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Hi, I'm new to both property tribes and buy to let. After a recent fortunate business deal I have 500K to invest and am very interested in buy to let. I'm locked into working full time for the next 5 years and will have very little free time in this period. I'm looking to invest in Manchester, Nottingham, or university towns. I have looked into buying off plan but am concerned about the potential to rent the units if they all come online at the same time in cities with extensive building projects. Nova Financial have provided a proposal for off plan units - has anybody had any experience with this company?
I think I prefer the alternative method of purchasing traditional stock and renovating to add value. I have contacted Grant Property who provide sourcing and renovation services along with final letting. These are mainly student HMO's.
I'm trying to get as much information as possible and after reading lots of books and listening to podcasts, the possibilities see endless and to a beginner very confusing.
The purpose of the investment would be to maximise passive income to enable possible reduction to part time employment in 5-8 years.
Any suggestions or advice would be greatly appreciated. Are there any other people I could approach who provide a one stop approach?
Hi Mark and welcome.The first thing to do is start with the end in mind. What would you like to achieve from property investment?Set an end goal, and then work back from that in steps. This will create a path to follow.Then, once you have decided the strategy that will take you there, you need to sit down with a reputable mortgage broker and understand the financial products you have access to.The team at Property Tribes Brokers are on hand to assist and can be contacted on 0333 363 6507.I will post some relevant links below and finish by saying, in respect of using third party companies, that the best person to make investment decisions for you, is the person you see in the mirror each morning. I would strongly advise against student lets, as this is a specialist strategy suited to more experienced investors.Start out with low risk single occupancy buy to let, perhaps doing a light/cosmetic refurb to add value, and then build on your experience over time.Jumping straight in with high risk investments like off-plan city centre apartments and student lets may well end in tears imho. £500K is a lot of money, but you will find that investing in duff property deals can eat it up very quickly, so you need to be very careful on how you move forwards.One simple and low risk way forwards would be to buy a tenanted portfolio. You can do this via the Vesta platform.
These links should assist your thinking:Top 10 Property Tribes resources for novice landlords and BTL investors Property strategy for £500K cashNewbie: 500k to invest. Do a refurb or JV ?Good luck and hope that helps for starters!
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I started with the plan of buying two 2 bed terraced properties needing renovation for cash rennovating them and letting them for six to see how it would go and how I would like it. Though I didn't follow it exactly I still think it is a good way to start.
The value the rennovation should add should ensure that if you find you don't like being a landlord you can sell up and get your money back.
I bought near Manchester where I had grown up and had a builder friend who introduced me to a letting agent. They put me onto a 3 bed semi being sold to pay care costs and a very good commercial opportunity so I went for a 2 bed a 3 bed and some shops
You could take a mortgage out on them later if you want to use leverage,I did so for one of them.
All of the above makes sense.However with property prices falling over the next 12/18 months I would be in no hurry to buy.Do your research and decide what and where you want to buy. Monitor the prices and conditions and you will no doubt find a bargain in due course. With interest rates going up. economy deteriorating fast, job losses increasing, and over priced assets , property has only one way to go.-down.Just take your time and something always comes along. Don't forget you are in the driving seat as a cash buyer.Remember buying off plan is dangerous.- great in a rising market and buoyant economic but now be careful as many providers will not complete the job and fail. Remember also many projects take time and buying now will see you completing your purchase 12+ months down the line. Then you could be locked into an expensive deal as others pick up similar flats for greatly reduced prices.Cash is king for now -so take your time, relax and wait for that opportunity which always comes along.
Welcome and it's great your educating you're self. You will also need a good account but you will need to know about section 24, Ltd companies and pensions.
Like you I'm time poor as a cardiologist but by small steps, hard work, delegation and leaverage I've build a small portfolio since 2004. My properties are in Manchester, Nottingham and Birmingham. I favour Manchester as I've lived there all my life. I almost bought a HIM 2 years ago but pulled out as there's increasing legislation. I would advise avoiding new builds, Off Plan and student accommodation.
I have moved on to renovations, commercial and Serviced Accomadation. I've just bought an off market commercial listed building in Manchester against stiff competition. One of the failed bidders has just come back and offered a higher price. I may flip but probably develop and let.
If you need to have a chat or need some advice get in contact. firstname.lastname@example.org
Good luck to you in all your endeavours, and welcome to the world of property! Vanessa put a great post up to you and she makes excellent points. Let me add the following observations from 21 years in BTL and developing.
1. Given the current govt tax attacks (aquaint yourself with ‘Section 24’ if you don’t currently know about it), I’d say structuring correctly from the start is essential, especially if you are intending to grow the business. Your own personal financial position and tax status will help inform this. Buying in your own name now is fraught with difficulty - S24, PRA etc - but it is usually cheaper and offers flexibility. Alternatively, with growth in mind, a limited company may be a way to go. There are advantages and disadvantages to both so please be sure to research and pick the correct path for you right from the get-go.
2. Funny you say Manchester and Nottingham. I was going to say something similar-ish. The East Midlands and Manchester are hot spots (for capital growth especially) but I’d steer well clear of the city centre. In Manchester, I’d ignore all the new builds and start looking around the cheaper neighbouring areas. Yield is strong in Burnley/Wigan/Blackburn/Bolton and property cheap so building cash flow and a portfolio will be easier there. If you are insistent on ‘sexy’, Salford Quays seems to be popular but beware of supply saturation in some blocks.
3. Are you looking to take mortgages or only pay cash? (See my point 1 - this could be important!). If you are only paying cash I’d be looking for 10 cheap Blackburn houses at 50k each paying 400-450 a month. If you want more expensive places on mortgages, then I’d put 10 x 40/50k deposits on 150k houses (plenty in your areas). Leicester/Derby work well on this model too. I like Peterborough where a 150k house will get you 750-800 a month, so 10 deposits should see you grossing 7500pcm, or somewhere around £3500 once mortgages are paid (depending on interest rate/structure etc).
4. Buying cheaper up north will save you quite a lot on stamp duty too - another reason to head north out of Manchester.
All the best to you!
I would also look at Liverpool, very good BTL market at present. If you need any advice/assistance, let me know.
Mark before you plunge into BTL and all the aggravation it will bring you i suggest you look at commercial investment property as an alternative
Thanks for all the great information. A lot to think about. There is so much on the web regarding off plan properties - but it would appear that most people advise buying traditional stock . Regarding refurbs, I'm interested to know how people find reliable builders - especially as I live on the South coast and I'm considering properties in the North.
My builder had been a neighbour of my parents for 20 years so I can't help much.
I see you are interested in investing in Buy-to-Let and University towns.
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