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Hi guys, brand new member here and new to the world of property investment. I wanted to kindly request some advice and guidance on my current situation. I have my own limited company where I am a contractor. I plan on using the money building up in my limited company to purchase my first buy-to-let property investment (by diversifying business interests) through this limited company. I am considering purchasing a 3 or 4 bedroom property with a budget of 110k and plan to rent the rooms out either individually as a multi-let. I plan on using a letting agent company to help manage the property as I am completely new to being a landlord and, at at least at the beginning, would prefer this being managed by an agent. The plan is to purchase in Birmingham/Midlands - still deciding on location but options are: hockley/handsworth/aston/lozells/perry barr/coventry, wolverhampton, walsall (near city centre amenities). Any advice or guidance for a complete newbie looking to invest his money in property? Best regards
I think you will need to talk to an accountant.
The SIC code of your company is probably not property related is it? I suspect you will need to set up a separate company for property.
You're very sensible in using a letting agent set up the tenancies - it not straight forward and very important to get it right.
Hi Dom, thanks for your reply. No, it isn't property related. I briefly spoke to an accountant the other day who says I would be able to use my limited company to purchase property. I will need to clarify this before I go ahead. Many thanks
You're welcome. I may be wrong on this. Perhaps RITA could comment?
I would advise you to join a trade body and do their landlord fundamentals training.
Best of luck!
Depends if you're planning to use mortgages or not.
Lenders prefer separate companies.
If buying cash, then doesn't matter too much.
Welcome! There are lots of posts on PT about HMO landlords which I suggest you read and then thoroughly research to find out what you're getting in to. Taking on an HMO as a newbie is not recommended owing to the high demand from tenants and legislative compliance. Even using an agent (most won't touch HMO's for the reasons stated) for.management, the buck stops at you personally, not the agent.
It's tempting to max on income, but you could consider running family let for a couple of years while building on knowledge and experience.
Hi, thanks for your reply. I agree with your comment. This is why I plan to purchase a 3-4 bedroom property. I have read that a HMO is 5 or more people residing? if it is 3 or 4 individuals, then technically HMO regulations do not apply? The reason for choosing 3-4 bedroom properties is the ability to multi-let or let as a single let to a family. I would greatly appreciate any further comments. Regards
Wolverhampton have Article 4 restrictions in place I think?
I would not touch hockley/handsworth/aston/lozells/perry barr with a barge pole. If you want to be that side of the city try Grear Barr and Kingstanding and Erdington and Hodge Hill areas.
Instead of trying to invest your company money into residential but to lets which will be subject to some difficulties being non-commercial. Have you considered purchasing a commercial property in a SIPP ? I have just transferred my own commercial property into my own SIPP managed by AJ Bell in the Corby area. I act as the management agent for the SIPP - sorting payments from the tenant, dealing with leases via a good commercial solicitor etc. The good thing with this arrangement is that all the rent will go into the SIPP tax free and being a commercial property the lease is a full repairing lease as is commonly found in commercial leases resulting in minimal repair costs. If you don't have a SIPP it is relatively straight forward to set one up. Also the investment money now becomes ring fenced within the current pension rules. Typical yields for 2500 sqft units is in the 8 % mark - which in todays market is dam good. Hope that's helps - if you have any queries I will try to pass on my limited knowledge.
I agree with the comments above. I don't think that you can't do what you have suggested but you seem to have chosen a difficult route.
Its usual to have a separate company for investment properties and I believe its a requirement for mortgages.
HMOs are probably the most difficult to get right, even for experienced landlords. There's a lot of additional legislation involved.
Almost everything you could possibly want to know is somewhere on this site. Try using the search function for more information but also feel free to ask questions.
Best of luck.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
Hi Gary, thanks for your comments. Am I correct in saying that a 3-4 bed multi-let is NOT bound by HMO regulations as it is below 5?