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  • Buy-to-Let

    £50K to spend - best options?

    Hello

    I’m based in Whitefield in Manchester i am in the process of remortgaging my own home to pull out around £50K to buy a 2nd property.

    I’m after some advice please on my very basic calculations.

    Which is the best option.

    1) put £25k each down on 2x £100k houses in radcliffe and rent them out for around £550/600pcm with possibly minimal capital growth due to being terraced houses.

    2) put £50k down on a £200k 3 bed semi detached house in whitefield and rent it out for £800/£850pcm With the potential of decent capital growth 

    3) put £35k down for an £140k house and rest of money to renovate then flip it.

    As I’m a higher rate tax payer I plan to set the buy to let’s up through a LTD company.

    Many thanks in advance.
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    Don’t forget stamp duty, legal fees, mortgage set up fees etc pretty sure there will be some refurb work even if just flooring and paint
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    Hi thanks for the reply yes I understand that that’s why I’m just throwing out very basic figures just to see what people would do in their situation.

    I’m leaning more towards a flip or a 3 bed semi detached. I’ve had a terraced BTL before and had nothing but problems.

    Cheers
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    I would go flipping if you want to have big lumps if you want monthly income terraces would be answer. It’s getting harder to find houses to flip in my area did 3 last year only found one worth doing this year. There’s lots of newbies doing it pushing prices up and a massive shortage of stock good luck with whichever way you go
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    Thanks for that what main criteria do you looks for when finding a suitable property to flip?

    I’ve been looking at a house for £190k spend £10 on it and potentially make £20k

    What’s the minimum you will you will look to make on a flip? 

    Obviously anyone can find a run down house and do it up but how do you make sure it’s worth doing for the returns?

    Also if I was flipping would you say get a personal BTL mortgage instead of going through a LTD company? I’m told Me and Mrs get £11k each capital gains tax relief.

    Cheers
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    I buy terraces, ex council house etc standard stuff really and easy to tell what they should sell for aim min 20k but took 17k on last one they were nice couple and ready to go for mortgage etc. I know my area and only really buy where I wouldn’t mind living.

    Also take every cost into account if u use btl mortgage make sure there’s no fee to get out early etc. Include everything in figures council tax for year gas water insurance selling fees buying fees stamp duty etc have it all on spreadsheet then you can work out most properties quickly. Make sure u and missus are on it so yes 11k tax free. Ask agents and see what’s selling or has sold recently must admit I only now buy within a 3 mile radius of where I live and know.

    One was sold last year after they viewed another I had but was to much said could they view it before done showed them it agreed and it was done to same spec so no agent fees on that one. But I truthfully can’t find anything else at min.

    As for 20k on 220k I’d say won’t be worth your time as it will cost you more than you think and doesn’t leave much profit at end, of its mortgaged council tax gas heating water etc it’s going to be at a guess 600/800 a month  costs when done and empty 20k doesn’t last long with them bills
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    (*Moderator note:  Comment removed as a breach of our Terms and Conditions*).

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    4) Put £35k down for an £140k house using a bridging loan and rest of money to renovate then rent it out.  Get a re-valuation and term BTL finance to redeem the bridge and some of the cash input you made.  Rinse and repeat.

    See - Genuine day 1 remortgage on increased value! or use the Precise bridge and then term finance product.

    Property Tribes Financial Services on 01206 654444 will assist you in constructing this deal so that you redeem as much of your cash input as possible, enabling you to go again.  This is a very smart and efficient way to build up a portfolio of properties in the current market conditions, especially if you buy at a deep discount.

    To answer your question above, you cannot use BTL mortgages for buy/refurb/sell - this is a cash or bridging finance activity only.

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    Bridging loan for a newbie is a risky route I would say, it soon adds up
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    Vanessa, aren't these sorts of "bridging loans" extremely expensive, both for the fee to get one set up and then secondly the interest rate that needs to be paid?  Also, how accessible are they?

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    It's worth mentioning that a BTL mortgage is only for properties to be rented out, not for flips.

    Lenders expect a property to be ready to rent out virtually straight away so for a flip you would need to either pay cash or use a bridging loan.

    For a property needing a refurb before being rented out there are mortgage products which begin as a bridging loan and then convert to a BTL mortgage once the place is ready to let out, it just depends what your longer term plan is for it.

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    All comments are made in good faith and are given to the best of my knowledge and experience but I would advise you to consult an expert before making important decisions and I accept no liability for comments made.