X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Buy-to-Let

    30K - how would you start?

    Dear Tribe,

    I’m looking for advice.

    I’m a first time investor (and first time buyer), looking how to replace my income with property cash flow. I have 30K.

    My first aim is to pay my current rent which is 385 pcm. Having 30K I need to find 15.4% yield deal. Well, it looks possible, though a bit tricky.

    So I decided to buy a 3-bed house for 250K in Bromley, convert it to 4-bed (make another bedroom in one of reception rooms) and sublet 3 rooms.

    These are my calculations for a 220K mortgage and a 3-bed house:

    Repayment (per month)

    £1,286.00


    Interest only (per month)

    £917.00


    Bills

    £144.83


    Maintnance

    £150.00


    Council Tax

    £100.17


     

     


    Total (repayment)

    £1,681.00


    Total (interest only)

    £1,312.00



    With repayment mortgage I will need to let a room for 560, with IO – for 440. It still looks doable to me (if you think opposite please share), but the rent is quite high. And the repayments for the first months, when I’m going to make a light refurbishment are high as well… So I thought about the second way.

    The second way is to buy a house or a flat for 30K somewhere up North with 10% yield. I think I can buy for 50K with a small mortgage or a loan, which I will repay with the good contract quickly… If I’ll find a 50K house with 10% yield, I can pay my rent roughly… And after that I will still have an asset which I can use to obtain a mortgage for the next deal.

    It looks like the second way is better. What do you think? Please share your valuable ideas)

    Thank you!

    Kind Regards,

    Julie.

    My story: shinvestor.com.

    0
    0
    I share my investment experiences and things, I find useful, in my blog.
    Hi Julie,
    Welcome to the tribe!
    That is a hard question to answer as we do not know enough about your personal financial situation to understand how best to advise you.
    Also, are your calculations based on a residential or BTL mortgage?
    To get the best BTL rates you will need a 30% deposit which may put the South East out of your reach.
    My instinct is to buy a house for you to live in and sublet some rooms to help towards the mortgage payment.
    I have not paid the mortgage on our house for the past seven years, due to having two lodgers. The government also allows the first £6K or so income to be tax free!
    With someone else paying your mortgage, you can start to build up some cash reserves to buy another property and meanwhile accrue some equity in your own home, which someone else funded. Happy days! Smile
    The first thing you should do is speak to a reputable broker like Lisa Orme or John Simpson (members here) to fully understand your financing options.
    Whatever happens, please do not be seduced by promises of NMD, get rich quick, etc. Hang onto your £30K for dear life!! If you would like to chat with me in person to go into more detail, then I am happy to speak to you.
    0
    0
    Hi Vanessa,
    My calculations are based on a residential mortgage.
    Thank you.
    0
    0
    I share my investment experiences and things, I find useful, in my blog.
    Julie,
    The theory is fine but the reality is more complex. Roommates, taxes on the income (or no tax as it happens), maintenance, ability to qualify for a loan, how to pay off the debt if you want to own the home when you no longer want roommates are all issues.
    Is it really important to stop working? It might be a whole lot more profitable living in an HMO while still having a real income. More so if you want to buy more properties in the future. A few years of income from a job can make a very large difference in your lifetime wealth.
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
    0
    0

    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Hi John,
    Another few years on a hatred job and I won't need any wealth in future)
    The whole point of doing property to me is to escape the office. I don't say that I'm going to quit the job right now, but I'm looking how to start now, not in a few years' time. When I work I tend to spend more in order to justify the suffering, so it's hard to make huge savings.
    So do I understand you right that it's hard to start with 30K and it's better to start with a bigger amount? 100K?
    REI said:
    Julie, The theory is fine but the reality is more complex. Roommates, taxes on the income (or no tax as it happens), maintenance, ability to qualify for a loan, how to pay off the debt if you want to own the home when you no longer want roommates are all issues.
    Is it really important to stop working? It might be a whole lot more profitable living in an HMO while still having a real income. More so if you want to buy more properties in the future. A few years of income from a job can make a very large difference in your lifetime wealth.
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
    0
    0
    I share my investment experiences and things, I find useful, in my blog.
    Hi Julie
    I can totally relate to disliking a job ... intensely! I used to feel like that before I started my own tax practice - and actually found that it wasn't the job, as such, but feeling like a slave ... now that I am my own boss, work is something I really enjoy ... as it's on my terms.
    I remember working at RSA Insurance after qualifying as an accountant & being told that my promised £5K bonus had been cancelled ... and the following year moving to another company & being told that the mooted 20% bonus was 'unlikely'.
    That was the beginning of the end of employment for me ... I started making plans to ditch the day job, and expand my property portfolio. But, a portfolio of single-let properties tends to provide a meagre net income.
    Have you thought of doing straight property trading ... 'Buy To Sell'? You would simply buy cheaply, or spot some development opportunity, and sell at a profit (with or without a refurb). Build your portfolio alongside that ... keeping 1 out of 2 or 3 purchases, and using the sales for capital building and your personal income.
    Just remember to batten down the hatches with your personal spending ... not many escape the 9-5 without sacrificing personal spending ... you probably have enough shoes anyway, I'm sure! Smile
    Let us know how you get on ... cheers
    Stephen Fay ACA
    The Property Investor's Accountant
    https://www.fyldetaxaccountants.co.uk
    0
    0
    Stephen Fay FCA
    www.fyldetaxaccountants.co.uk
    'The Property Tax Specialists'
    Hi Stephen,
    Thank you for support)
    I have not considered "Buy to Sell" so far, mainly because I'm not confident with the market.
    As far as I understand auctions is the main source of bargain properties. Is it possible to buy a bargain not at an auction?
    What is your strategy?
    Stephen Fay ACA said:
    Hi Have you thought of doing straight property trading ... 'Buy To Sell'? You would simply buy cheaply, or spot some development opportunity, and sell at a profit (with or without a refurb). Build your portfolio alongside that ... keeping 1 out of 2 or 3 purchases, and using the sales for capital building and your personal income.
    Just remember to batten down the hatches with your personal spending ... not many escape the 9-5 without sacrificing personal spending ... you probably have enough shoes anyway, I'm sure! Smile
    And why it's always shoes?))
    0
    0
    I share my investment experiences and things, I find useful, in my blog.
    Julie
    I have bought and sold a couple of properties (flipping them around After a renovation)
    They were both bought from estate agents at a discounted price.
    So yes it can be done
    I have tried to buy one this week but I often find that the competition for these types of properties in my area is hot and often they end up getting bided up well above a price that I see a decent profit in them.
    Maybe they go to first time buyers willing to pay that bit extra???

