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  • New Members

    Hello! North West Newbie

    I'm Darren, and based in the beautiful North West!

    My Past

    I've spent the last 20 years in retail, with 12 of those as a Store Manager.  This ended last August when I decided I'd had enough and left my job (When I make a decision I go for it!).  I ran our home finances, and it was apparent that I could stop working and with a few cuts at home, we could still have a similar lifestyle to what we were used to.

    The plan at the moment is that I am going into teaching (Primary Maths Specialist).  I have spent September onwards gaining experience in schools (2 days per week), and have been accepted at Edge Hill University for September 2017.  I have a small part time job (18 hours per week over 3 mornings) to keep the Mrs happy.....

    Property

    I've looked at property now for a number of years, but due to my previous role and the hours I used to work, it wasn't something that I had any time for.  My aim is to acquire a small number BTL properties, mainly for long term retirement purposes.  I now have a lot more time on my hands, and can happily sit here and spend time looking and researching (which is how I have found the site).

    I currently jointly own a flat with my Mother (Which we purchased off the council).  She resides in the property.  This property will one day be rented out.  I have just released 10k of equity from the property, and reduced the term to 12 years (standard repayment mortgage).

    I live in a new build 4 bedroom detached property with my partner and 2 children.  I will not re-finance this property to release any equity, the Mrs would simply go crazy, so this pot is being left well alone!  Fortunately we have just re-mortgaged as our 2 year period had ended, and the mortgage company increased the house value by 30k, which has meant a much better repayment (we actually pay less than when we lived in a small 2 bedroom terrace!).

    Finance and Plans

    I don't have a huge amount of money to start with, but I do have £25k cash.

    My initial plan was to purchase a BTL using a SPV.  I know my local market and have been watching it for a number of years.

    The yields that I am looking at are:  8.52% Gross,  4.52% Net (Exc Tax),  3.54% Net (Inc Tax).  I have tried to include as many costs as I can, including 2 months vacancy etc (im sure there is more, but research will prevail).  There is still some work to do on what Tax can be claimed back, as at the moment I have only included the interest on the mortgage.

    The plan is to build up income from the BTL over the following years, and gradually work towards multiple purchases.  The "pot" would never be touched unless it was needed for property reasons.

    But......

    Recently my mind has been flitting on the feasibility of buying to renovate to sell.  I'm very fortunate that if needed, I can have a lot of free time (which would be needed for this type of venture).  Looking at my current situation and being "in-between" careers this does seem like a perfect opportunity to dip my toe into the water.  I could delay my University study until Sept 2018 (I've not however broached this subject with the Mrs though.... I do not think she would be as willing... She thinks property is voodoo!).

    For this type of purchase however I have a lot less knowledge than what I do with the BTL market. I had never planned on looking into this as an option because of previous work/time commitments.

    Advice

    Those with a lot more experience (and a lot more knowledge), if you were in my shoes what would you be inclined to do?  I am very driven, and once I have an idea in my head I will work my proverbials off to achieve what I set out to do.  I appreciate that the amount of money is no-where near as much as what I have seen for other newbies, but we all need to start somewhere don't we Big Grin

    Any advice would be greatly appreciated, and I will continue to read through the site to take in as much as I possibly can.

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                 http://www.fmp-investments.com

    Welcome to PT Darren.

    Where  are you in North West? We are based in West Mids but also invest across NW but mainly around Blackburn, Accrington & Burnley.


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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson

    I reside in the beautiful town of Rochdale (well, just outside it) - Start of the moors on the M62.  I have started to broaden my BTL search to Burnley, but at the moment focusing on where I know best.

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                 http://www.fmp-investments.com

    Why not just start investing in bog standard FREEHOLD terrace properties

    Maybe ones that you could easily force appreciation on with minor refurbs.

    Then let out for yield as capital values won't  increase much

    The better you get at refurbs could mean you could get into trading

    Doing up terrace properties and selling on

    Possibly using profits you could pay down mortgage debt to increase yields.

    But round your way only by forcing appreciation will you increase capital values.

    However what you will be able to do is purchase far more property with your £25000 than down South

    You have enough for probably 2 North West terraces and sufficient remaining to pay for refurb costs

    This as the missus won't allow you to play with the big money locked up in the marital home......

    So go have some fun with your £25000

    You should be able to achieve substantially

    But you have to invest as a company

    S24 makes it pretty pointless in your own name.

    Just make sure your company can trade and invest on the basis that Govt could well impose S24 on small corporate LL.

    Do a bit of both and then you won't be considered to be just a small corporate investor who would be clobbered by a new S24 corporate tax.

    It might never happen, but it would be worthwhile to carry out some trading just incase HMRC comes a calling!!

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    Thanks Paul,

    I will take your comments on board.  I am already following some advise of looking into tenanted properties available to purchase, and will now spend some time looking at your suggestions.

    I do acknowledge that there will be very little capital gains in the properties that I can currently aim for (BTL), and that the income would come from rental.

