markr
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Post by markr on Jul 14, 2014 10:28:04 GMT
Just thought I'd start a thread discussing the pros and cons of buy-to-let as an investment. Has anyone here got any buy-to-let properties in their portfolio?
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shimself
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Post by shimself on Jul 14, 2014 17:48:08 GMT
theHousecrowd (and several rivals) are the p2p version
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Investor
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Post by Investor on Jul 14, 2014 18:19:38 GMT
Mark Not sure if you are referring to buy to let p2p investments (I have none) or buy to let physical bricks and mortar (I have a few, and can offer some thoughts)
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markr
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Post by markr on Jul 14, 2014 19:37:39 GMT
Hi Investor, I meant actual bricks and mortar. I've been looking at it, in particular in comparison with the House Crowd but I'm not sure the returns available are worth it, especially since I wouldn't want to have to undertake any major renovations and would want a letting agent to manage the day to day stuff. Any thoughts and advice are welcome.
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Post by brettb on Oct 29, 2014 8:17:04 GMT
I bought mine in 2006, but I can't say it's been a great investment. There have been too many maintenance costs, like a couple of months ago the bath leaked and I ended up paying £300 to repair the ceiling of the flat below mine . The only good thing is that I've had very few void periods. If you buy small 1 or 2 bedroom places in the SE (or highly desirable other places like Exeter) then you'll rent places out very quickly indeed. Earlier in the year I did consider buying a second flat. However, prices surged 15%+ from January to May which made me reconsider the whole thing. I did actually build BTLFinder over the Summer as a way of finding high yielding areas to buy in. However, I couldn't make the maths work, so I ended up piling into various P2P platforms instead. I think with BTL the timing is everything. Like back in 2009 my ex-landlord bought a 2 bed apartment in Essex for around £90,000 at auction - the original owner bought it at the 2007 peak for around £170,000 . So they were getting a tasty 8% yield. I imagine we're due another property crash at some point. Lessons haven't been learnt from the last debt fuelled crash. What would worry me as a landlord is that if the government cracks down on European migration then it will be harder to rent out properties - most of my tenants over the years have been from Eastern Europe.
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markr
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Post by markr on Oct 29, 2014 12:34:59 GMT
Thanks brettb. Since posting this I have, after some thought and useful insights from Investor dipped a toe in. So far my findings are that buying houses is a fiendishly slow process with a lot of up-front costs, but hopefully it'll all come good in the end!
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Post by brettb on Oct 29, 2014 15:01:15 GMT
Yeah it's a very slow process - I did my viewing in Feb and put the offer down and everything, but I didn't exchange until August of the same year. Then it was a total panic with the purchase going through so quickly when I went to collect the keys the seller still had half their stuff in my property. Good luck anyway - there's no shortage of renters these days!
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Post by twerling on Nov 4, 2014 0:44:52 GMT
Just thought I'd start a thread discussing the pros and cons of buy-to-let as an investment. Has anyone here got any buy-to-let properties in their portfolio? Not read the full thread. Short answer: if you buy at what surely (DING!) has to be the top of all tops of an artificial bull market, expecting inflation-beating returns year on year without any losses from maintenance, rent defaults and so on, you need your head testing sorry.
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webwiz
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Post by webwiz on Nov 4, 2014 20:38:31 GMT
BTL can never work in the sense of obtaining a decent yield. The only way you can make money out of BTL is by house prices going up. If someone tells you they are making a profit on a BTL I will bet they are not using the market value of the property as the yield denominator, they will be using maybe the price they paid for it or the mortgage amount they have on it or some other irrelevant figure.
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pikestaff
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Post by pikestaff on Nov 4, 2014 23:32:04 GMT
BTL can never work in the sense of obtaining a decent yield... The return is the yield PLUS the capital growth. But if the capital growth turns out to be nil or negative, you will be a bit sad. I've been a property bear for years. I will be right one day ;-)
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Post by jackpease on Nov 5, 2014 7:19:06 GMT
I recently bought a flat and have done the sums - there's a whole lot of things to add in - service charges cost me £1500 a year for a £230k flat which is getting on for two months rent by itself. Then there's hidden fees like leashold assignment fees (£160) tenancy renewal fees (£100) all payable to managing agent/landlord and they really do add up. That Tenquiz character has sewn up loads of flats UK-wide with his high charging agents.
I reckon it can only work as in investment if you know the flat will rise in relative value eg that the area is on the up because of town centre improvements or something like that.
It is not a licence to print money as many pundits would have you believe and I reckon you'd get more playing the P2P markets but then if you've maxed out on what you're comfortable with with P2P then maybe its worth a spin. Cash buyers can of course buy flats with a tenant in situ and if the tenant is good then that's a load of hassle off your mind.
If you are spreading your risk with buy to let then probably best avoid overexposure to P2P property bridging loans....
JP
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Post by p2ples on Sept 6, 2018 11:35:23 GMT
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mrsb
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Post by mrsb on Sept 6, 2018 11:58:35 GMT
I had BTL back in the late 90's ... used to work on buying freeholds at approx 100x monthly rent (ie $450pcm = £45K) - had 5 on that formula. Before the days of credit reference agencies, so each bought as a 'first time buyer'.
Sold out MUCH too early, to achieve debt free with spare cash. Waiting would have netted me a LOT more spare cash - but hey-ho.
Got back into it in a small way in 2005 ... fairly decent yield, sold them in 2015 for a small uplift.
Back to today ..... I'd be very shy about residential BTL. Yields are shite, and current risk of f/h values falling (or stagnating) would be too high for me.
I've now got into commercial "BTL". Much better yields, tenant maintains the property and pays insurance. It's harder to raise finance, so keeps prices down, and of course no 3% extra SD ... Whereas, residential prices are (up to recently at least) pegged (floated!!) to the cost of borrowing the necessary capital (and not to the size of that capital).
Of course commercial doesn't have the capital uplift characteristics of residential - but where is the latter heading just now?
Ignoring yield ... best residential yield for me was 2 bed terraces.
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cb25
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Post by cb25 on Sept 6, 2018 13:15:53 GMT
"I've now got into commercial "BTL". Much better yields" -how ? -what sort of yield ?
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mrsb
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Post by mrsb on Sept 6, 2018 14:10:55 GMT
That's what I get in my area.
How? ... the usual method of buying something, then charging people to use it.
A quick search on RM for freeholds and rentals will give an idea of yields. Comparisons are simple because industrial is mostly per/sq ft - prices and rents (per sq ft) reduce as size increases ... rents decrease faster, so smaller units is where it's at, and obviously don't value a small f/h on the basis of rent on a huge unit ... and viky-verky.
Where I am, sub 2000ft f/h are about £100/ft, and rent at £6ft upwards.
I'm doing industrial. Wouldn't touch food/retail, unless there was a gold-plated tenant in-situ ... and then still probably not!
The big obstacle to entry is finance. IME - Lenders are mostly interested in the tenant, and lending for terms slightly shorter than the lease (which they will look very critically at). In may ways, you could be a homeless tramp - so long as the tenant passes scrutiny. We tried the high street banks - to try and gain a margin between their lending rates, and what we have in P2P ... there is a margin to be had, but at the cost of a lot of hassle and searching for appropriate property/tenant deals. We wound down P2P and left the banks alone. Still got further to go with reducing P2P.
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