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Anyone here into "Buy to Let" ?

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Anyone here into "Buy to Let" ?

Postby 9fingers » 11 Jan 2017, 21:04

As per subject really.

I can't decide whether is is a good idea or not as part of a balanced investment portfolio and would welcome comments from those who are giving it a go in UK.

TIA

Bob
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Re: Anyone here into "Buy to Let" ?

Postby Tusses » 11 Jan 2017, 21:30

I had 3 just before the crash .. lost about £250k :shock:

I'd do it again ... except I'm properly skint as the result ! :lol:

I wasn't in a position to ride it out, and had to sell as much as poss very quickly.
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 11 Jan 2017, 21:39

Tusses wrote:I had 3 just before the crash .. lost about £250k :shock:

I'd do it again ... except I'm properly skint as the result ! :lol:

I wasn't in a position to ride it out, and had to sell as much as poss very quickly.


Thanks!
What problem did the crash cause you? Negative equity and hence mortgage foreclosure or something else?
I don't plan to borrow for this venture. I feel I might have too much stock market exposure.
Cheers
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Re: Anyone here into "Buy to Let" ?

Postby Tusses » 11 Jan 2017, 22:52

9fingers wrote:
Tusses wrote:I had 3 just before the crash .. lost about £250k :shock:

I'd do it again ... except I'm properly skint as the result ! :lol:

I wasn't in a position to ride it out, and had to sell as much as poss very quickly.


Thanks!
What problem did the crash cause you? Negative equity and hence mortgage foreclosure or something else?
I don't plan to borrow for this venture. I feel I might have too much stock market exposure.
Cheers
Bob


I was "playing the game" .. that was the main problem.
I had no cash to start with .. used credit cards for a deposit, re-mortgaged as we rode the wave, used that to buy the next .. .. built up a decent portfolio, inc a 57ft boat, a good stock of american muscle cars etc etc,,,

we lived it right up for about 10 yrs, so I don't regret it.
would have been sweet if the crash didn't happen ! :D

Basicaly lived off the rising house prices like it wasn't going to stop !

Saying that, the place we are in now, isn't worth what we paid for it in 2004.
Neither would we have been able to buy it playing by the normal rules.

If you have cash and are planning on living a long time, I'd say look at it.

I'd look at investment "do-err-uppas"
Do the very least to get them rented.
Then fix up if you want to sell.

I did it the other way .. did them up nice, and found the tenants just had no respect for the house.
Used a rent agency for one, which didn't help much .. apart from it was easier to get my deposit back when I chucked the tenants out.

SIL rented her house out .. tenant stopped paying and it took 6 months to get them out

also remember there is a housing shortage, and also a building boom .. so if the housing stock catches up, then the prices might not rise like they have in the past.

I'd do it again .. and with hind sight, not be so blahzay about the whole thing ..
I still have a collection of cars for resto ... so maybe I still will :-)
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 11 Jan 2017, 23:08

Tusses wrote:
If you have cash and are planning on living a long time, I'd say look at it.



If someone would only tell me how long I will live then all sorts of planning would be a lot easier :lol:

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Re: Anyone here into "Buy to Let" ?

Postby Tusses » 11 Jan 2017, 23:17

9fingers wrote:
Tusses wrote:
If you have cash and are planning on living a long time, I'd say look at it.



If someone would only tell me how long I will live then all sorts of planning would be a lot easier :lol:

Bob


that's exactly why I chose those words !
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Re: Anyone here into "Buy to Let" ?

Postby chataigner » 12 Jan 2017, 09:54

When I moved to France (1999) we bought a nice 2 bed purpose built flat in the Uk for the regular visits needed to wind down and sell the business. After the business was sold we decided to let the flat. Because we were in France we used an agent who charged around 10% of gross rental to take care of everything and that included insurance for unpaid rental. Initial tenant was a young couple saving to buy - they took good care of the place, did basic maintenance such as replacing a broken window catch themselves and billed me for parts. Worked very well - the agent did nothing for his 10% but I was insured against unpaid rent so didnt mind. They eventually left and the new tenant was a single woman who called the agent for everything, even a dead light bulb. There was something nearly every month - £5 to fix the silly problem and a callout fee of £50 each time. Got fed up with that and sold with the sitting tenant. Had the flat around 5 years in all, got a small capital gain.

I guess I was lucky with tenants as far as looking after the place was concerned, both left the flat in good order, but I hear horror stories elsewhere.

Would never go with an all-in management agent again, you need to be on the spot to manage things yourself. Flat better than house with garden, you need to be lucky to find a tenant that will manage a garden.