    What mortgage would be best for a buy to sell, and would this path also be best through a SPV?

    I know what I want​ to do... lol... but convincing the Mrs is a different game all together!  Big Grin

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                 http://www.fmp-investments.com

    One thing that you should consider is that you could easily make capital out of the misery of many LL forced out of business by S24.

    You could well buy at substantial BMV.

    Fortunately you will be new LL and not subject to S24.

    Consequently you are in a great position to exploit LL that will be victims of S24 and need to sell ASAP

    Many of those LL won't realise what S24 is going to do to them until about Jan 2019

    Then the proverbial will well and truly hit the fan!

    You could then swoop in as a new corporate LL and nick some great deals off the LL who can't cope with S24 and don't realise it until the first tax demand lands on their floor!

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    Completely understand what you mean.  I work with a chap who has 3 x BTL properties.  I spoke to him a few weeks ago about how S24 will affect him and he looked at me blankly and just said his accountant will let him know.

    The ideal plan would be to have the funds in place for when these properties start to hit the market?

    The issue that I can see is the funding of such properties, as there are large numbers sub 30k, which is traditionally difficult to get a SPV mortgage for from what I have seen?

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                 http://www.fmp-investments.com

    Paul,

    Great advice.  It was taken on board, and I have now secured an ex BTL property with a cheeky offer that was accepted!  So saved myself some money straight away.

    There are a number of these properties emerging in my local market, so will be interesting to see what appears over the next 12 months

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                 http://www.fmp-investments.com

    Hi McN,

    Welcome to Property Tribes and thank you for the detailed introduction.

    A couple of things to consider - without an income, you may find it more of a struggle to get mortgage finance.  There is far less choice of lenders, for example. Your first port of call should be to speak to a mortgage broker to find out what kind of mortgage products you, as an individual, have access to.  This will greatly increase clarity on the direction you can take in reality, with your specific circumstances.  

    If your wife is still working, then she may be able to get mortgages in her name.  Property Tribes Financial Services can assist you on 01206 654444.

    As for forming a ltd company, you need professional tax advice on this.  It's important to get your property career set up in the most tax efficient manner, so this conversation is also a "must".

    With regards to refurbishment/development, you cannot use standard BTL mortgages to undertake this with the intention of selling the property on.  It is mostly undertaken by cash buyers and/or people who have a track record and can access specialist products like bridging finance or specialist refurbishment finance.  I feel with your situation that this is unlikely.

    You can of course buy using a BTL mortgage, add value through refurbishment and then rent the property out, although you would have to factor in the cost of paying the mortgage throughout the refurb period, as you would not be able to have a tenant in situ.  

    This tends to work well for relatively quick refurbishment projects when you are doing the basics - decoration, flooring, and up-grading kitchens and bathrooms - these kind of projects can be completed within a month.

    I fear you may struggle with £25K starting funds.   You should speak to your wife about taking some equity from your residence.  

    When I started out 14 years ago, I was incredibly nervous of releasing equity and initially released £40K.  However, once I understood everything and was gaining knowledge and confidence, I released some more equity.  Baby steps.  Show that it is working and safe and your wife may reconsider.

    Explain it to her like this:

    Your home is like an oak tree.

    Take cuttings from it (equity release) and buy additional income-generating assets.

    When you arrive at your retirement, you will have an orchard instead of a single tree.

    Hope that helps and good luck! Smile

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    Thanks for the input Vanessa, again I will digest your input and take on board your advise and expertise!

    I have spoken to my mortgage adviser today to start looking at the finance options available to me, so should have a better idea of what products are available.

    BLT for refurb/development - Yes I had read on the site that this was not an option, so have already looked against this as a buy to sell option.

    For the buy to sell I may be able to access more cash funds (possibly doubling my amount to £50k cash) with a personal loan from a family member.  This may be a conversation to have in the near future.

    As for the Mrs.... its simply wont happen!  She gets worked up over the thought of buying a 30k property!!  She's very traditional and believes in working 9-5 like everyone else.

    Big Grin

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                 http://www.fmp-investments.com

    Hmm!!

    Borrowing from a family member!!!!?

    Not a very good idea unless you are prepared to apply a voluntary 2nd interest in their favour on your property, just in case you don't repay the loan.

    At least they could then force the sale of your property to recover the defaulted loan..

    I borrowed from a close associate to whom I could not repay..

    So I applied a voluntary 2nd interest on a property that he could force the sale of if I refused or couldn't pay him

    Now I know there is no way your missus would allow a 2nd interest to be registered on your property in his favour by you

    I would strongly counsel against borrowing off family or close associates unless you are prepared to offer security for it.

    I have done so after the fact.

    I only have another £30000 to go and then he has been repaid in full

    Been repaying him since 2010!!!

    Believe me stiffing a bank is OK but not friends and family.

    Personally I would avoid taking a loan from your family member.

    The issues that could occur if you can't or don't repay them are not nice to consider.

    Try the credit card game before accepting loans from personal associates.

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