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I have a property in London with around 600k equity in it.
Sick of the daily grind I was going to sell that, with the £600k I would buy 4-6 properties up north. I would then look to work part time, hoping to have a decent income from the BTL properties.
I will remain in the same area I live in via paying rent, which is £1,500 ish per month. I am looking for 5-7% ROI on the rental of the above properties and maybe over time the property itself will go up in value (I know up north this might not happen)
Could you highlight some of the pros and cons I may be missing here?
(I should be able to cover the £1,500 rent on the property I will live in via my part time job. I have no interest right now in taking risks and leveraging up to buy more than i can afford. I will have no mortgage!)
Thank you for any input
You are covering one hell of a lot of ground with this plan
Borrowing money today is not a cake walk lots of hurdles
you are looking to buy in the north and I would imagine you don’t know the North and that is a topic in itself
you then have the issue of taxation S24 has changed the playing field of BTL
what you are proposing was quite easy done In the early 2000s
you are starting into a different world
if I was you I would take time to understand S24 and seek advice from a tax advisor and a very good mortgage broker and then take time to what sort of Property you want and your customer type you will work with.
Learn Change and Adapt ?????
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Not sure your reply applies to me (maybe I am wrong though)
i have no Mortgage and I won’t be seeking one. I have £600k to invest.With 6-7% ROI on 600k I would expect to get back around 30-35k a year.
My wife asks me if I would still buy property if I had a million pounds cash in the bank. In the past I would say yes for sure without a doubt.
Today I’m not so sure -
imho for the 6-7% ROI you are looking for.
I would consider researching and exhausting other options , before looking at BTL which might be exhausting.
at the very least a independent financial advisor should check your plan over. Holistic overview.
Coming soon Investorsk8.com
Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.
Well in that case it would work as long as you knew your area and the customer you seek
best of luck dl
If I were in your very favourable position, I wouldn't dream of selling the London property.I would turn it into a BTL property via a BTL mortgage and withdraw equity to pay for additional assets, plus use some of the money as a deposit on another residence. You really don't want to be paying £1500.00 per month rent, when you could be using that money to pay for additional assets to benefit yourself imho.If you bought a new residence, you could buy something with having a lodger in mind - such as a two bed/two bath apartment. You can enjoy £7,500 tax free income via the Rent a Room Scheme, while earning money to pay towards your residential mortgage or build up a savings pot.For example, we rent out two rooms in our 4 bed house in Guildford which bring in £1250.00 per month. This is around twice what the actual mortgage is.I would also be very wary of buying up north*. I have explained my reasons in this thread:Why higher value properties are betterI hope you find my input some food for thought?*Bearing in mind that I am a low risk investor.
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However you do it I think you need to know 'up north' much better. Maybe you do more than I assume? I've bought in 3 places up north, one of which I've visited relations for years; another I've always known a bit and taken lots of time to get to know better; the third I've taken loads of time to get to know, have walked every street of the area that is of interest, spoken to anyone that I can about it... and actually not bought yet but will be doing.
I agree here yes. But a lot of it is common sense, as it is here with London.
Researching areas via the net, visit them. Look for areas with good schools/uni, nice shops (not Iceland etc) The list goes on, but a nice area vs a rough area should he common sense imo
A lot depends on whether you want to stay living in London yourself?
Just imagine you sold the London pad then started renting....prices in London double in 10 years and you have no way of buying back into that market. How would you feel about that ?
If on the other hand you was happy to relocate there are nice areas 2 hours from London where you can buy a nice 3 bed semi for £150k so in theory you could buy 4, live in one mortgage free then rent the other 3 out at circa £650 - £750 pcm each.
Nice comfortable position to be in...
This is another worry I have. I don’t believe we ever see the good old days of property in London going up 100% every 10 years. The way it’s looking we would be lucky to see 10%!
in the last 2 years the property in my area has either gone down or sideways, when I see places like Manchester have gone up. ( I live in a very nice sort after area in London)
If property in London did go up 100% in 10 years and up north went sideways I would lose for sure. But as I said I believe London and certain parts up north will go up in the long ru.n.London you would think will outperform up north, but will always have terrible rental yields. With up north having decent ish rental yields. Also rent up north should increase as London increased as well.
Right now my main objective is a decent income right now from my 600k. I don’t want any debt, for me that adds more risk/stres.
Agree with your points about making sure to do your local research!
It’s good to see you’re not being dissuaded by geography as sometimes landlords can make the mistake of allowing location to restrict their investment criteria.
Regarding the debate about capital appreciation versus yield, there’s of course a natural trade-off between the two. We’re seeing a number of South East / London based investors who are looking for yield to generate a stable passive income, for which they need to look outside of the region! At Vesta Property we have a number of lower value (< £100K), higher yielding (7%+) properties which could be of interest. Feel free to check them out. Most of them are tenanted which means you know what the rent is, there’s a rental track-record, you get income from day 1 and you don’t have to pay a letting agent to find you a tenant.
Good luck if you do decide to go down that path.