Now in the process of doing it again here in France. Isabelle has a small flat let (I installed a new kitchen for her and sorted some electrical problems) and I'm in the process of restoring a run-down town house just around the corner with a view to letting. Capital gains tax on other than primary residence here is punitive, so you have to be in it for the long run.

PS - Invested the cash from the sale of the flat in the stock market in 2005/6, lost half of it in 2008/9 by panicing and selling at the wrong moment.
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Re: Anyone here into "Buy to Let" ?

Postby Robert » 12 Jan 2017, 11:41

My wife watches homes under the hammer most mornings. Looks easy when all you need to fix it up is a whoosh noise.
Having fixed it up you then take the risk of someone unfixing it and all the other things they could do.
I thought about it when I packed up being in business but it just seemed too much hassle. My mother died just after I stopped work and the family house would have been such a project. A mixture of sentiment and practicality meant I sold the house instead.

We had a financial advisor when we were in business and I stuck with him for personal investments. Most lost significant amounts around 2008 but have recovered to be worthwhile now. I don't regret staying away from property even though house prices round here have more than doubled since 2006.

To me property is like starting a small business - ie work. Investments mean getting an income without the responsibility.
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Re: Anyone here into "Buy to Let" ?

Postby TrimTheKing » 12 Jan 2017, 12:40

We have bought and renovated two terrible houses to a state where both have been rented out for around 6-7 years. First one bought cheapish, did up to a good spec (for rental) and got a friend of a friend in. Looked after it really well, paid every month etc, all good.

Second tenant the same, only contacted me a couple of times for things they couldn't resolve themselves, paid fine, no issues. She left and little things were starting to go wrong (alarm, shower screen, neighbours being @rses etc.) and taking up my time to resolve (we only used an agent to find tenants and create the contract, which are fairly standard so you can do this yourself) because I managed maintenance, knowing it should be low due to the quality we had renovated to, so we sold up that one and made about £40k CG as well as 7 years at £700-725pm rental.

Second house was bought as a shell and completed rebuilt all bar the front wall, so invested about £40k in it, but has been let to a lovely couple who keep it brilliantly and only contact me when something really needs sorting, which has been about 5 times in 5 years, so that's been fine. £750pm income and currently about £60k CG in that one and while tenants are still there we're keeping that one. Easy money income for very little effort means that is a no brainer.

Seems to me that getting good checks on tenants and being lucky in that respect is key to this, along with buying bargains where possible, but in terms of if you have the capital to invest then even if the value don't rise you will make a healthy profit monthly and have a strong asset when you come to sell.

Both ours are/were 2 bed terraces in a nice, desirable residential area.

Cheers
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 12 Jan 2017, 16:49

Thanks for your replies gents.

My portfolio is currently about 20% cash on deposit earning sweet FA, 15% P2P (mainly property bridging loans) 20% structured investment products (high risk high yield investments linked to stock market performance also known as Kick-Out bonds*) and 55% stocks and shares. We also have my parent's house in rental to excellent tenants who have 10 year Agricultural Tenancy on the house and land. This is working well but probably not representative of a typical residential tenant.

*http://www.adelphi.ie/2012/09/what-is-a-kick-out-bond/

Based on the recent stock market rises, it is highly likely that the Kick-out will be invoked in a couple of weeks and a significant wodge of cash that has been earning 13% pa will become available.

I have no idea how the Brexit business will resolve but the markets don't like uncertainty so whilst the FTSE might not dive, it just has to slow down from the current progress and maybe flat line for the next few years.
So I feel it is prudent to take the opportunity of the kick-out and not to re-invest in the stock market but I do need to find something to do with it to protect it value.

Whilst I very much agree with Robert's comment
"To me property is like starting a small business - ie work. Investments mean getting an income without the responsibility." I can't think what else would be a reasonable yield yet secure investment.

A secondary reason is that I shall possibly purchase property in my son's name to continue the process of IHT planning so it can be a "business" that he can contribute some effort to in return for his share.

Even in out worst scenario I can't see how we would not be able to cover long term care costs from the balance of savings and pension income so passing money over to our (only) son seems low risk. In any case he "knows!" if push came to shove he is expected to the decent thing and bale us out in extremis.

Ideally a local house converted to 2 flats would be ideal as I have a friend who I would trust to live in one and keep an eye out on the other one for me. Not many of those on the market that I've seen sadly.

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Re: Anyone here into "Buy to Let" ?

