PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Property investment options - mortgage, cashbuy, crowdfnding? which?

Options
ileven1225
ileven1225 Posts: 176 Forumite
First Anniversary First Post Name Dropper
in House buying, renting & selling
Hi everyone,

I have been buy to let market using mortgage for a few years. Now I have some savings and am able to look at other options. I am not sure other options, e.g. cash buy, corwdfunding, are better than my current way. I would like to know your opinions and if there are other better ways than what i know.

1. My current way - apply 80% LTV mortgage buy to let, either 2 or 5 years, rent the property out to provide me monthly income. If the property price increased, i would sell it for some capital gain income or i can keep it for even longer term hoping it will increase more.

2. Cash buy - if the property is £150k market value, sometimes cash buyer could negotiate a good price as the seller urgently need cash. The property could be purchased as £120k or lower. It means after cash buy, i can refinace/remortgage it to recycle the cash. There are some addtional payment, e.g. stamp duty, socilitor fees, etc, but not much. The cash is in theory constantly recycled.

3. Crowdfunding - recently I heard this term and it can provide fixed return of 8-12% in 6-18months, depending on projects. One example, www.sourced.co, they only provide property investment project. Have anyone used them before? It sounds low risk and reasonble return. However, I know that it can't be true and any investment has risks. Anyone has used such method and would like to share your opinions?

Note: There are some pros and cons using ltd company, however, this is not part of the question. The above 3 ways can apply to both personal and ltd company.

I would like to know your opinions on which way produces higher return (obviously higher risk i assume) and if there are other ways. It could end up with similar return and similar risks.

Thanks everyone in advance.
«134

Comments

  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Options
    If anyone is offering 8-12% then there a big risk soemwhere, whether you can see it or not.
    Given you seem to be experienced at being a landlord, I'd just stay as you are with the first two options, even if only because its all in your control.
  • ileven1225
    ileven1225 Posts: 176 Forumite
    First Anniversary First Post Name Dropper
    Options
    AnotherJoe wrote: »
    If anyone is offering 8-12% then there a big risk soemwhere, whether you can see it or not.
    Given you seem to be experienced at being a landlord, I'd just stay as you are with the first two options, even if only because its all in your control.


    Thanks. Regarding option 1 and 2, which produces more income in the same period? I wonder if I would go with cash buy or I would split the cash into several deposits to apply for several mortgages?
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Options
    No idea, I dont do BTL.

    If you are experienced in it you should be able to do the sums yourself based on all the different variables.
  • ileven1225
    ileven1225 Posts: 176 Forumite
    First Anniversary First Post Name Dropper
    Options
    AnotherJoe wrote: »
    No idea, I dont do BTL.

    If you are experienced in it you should be able to do the sums yourself based on all the different variables.


    I haven't done any cashbuy so far, would like to know some pros and cons from anyone who has done it before. I has some cash now and would like to know some tips before i start buying with cash
  • davidmcn
    davidmcn Posts: 23,596 Forumite
    Name Dropper First Anniversary First Post
    Options
    ileven1225 wrote: »
    3. Crowdfunding - recently I heard this term and it can provide fixed return of 8-12% in 6-18months, depending on projects. One example, www.sourced.co, they only provide property investment project. Have anyone used them before? It sounds low risk and reasonble return.
    From a brief look, you're lending to property developers to fund individual developments. So perhaps low risk in the sense that there is at least security for the loan (not immediately clear to me what that typically is, or whether you can rely on whatever due diligence has been done), but you can only withdraw your funds if and when the loan is actually repaid. And obviously a risk of losing it all (or a fair chunk) if they end up repossessing and selling at a shortfall.
  • ileven1225
    ileven1225 Posts: 176 Forumite
    First Anniversary First Post Name Dropper
    Options
    davidmcn wrote: »
    From a brief look, you're lending to property developers to fund individual developments. So perhaps low risk in the sense that there is at least security for the loan (not immediately clear to me what that typically is, or whether you can rely on whatever due diligence has been done), but you can only withdraw your funds if and when the loan is actually repaid. And obviously a risk of losing it all (or a fair chunk) if they end up repossessing and selling at a shortfall.


    Thanks. I was told that they leave 30% profit margin which means if the property devalued by 20%, there is still a margin to pay back the investors. I think the worst would be the property needs to be refinanced and there is still some money paid back to me.
  • MobileSaver
    MobileSaver Posts: 4,234 Forumite
    Name Dropper First Post First Anniversary
    Options
    ileven1225 wrote: »
    2. Cash buy - if the property is £150k market value, sometimes cash buyer could negotiate a good price as the seller urgently need cash. The property could be purchased as £120k or lower.

    The "cash discount" for a house is an urban myth, unless you happen to hit extremely lucky to find a seller in an absolutely desperate situation, it just doesn't happen in the real world.

    Practically no-one is going to give you a £30k discount because you are a cash buyer that *may* complete a couple of weeks quicker than someone with a mortgage. Sellers could not care less whether it is your money or your bank's money paying for the house.

    Buying with cash is nothing special any more, I actually bought my last three properties with cash. In fact one in three property purchases are "cash buys" so if a 20% cash discount was normal you'd expect house prices to be negative over the last ten years rather than positive.
    Every generation blames the one before...
    Mike + The Mechanics - The Living Years
  • ileven1225
    ileven1225 Posts: 176 Forumite
    First Anniversary First Post Name Dropper
    Options
    MobileSaver wrote: »
    The "cash discount" for a house is an urban myth, unless you happen to hit extremely lucky to find a seller in an absolutely desperate situation, it just doesn't happen in the real world.

    Practically no-one is going to give you a £30k discount because you are a cash buyer that *may* complete a couple of weeks quicker than someone with a mortgage. Sellers could not care less whether it is your money or your bank's money paying for the house.

    Buying with cash is nothing special any more, I actually bought my last three properties with cash. In fact one in three property purchases are "cash buys" so if a 20% cash discount was normal you'd expect house prices to be negative over the last ten years rather than positive.


    Thanks for sharing your experience. I do see some properties are cheaper than market value on rightmove but cash buyer only. However, i missed the chance as you said it is rare. What you said is interested, if you didn't get discount by paying cash, why did you buy last three properties using cash? I assume buying through mortgage will increase cash flow and can buy more properties?
  • MobileSaver
    MobileSaver Posts: 4,234 Forumite
    Name Dropper First Post First Anniversary
    Options
    ileven1225 wrote: »
    I do see some properties are cheaper than market value on rightmove but cash buyer only.

    "Cash buyer only" typically means that the property is non-standard build or has a serious defect and so you will be unable to get a mortgage anyway. In those scenarios the cheaper price is the market value because the two thirds of buyers who need a mortgage can't possibly buy it (and any buyer will have the same problem when they try to sell.)
    ileven1225 wrote: »
    Why did you buy last three properties using cash? I assume buying through mortgage will increase cash flow and can buy more properties?

    I've already made my money, I'm not interested in buying more properties; the ones I bought were for myself and other family members, I'm not an investor or landlord.
    Every generation blames the one before...
    Mike + The Mechanics - The Living Years
  • ileven1225
    ileven1225 Posts: 176 Forumite
    First Anniversary First Post Name Dropper
    Options
    Thanks. I will dig it further.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.3K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 248K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards