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  • Buy-to-Let

    Healthiest strategy within property sector?



    Recently I was speaking to a lending manager for a bank who would have 300 - 500 clients he looks after and he told me that the ones who were making money were the clients who got into the business earlier on, the point being that the numbers now don't always stack up in the way they used to

    Is there a general consensus amongst the more experienced forum members as to what type of area and or activity within the property business that's the most likely to produce the healthiest returns on effort and investment for new entrants in the current climate factoring in the likely upward trend of interest rates.

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    Hi Jake,

    Section 24 only affects highly leveraged landlords, so not all BTL landlords are affected.  Low leveraged, unencumbered, and incorporated landlords are not affected.

    To answer your question, I would say holiday lets and commercial to semi-commercial/resi are the best strategies in the current market conditions, but neither of those may be suitable for new entrants.

    To get started, a good quality property in an area of high tenant demand with around 50% LTV is probably the most realistic way forwards for those starting out.  Other higher risk strategies generally require experience.

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    Hi Vanessa,

    Thank you for your reply, I've never thought about holiday lets as I assumed they were probably seasonal in nature and so should look closer, I've not really managed to fully understand the tax implications of the changes that are on their way and so should look for a thread here that explains it.

    I remember the large and excellent thread here on the Tribes forum a few years ago which discussed the different strategies of investing in the North vs the South and in the end I decided on the lower yielding and more expensive South.

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    If you buy a holiday let in the right location, they can enjoy year round occupancy.

    See - Guide to sourcing & setting up a holiday let 

    There is a ton of information there which should give you a thorough understanding. Smile

    I have my own North/South divide experience, having properties in both areas, and the South won hands down for me, not only for capital growth, but also quality of tenants, and far less void periods. Smile

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    Did anybody ever see that really interesting program hosted by Evan Davies (The Dragons Den host) in which he discussed the phenomenon of "Agglomeration" in a two part BBC documentary called "Mind the Gap" (https://www.bbc.co.uk/mediacentre/proginf...est.html), it seemed to suggest that the best and most popular locations keep on getting better and more popular and of course since the program was made the prices in London have kept on growing.

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    I agree with Vanessa,

    Holiday lets in the right location are great investments.If you have someone else doing the changeovers they are not hard work at all.Its all about getting the right staff.

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    I did it myself bloody nightmare

    I lived in the city at the  time so every time I was called out for quite silly things it was a 60mile drive

    It really was a job not an investment

    I grew to hate it lol


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    Learn Change and Adapt ?????


    Hi Bill

    Something I'll definitely have to look into, but then again it probably requires a different skill set and knowledge bank to know the idiosyncrasies of the holiday rentals market etc and a whole other set of knowledge and experience for the location/geographical buying information property price information as well

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    I too had Holiday lets and I just found it was not worth the effort for the time spent running the thing

    You have to do it right and you have to have a good standard and its costly getting it right

    I prefer simple 3 bed houses that rent easy and very little turn over

    a good yield over 8% and you cant go far wrong


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    Learn Change and Adapt ?????

    Is that an 8% plus net or gross yield, I'm assuming that must be a gross yield which is not bad at all, I'm guessing you probably have to buy at a low price and refurbish to get that kind of return

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    from 2007 till 2015 I was snapping up property in good condition for 75k with a monthly rent of £595 which was over 8% yeid

    the same property today would sell for just over 100k so the yield would be around 6%

    I doubled my business in this period it was simple using 25% deposits from cash reserves

    but its over now I would need 30% deposit plus costs and it no longer stacks up

    the new taxation rules have finished this game.

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    Learn Change and Adapt ?????