Postby justaskin » 12 Jan 2017, 18:30

Hi 9F
I bought 2 shared ownerships when we were younger and had a bit more cash spare. This was some 15 years ago now, and yes we have done well out of it, bloody annoying having to paya loada of tax though on the rent
just because we were more prudent than most. :shock: I often wondered if I was a ?isshead would I been in the same boat now.

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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 12 Jan 2017, 18:48

Our son is currently a mature student just starting on a 4 year degree course so hopefully there will be no tax to pay for now. Later on we might consider converting the property holdings to a ltd company to keep the tax down. All depends if he decides to move into one of them?

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Re: Anyone here into "Buy to Let" ?

Postby chataigner » 12 Jan 2017, 18:48

Interesting Bob, I've got some kick-out bonds linked to EuroStoxx50 too. Anniversary date on mine is early april, just after the proposed date for triggering Brexit - will be interesting to see what happens over 2017.
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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 12 Jan 2017, 19:16

Many thanks for the info re a Kick-Out bond which I'd never heard of before.

I don't envy your dilemma, Bob, although I do like your maths..is that a Ponzi scheme you have ? ;)

20% cash + 15% P2P + 20% structured investment + 55% shares = 110% :D

We don't have any IHT issues to consider as we have no children and neither of us has any intention of going into a care home and so we don't need to consider any funding for that.
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 12 Jan 2017, 20:11

chataigner wrote:Interesting Bob, I've got some kick-out bonds linked to EuroStoxx50 too. Anniversary date on mine is early april, just after the proposed date for triggering Brexit - will be interesting to see what happens over 2017.



We have done well with ours, starting 7.5 years ago, we have been kicked out and gone back in with the proceeds. The current Investec bond is linked to the performance of FSTE 100 and S&P 500 where both have to be over the starting value on Jan 23rd ( a couple of day after Trump hits the White House :shock: :shock: ) so fingers crossed that the markets down crash.
Assuming we come out, the capital will have more than doubled in the period equivalent to over 11% per annum.

I guess neither of us were thinking of Brexit or Trump at the time of signing up :lol:

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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 12 Jan 2017, 20:18

RogerS wrote:I don't envy your dilemma, Bob, although I do like your maths..is that a Ponzi scheme you have ? ;)

20% cash + 15% P2P + 20% structured investment + 55% shares = 110% :D



Oops! make that 45% Shares!
Careful with those structured products, they are high risk. If the markets don't meet the targets set, then you can end up not being able to get out and when it matures you are out with NO interest after 5-6 years or worst still a capital loss.
The markets are a bit too high for my taste at the moment. AKOs work best a little while after a crash.

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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 12 Jan 2017, 22:24

Interesting thread. Many years ago when I was working and on a good salary with surplus cash, a colleague enticed me into investing £15k with a guy that would double your money after three months. Naively I gave over my £15k. But not so naively I asked for my guaranteed £30k after three months. Persevered. Can be quite assertive when needed. Got the money.

Of course, I now realise that I was in at the early stages of a Ponzi scam.
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Re: Anyone here into "Buy to Let" ?

Postby Phil » 14 Jan 2017, 07:19

Interesting discussion.

When eldest son and DIL bought a house they sold the condo.

I gave serious thought to buying it, doing a bathroom renovation and then letting it out.

When I sat down and did a return calculation based on the investment, rental income after the agent 10%, tax on income and also providing for potential repairs and maintenance, it was better and safer to invest in one of the RSA retail bonds for 5 years at 9.75%

There was an oversupply of rental places in that area as well pushing rents down and then there were also the levies to be paid (sectional title complex).

So, I just backed out of. They sold the place within 4 weeks after placing it on the market.
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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 14 Jan 2017, 08:40

Phil wrote:Interesting discussion.

When eldest son and DIL bought a house they sold the condo.

I gave serious thought to buying it, doing a bathroom renovation and then letting it out.

When I sat down and did a return calculation based on the investment, rental income after the agent 10%, tax on income and also providing for potential repairs and maintenance, it was better and safer to invest in one of the RSA retail bonds for 5 years at 9.75%

There was an oversupply of rental places in that area as well pushing rents down and then there were also the levies to be paid (sectional title complex).

So, I just backed out of. They sold the place within 4 weeks after placing it on the market.

In retrospect, did you make the right decision, do you think ?

