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  • Buy-to-Let

    BTL strategy advice - multiple choice ...

    Folks

    4 months ago I had my family home(worth 350K) and 3 houses rented out(values 80k, 75k and 60k) generating a total rental income of 15k per annum. Total mortgage debt on the 4 houses 69k- all repayment mortgages to be paid off in 10-12years. The rent covers all mortgage repayments. UC tenants in the 2 of the  houses and I manage them myself.  My salary is 50k and my wife's 21K. I also had 200k cash.

    I read Rich dad, poor dad, researched on youtube and am a frequent reader of material on PT. I have sale agreed on 3 BTL properties 75% LTV 5 year fixed due to complete in next 4/6 weeks. All properties have reliable, long term sitting tenants:

    Property 1- 45 mins from home, 2 bed terrace, 76k PP, yield 9%

    Property 2- 40 mins from home, 4 bed terrace, 79k PP, yield 8.5%

    Property 3- 10 mins from home, 3bed semi, 110K, yield 6.5%

    Cash flow on each averaging approx. £300 net after costs etc

    When, fingers crossed, sales complete I will have my own home, 6 rental properties and 130k cash. I sought tax advice and decided not to go Ltd company route primarily because I aim to quit my job within 12 mths and my main income will be from the rent and I won't be penalised by S24 as much?

    I am now taking stock and am unsure what to do next:

    Buy 3 more 3 bed semis with appealing to working professionals at 130kish with 5% yield? Less tenant management issues potentially?

    Use sourcing company to get managed HMO somewhere in UK with 15-20% yield?

    Use remaining 130k cash to buy BMV house near me at 90K-spend 30k on refurb to have house to let worth 140K getting £650 per month?

    I enjoy all the property research/management side of things and am determined to leave my employment within 12 mths. However, I have to use my salary to get BTL mortgages before quitting.

    Advice on what to do next welcome- particularly JC, DL, Vanessa!!

    Thanks in advance

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    Use remaining 130k cash to buy BMV house near me at 90K-spend 30k on refurb to have house to let worth 140K getting £650 per month?

    That would be my preferred option. Smile

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    Thanks Vanessa

    If my intention is to never sell the property on, how to I materialise to value I have added to the property after refurb? I could buy a three bed semi in decent area near me for 130k without the headache/risk of doing a refurb?

    I like the idea of adding value and have a local builder who I trust- just not sure how I get the money back out if needed? Do I potentially just end up with a 140k house with a lower yield having suffered a lot of refurb headaches?

    Thanks

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    There is a good product that provides bridging for a light refurb, with a BTL product at the new market value for term, following refurb, so you redeem the bridge and hopefully, if your project went according to plan, have a tranche of cash to move on to the next project with ....

    ​If you talk to the team at Property Tribes Financial Services on 01206 654444, they will advise you how to pull out as much cash as possible following the refurb.

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    I actually replied to another thread yesterday about this exact product, I've copied and pasted below:

    ----------------------------------------------------------------------------------------------------

    There are some great products out there for bridge to let purposes though?

    You can refinance it within the usual 6 months, and its just one application for both the bridge and the mortgage after.


    • One application form produces 2 offers, one for thr bridge and one for the BTL.
    • The same valuer for both the initial valuation and the re-inspection
    • one expert underwriter from start to finish
    • one conveyance and discounted legal fees
    • the bridge payments can be rolled up too so no payments during the refurb phase
    • borrow up to 75% LTV on the bridge and then refinance for up to 80% of the post works valuation for the BTL mortgage which essentially means you can get all your money back out again for the next project.

    Obviously if you are flipping properties this is not for you but as for refurbishing a BMV place to then let out, its perfect, especially as the same valuer can see just how much of an improvement you have made and possibly agree beforehand if your planned works are going to add the right amount of value realistically.



    Feel free to get in touch and we can have a chat Cook.

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    In a similar position to yourself - albeit absolute numbers are different. In the process of expanding the business.

    Buy 3 more 3 bed semis with appealing to working professionals at 130kish with 5% yield? Less tenant management issues potentially?

    If you can do this with leveraged finance then that is what I would go for. 

    Use sourcing company to get managed HMO somewhere in UK with 15-20% yield?

    Certainly would explore this option if the numbers work. Assuming you are looking to acquire the property rather than R2R.

    Use remaining 130k cash to buy BMV house near me at 90K-spend 30k on refurb to have house to let worth 140K getting £650 per month?

    I wouldn't sink all the funds in 1 property without leveraging, not enough fat in the project by the numbers you suggest in this market. 

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    Use sourcing company to get managed HMO somewhere in UK with 15-20% yield?

    I would not touch that option as I have very little trust for deal sourcers.  Too many fresh off a training course with no real clue.

    However, you could buy a tenanted HMO direct from a platform like Vesta, which would reduce risk as its already tenanted and likely has a property management company already in place.

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    Great discussion. 

    My plan is to buy, refurb, remortgage to get some capital back out and move on to the next one. I suggest similar would be a good idea for you. 

    I would also look at areas with good growth potential like Liverpool, Manchester, Leeds, Nottingham and Sheffield. This will help to give your more options in the future. Even if you don’t ever plan to sell you can remortgage and take money out without having to pay tax, as long as the numbers stack up of course. 

    Thanks

    Phill
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    Why wouldn't you do an HMO close to home? I think a 20% yield is ambitious btw... but this is what I would do & self manage - particularly if you are giving up work. You will have plenty of time to do so...

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    Have you thought about raising finance in the future if you quit your current employment? Not sure if you would be able to or not but possibly something to put in your plan.
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    Omega Property (Formerly SBS Ltd.)

    I am not professionally trained to give advice, generally posting for the benefit of the community or my own personal development.