    Julie Smith said:
    Hi Stephen,
    Thank you for support)
    I have not considered "Buy to Sell" so far, mainly because I'm not confident with the market.
    As far as I understand auctions is the main source of bargain properties. Is it possible to buy a bargain not at an auction?
    What is your strategy?
    Stephen Fay ACA said:
    Hi Have you thought of doing straight property trading ... 'Buy To Sell'? You would simply buy cheaply, or spot some development opportunity, and sell at a profit (with or without a refurb). Build your portfolio alongside that ... keeping 1 out of 2 or 3 purchases, and using the sales for capital building and your personal income.
    Just remember to batten down the hatches with your personal spending ... not many escape the 9-5 without sacrificing personal spending ... you probably have enough shoes anyway, I'm sure! Smile
    And why it's always shoes?))
    0
    0
    Kev,
    Thank you for the replay.
    How did you find discounted properties? Was it a newsletter or a personal contact with an agent?
    What is the area and what type of property are in such a demand?
    Hope I'm not asking too much questions.
    Kev Bradford said:
    Julie
    I have bought and sold a couple of properties (flipping them around After a renovation)
    They were both bought from estate agents at a discounted price.
    So yes it can be done
    I have tried to buy one this week but I often find that the competition for these types of properties in my area is hot and often they end up getting bided up well above a price that I see a decent profit in them.
    Maybe they go to first time buyers willing to pay that bit extra???
    0
    0
    I share my investment experiences and things, I find useful, in my blog.
    Julie,
    It's really good to be of some assistance and give something back to the forum!
    I managed to knock £18k off my last property simply as it needed renovating and I just put a low offer in as I knew they needed rid of it as it had been inherited. It was originally up for £99,950.
    With renovations in ex council type areas they don't appeal to many developers as believe it or not I have found that many developers around here stay clear of these areas as they do not like to be associated with them.
    Quite frankly I will be associated with any area as long as there is a reasonable profit at the end of it.
    I also find that ex council properties are very well built, spacious, lots of potential and sell well once modernised.
    I'm finding that anything at the moment that needs renovating and a lower sale price because of this is flying off the shelfs and I always seem to get in bidding wars and most of the time loosing to someone who either wants it to live in or is buying for cash and doesn't have mortgage payments to worry about so can pay that bit extra.
    Hope this is of some use to you
    Kev
    Julie Smith said:
    Kev,
    Thank you for the replay.
    How did you find discounted properties? Was it a newsletter or a personal contact with an agent?
    What is the area and what type of property are in such a demand?
    Hope I'm not asking too much questions.
    Kev Bradford said:
    Julie I have bought and sold a couple of properties (flipping them around After a renovation)
    They were both bought from estate agents at a discounted price.
    So yes it can be done
    I have tried to buy one this week but I often find that the competition for these types of properties in my area is hot and often they end up getting bided up well above a price that I see a decent profit in them.
    Maybe they go to first time buyers willing to pay that bit extra???
    0
    0
    Hi Julie
    We attended a seminar last weekend where they mentioned that the only time you should buy from auction is via "post" sales. Reasoning is that if Joe Public isn't interested then you have a better chance of getting a better deal.
    Re discounted properties. This is a controversial topic where some people say there's no such thing and others say they are available on every street corner
    What we've seen so far is that you have to continually monitor those that have been on sale for a while OR you are more proactive and make your own luck ie adverts, mailshots, sandwich boards etc
    Good luck re your properties allowing you to give up your job. I need another 10 or so properties just to fund Ginas hair products
    Cheers
    Allan
    0
    0