My worst financial decision was in my very early 20's. It was just before the property boom in the early 1970's (1973 IIRC). A very good friend of mine was an articled clerk working in a solicitors above an estate agents. He told me one night in the pub how there was a new build of flats coming up on the market in Beckenham, that the market was going to explode and that I could have the pick of the flats. So I chose the penthouse at £7k. In the meantime, I was just about to start a secondment at the BBC's Training Department in Evesham. I thought that I would be staying in the onsite accommodation but was soon told that they needed all the rooms and so I'd have to rent in town. Oops...mortgage. Rent. :o

So I contacted the BBC HR department to ask if they would pay the rent and got back a very non-committal reply (bastards). I later found out that they would have done so. But too late. Coupled with my mother telling me "You don't want to saddle yourself with a mortgage at your age" plus the BBC response I pulled out.

My bad. My very bad. My very very bad. Three months later, the flat was sold on for £12k.
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Re: Anyone here into "Buy to Let" ?

Postby Phil » 14 Jan 2017, 10:52

Yes, I still think it was the right decision.

Doing a quick calc now, this is what an investment would look like
Price = 870k
Fees = 50k
Renovation = 30k
Total Cost = 950k

Investing the 950k a year ago at 9.75% yields monthly 7.7k (at compounded over 5 years it is obviously more!!!)
The 7.7k less tax at 35% yields 5k

Now looking at rental, the unit is 2 bed 1 bath (small) and a double garage.
Market related rent of about 8k
Less agent 10% of 0.8k
Less levy of 1.7k
Less provision for R&M 0.2k
Net before tax 5.3k
Less tax at 35% yields 3.445k

A loss of 1.572k

There will also possibly CGT when the unit is sold. IF the market recovers.

So, now someone will ask the question, what about the value growth of the unit over 5 years.

The property market currently is in a no growth situation, has been for a while and unless our useless government does something to kick start the economy, property values will just not increase.
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Re: Anyone here into "Buy to Let" ?

Postby Andyp » 14 Jan 2017, 12:23

RogerS wrote:
Phil wrote:Interesting discussion.

When eldest son and DIL bought a house they sold the condo.

I gave serious thought to buying it, doing a bathroom renovation and then letting it out.

When I sat down and did a return calculation based on the investment, rental income after the agent 10%, tax on income and also providing for potential repairs and maintenance, it was better and safer to invest in one of the RSA retail bonds for 5 years at 9.75%

There was an oversupply of rental places in that area as well pushing rents down and then there were also the levies to be paid (sectional title complex).

So, I just backed out of. They sold the place within 4 weeks after placing it on the market.

In retrospect, did you make the right decision, do you think ?

My worst financial decision was in my very early 20's. It was just before the property boom in the early 1970's (1973 IIRC). A very good friend of mine was an articled clerk working in a solicitors above an estate agents. He told me one night in the pub how there was a new build of flats coming up on the market in Beckenham, that the market was going to explode and that I could have the pick of the flats. So I chose the penthouse at £7k. In the meantime, I was just about to start a secondment at the BBC's Training Department in Evesham. I thought that I would be staying in the onsite accommodation but was soon told that they needed all the rooms and so I'd have to rent in town. Oops...mortgage. Rent. :o

So I contacted the BBC HR department to ask if they would pay the rent and got back a very non-committal reply (bastards). I later found out that they would have done so. But too late. Coupled with my mother telling me "You don't want to saddle yourself with a mortgage at your age" plus the BBC response I pulled out.

My bad. My very bad. My very very bad. Three months later, the flat was sold on for £12k.


Imagine the value now!
I had a flat not to far away in this block on the ground floor. I paid 58K in 1988 and was forced to sell at in 1996 for 43k!! House prices have not fallen since, not in that part of the world anyway.
now valued at 285k!
http://www.zoopla.co.uk/for-sale/detail ... 4dVTFHS.97.

On an aside have you considered buying gold?
cheers

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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 14 Jan 2017, 13:05

Often thought about it but gold price also fluctuates. The other pre-requisite...money!
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 14 Jan 2017, 16:10

Gold (and other precious metals) are a different kettle of fish altogether. You are totally dependent on the rise in market price as it does not provide and "interest" or regular income as well as buying and selling at opportune times. It does have the advantage that if you hold physical gold it is very portable and virtually untraceable.

Traditionally holding gold in a portfolio is a hedge against stock market jitters as when one tends to go up when the other goes down in price.
Property normally provides an income which should be greater than outgoings for maintenance, insurance etc as well as capital appreciation (provided you are not forced to sell in falling market).

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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 14 Jan 2017, 16:21

9fingers wrote:.....
.... (provided you are not forced to sell in falling market).

Bob


Or have the 'tenant from Hell'
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 14 Jan 2017, 16:26

RogerS wrote:
9fingers wrote:.....
.... (provided you are not forced to sell in falling market).

Bob


Or have the 'tenant from Hell'



True! :D
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