My dilemma with property investment

cwodavids

Hi all,
I'm in a bit of a dilemma, at present I have a flat that has a £33,000 mortgage and is worth around £85,000. It has came to that time when I want to jump on the band wagon and buy some additional properties. I have a disposable income with which to finance additional mortgages.

The problem is that I don’t know where to start or what route to go down, I'm in Scotland btw. I have started to look at a few properties but the estate agents are being a pain in the butt with all there theories and conflicting advice. Your advice, experiences and thoughts would be greatly appreciated.
My questions -

1. Should I use a buy to let or let to buy - Mortgage advisor was pushing let to buy in a big way hence why I am wary as I had never heard of it before and it does seem a bit too good to be true.

2. What are the tax implications of having additional properties - I have seen SO much info that is on the face of it contradictory.

3. Would i be better with 1 or several properties - With £50,000 equity i could buy up to 4 properties on a buy to let at a value of £90,000 assuming 85% LTV

4. Is the market right just now to try and buy a property for renovation - I work away from home for 20 days a month and occasional overseas stints of 2 months once a year. If so what is the basic procedure for financing?

5. What kind of things should i be asking a mortgage advisor - I asked a few questions which he answered but got the impression he would not have offered the info had i not thought of it myself.

6. What kind of property is the right kind to go for - I was thinking of flats that are in the town centre with 2 bedrooms for young professionals.
If anyone could help me with this it would be greatly appreciated as I'm not that up to date with property as i bought my current place in 2000.

Thanks

D

p.s. If there are any weblinks that are lurking that are non-commercial that explain things and it will save you typing away then post away.

UK007BullDog

cwodavids wrote: »

Hi all,
I'm in a bit of a dilemma, at present I have a flat that has a £33,000 mortgage and is worth around £85,000. It has came to that time when I want to jump on the band wagon and buy some additional properties. I have a disposable income with which to finance additional mortgages.

The problem is that I don’t know where to start or what route to go down, I'm in Scotland btw. I have started to look at a few properties but the estate agents are being a pain in the butt with all there theories and conflicting advice. Your advice, experiences and thoughts would be greatly appreciated.
My questions -

1. Should I use a buy to let or let to buy - Mortgage advisor was pushing let to buy in a big way hence why I am wary as I had never heard of it before and it does seem a bit too good to be true.

2. What are the tax implications of having additional properties - I have seen SO much info that is on the face of it contradictory.

3. Would i be better with 1 or several properties - With £50,000 equity i could buy up to 4 properties on a buy to let at a value of £90,000 assuming 85% LTV

4. Is the market right just now to try and buy a property for renovation - I work away from home for 20 days a month and occasional overseas stints of 2 months once a year. If so what is the basic procedure for financing?

5. What kind of things should i be asking a mortgage advisor - I asked a few questions which he answered but got the impression he would not have offered the info had i not thought of it myself.

6. What kind of property is the right kind to go for - I was thinking of flats that are in the town centre with 2 bedrooms for young professionals.
If anyone could help me with this it would be greatly appreciated as I'm not that up to date with property as i bought my current place in 2000.

Thanks

D

p.s. If there are any weblinks that are lurking that are non-commercial that explain things and it will save you typing away then post away.

Well, your type is not much liked here by some peeps. However I will give you some tips.

1. buy a couple of books on property investment.

2. stay away from property clubs.

3. currently the market is not good for BTL

4. I suggest trying to pay off your mortgage at this time and save money in ISA's and Pension plans.

5. Yes you will have to pay tax on your properties income and profits. Unless you do not declare it (could be hit with a massive fine though) or have a really good accountant.

6. If you are out of the country a lot you need someone to look after them unless you buy a newbuild property which are low maintenance.

7.Let to Buy is actually just a remortgage to release equity on your existing property.

8. you do not have £50K equity. more like £40K. has your broker shown you how much you will be paying on your new mortgage alone? Has he shown you how much you have to pay per month on your BTL mortgage(s) in case they are empty or the tennants decide not to pay? Because you still have to pay the mortgages and any service charges if flats.

9. Do not let greed cloud your judgement. Start off with one property to get a feel of being a landlord.

10. The rental income will decide on how much of your own money you have to put into the purchase.

11. Google for "Fraud on new build flats" makes interesting reading.

12. research this site and look at the facts, research the area and see if there is a demand or if the market is flooded, pushing prices down.

Sapphire

cwodavids wrote: »

Hi all,
Would i be better with 1 or several properties - With £50,000 equity i could buy up to 4 properties on a buy to let at a value of £90,000 assuming 85% LTV

Are you crazy? :eek:

Even the slightest bit of research would have told you that property is almost certainly heading for a (probably) major crash. I would suggest that you do a lot of reading before attempting to gamble in this way. :cool:

SouthCoast

I work away from home for 20 days a month and occasional overseas stints of 2 months once a year.

I would never run a business unless I had 24/7/365 hands on control.

poppy10_2

cwodavids wrote: »

The problem is that I don’t know where to start or what route to go down

Then don't do it. Making money in property is becoming near-impossible even for seasoned investors, to come into it as a novice at this time would be suicide.

I was thinking of flats that are in the town centre

Oh dear god :eek:

PasturesNew

What you need to do is to release the equity from your flat by remortgaging.
Then get the hard cash out of the bank.

Set aside some time to put the cash into 12 neat piles on the floor and label them:
1] Cost of buying
2] Cost of finding a tenant
3] Cost of initially doing up the property/paint etc
4] Cost of paying out before 1st tenant moves in
5] Repairs
6] Agent fees
7] Cost of voids between tenants
8] Repairs to property when tenant damages things and leaves without notice
9] Unexpected costs
10] Cost to sell
11] Cost of keeping property empty while you sell
12] Headache tablets

Then stand up and walk round the 12 piles of cash. Read each label out loud 3 times slowly.

When you've done this, reach for a lighter and set fire to each pile in turn, repeating what was on its label 5 times as it burns.

Trust me, it might seem like a lot of effort to go to, but you'll have more fun with your money doing it this way.

granville_2

I'm sorry to say this, but if you have to ask about BTL on a Money SAVING board you probably should stay well away from such investments.

Have a read of what is happening in Manchester to lots of new build city center flats:
http://www.guardian.co.uk/money/2008/feb/16/property.houseprices

If you are still keen, pop over to Singing Pig:
http://www.singingpig.co.uk/forums/

IMO BTL was a fine investment if you got in at the right time (mid-late 90s early 00's) but not now...

ymmv.

cwodavids

Thanks for the advice guys. A few things to add.

1. Even if property drops im not too bothered short term as I'm looking long term (10yrs+) I am aware of the impending doom that is going to hit with the bottom falling out of the housing market. The main thing that I want to achieve is for someone (a tenant) to pay my mortgage on several smallish properties. This is so that at a future date i can sell them once the mortgage is paid or partly paid and hopefully buy a single property with little or no mortgage.

2. I am not looking at a new build as there is no real money in these and they tend to be pretty small and basic. Renovating or modernising is the route i would prefer to go down, buy cheaper, spend a bit modernising and hopefully from the start have some equity.

Thanks for all the comments

D

Numbnutz_2

cwodavids wrote: »

1. Even if property drops im not too bothered short term as I'm looking long term (10yrs+) I am aware of the impending doom that is going to hit with the bottom falling out of the housing market.

Why not wait a while for prices to drop then ?

cwodavids

Numbnutz wrote: »

Why not wait a while for prices to drop then ?

The equity in my place I have just now will also drop then.

ixwood

lol. Are you serious? Smart plan. This time next year Rodney...