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I thought it might be helpful to discuss the differences between buy to let and buy to sell, because they often fall under the overall heading of "property investment".However, I don't see BTS in that light at all! To me, it is comparing an apple to an orange. I thought I would make some comparisons here, to clarify why I think that:Buy to let is largely a passive income strategy.You purchase a property, you rent it out to a tenant, the property (hopefully) delivers net cash flow per month. In other words, set it up, and then minor interaction on-going to manage the tenancy, repairs etc.Buy to sell is much more like a J.O.B.You find a property, in some cases add value, then you then sell to release the profit. You pay tax on that profit. You need to have the next project in the pipeline to move on to to keep the cash flowing.It is much more hands-on and you have to be in the driving seat to ensure that you end up with a net profit after the sale. You have to bear the costs of acquiring and selling property too, and these eat into your profits, along with finance costs (if using bridging or private JV loans).Buy to let involves tenants.Tenants are our clients, therefore we need to think like "service providers" and we need to be compliant to over 140 government statutes and regulations.Buy to sell does not involve any tenantsAt the end of the project, you sell. The property remains empty, possibly eating into your profit, until the sale completes.A BTL'er has the mentality of being involved for the long term.That means long term thinking and delaying gratification for up to 25 years.A BTS'er has the mentality of being involved for the short term.That means short term thinking and seeking "instant gratification".A BTL'er is running a business with clients to satisfy.We may be in long term relationships with our tenants.A BTS'er is trading a commodity. There is an end user in mind - the buyer, but the relationship is very short term and, once the property is sold, the BTS'er will not have any further connection with that property or the buyer.BTL is an investment on which you seek a profit over the medium to long term.You can build a herd of cash cows that you can milk for cash flow month on month. Taking equity release from them is like breeding from them to build other assets.BTS is making a profit by trading a commodity.You buy a cow, fatten it up, and then slaughter it to release the profit and buy another cow.Both strategies are treated very differently from a tax perspective and it is advisable to seek professional tax advice on how best to set up whichever type of strategy you decide to adopt.What other differences to you see?
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**
Author of The Complete Guide to Property Strategies and The Complete Guide to Property Investing SuccessLearn more at http://www.completepropertysuccess.co.uk
I also post property updates on my Facebook Page
"It is the small decisions you and I make every day that shape our destiny" Anthony Robbins
(27-06-2013 04:39 PM)vanessa warwick Wrote: I am a dyed in the wool BTL'er. I would not do BTS no matter what the market conditions!!
Once properties are acquired, I believe in hanging on to them!