property investing as the golden money tree. I'm not surprised if there are many people wanting to get into it. Unfortunately, media does have an influence. 

I'm not the OP, but in my case I was considering a single property intended to be gifted to my son, and one part of that was as insurance to make sure that he can get onto the property ladder without needing a mortgage. The renting it out bit was meant to enable the property to wash its own face, rather than be a huge profit-making venture. Rental income would allow maintenance and hopefully improvement of the property over time. 

By all means, please chime in, I'm all about listening to others and learning.  What you want for your son, is what mum wanted for me.  

RE: Stamp duty, I think you got stiffed with £15!?  😮  I want to buy myself a house for like £250/300 which is completely Stamp Duty free as a first time buyer.  But if I bought a little apartment to rent, as a first property, I'd lose a good few grand on SD.  There are loads of Stamp Duty calculators online to test this theory.

I got it wrong. If I hadn't been a FTB I would have paid £27 SDLT. I'm not sure I understand under which circumstances people pay SDLT on properties under £250k. ... (plays around with a calculator). Oh, if I bought an additional property not to replace my current home for £180k, then I would pay over £5k. If I was to buy for my son then I was thinking £160k as being the cheapest freehold property around here. But, as I would buy that as a second property, I would pay a bit under £5k for SDLT for that.