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Hi, I am lucky enough to have a fairly substantial sum of cash (£200k) to invest in property and I am looking to generate an income to eventually (sooner rather than later I hope) replace my income from my day job. I would prefer to invest in the South as I live in Brighton and would rather have easy access to the properties so I can carry out the management and maintenance wherever possible.
If you were in this position which investment strategy would you look at to generate a stable and decent income without looking to the North?
I would consider holiday lets - no sec 24 tax implications
Brighton is very popular and always will be in my view.
Jonathan Clarke. http://www.buytoletmk.com
Thanks for the reply. That is an area I am considering as a priority. The issue with Brighton is the high cost of entry into the market but then that is the issue with the South in general! However, Brighton is a city that attracts visitors pretty much all year round so it does have many benefits too
First thing and most important
DON'T GIVE UP THE DAY JOB!!!!
Not just yet anyway! !
ONLY and ONLY when you have achieved all the borrowing you require will it be safe to give up the day job.
Your job is the passport for all of your borrowing requirements.
I would not rush into buying now due to the flood of S24 properties that will be coming to market as S24 LL desperately try to offload their now dud properties.
Prices are already reducing substantially
Watch and monitor the market.
Keep your powder dry
You will be able to use it to nick some great deals from distressed S24 LL.
Just read up and learn everything you can about being a LL..
Especially learn all you can about the dysfunctional eviction process.
Learning this will guide your investment decisions.
Keep up to date with all things PRS.
You simply cannot know too much.
Don't go on any silly courses or mentoring services except with RLA; NLA etc
They aren't needed
Become an accredited LL.
Even before you have made any purchases.
Start off with bog standard terrace properties.
Remember EPC and electric issues.
Consider all different types of licensing that councils are imposing
Not giving up the day job just yet, but keen to do so asap! I know it's all about education, education, education as much as it is location, location, location but I seem to have hit a brick wall recently. Almost every property I think is a good possibility recently has turned out to have a hidden issue behind it or I have been out bid by someone
If it was that easy everyone would be doing it!!!!
Rarely will the deals come to you.
You just have to keep on looking.
Despite what all the LL haters think being a LL is not easy.
But you cannot give up the day job no matter how much you might detest it.
It is the great facilitator to obtain BTL mortgages
Just speak to a mortgage broker and you will find I am correct.
Don't give up
Every time you lose out you are learning something.
Paul I’m in a very similar position to CPDS, except I live in Bournemouth. What do you think of Jonathan’s suggestion about holidays lets? I know nothing about this area and wonder how complex and time consuming it might be.
Also, would you rule out the North completely? I’ve been looking at single let terraced houses in Hull, where I have good contacts (including a good management company and power team). Yields there can be 8-10% or more and from what I’ve read prices are expected to rise (Hull be an area of intebddd regeneration, with some big companies including Siemens relocating there).
There are also BMV deals to be had if you look hard, much more so, it seems, than here or in Southampton.
I would say your ideas are good if you have local contacts etc.
However it is often forgotten that if the tenants default on rent you will invariably have to evict.
It takes about 42 weeks to evict .
In Hull I doubt the usual tenant demographic qualifies for RGI.
Yield only works if you are actually paid the rent! !!
That is why buying BMV in these areas is very risky.
I am unable to support a mortgage without the tenant's rent.
Which is why I never considered such areas.
But if you have contacts etc up North then by all means take the plunge.
Just be aware of what a dysfunctional eviction process could do to your bottom line.
Most of these sort of BMV properties attract HB tenants who I refuse to let to on principle.
Most of them are lazy feckless gits and no way would I wish to help them.
Not even forgetting the UC debacle.
HB tenants have caused me more losses than two Hull BMV properties.
The value of your tenant demographic is sometimes worth paying extra for a property to achieve.
As for FHL.
There seems to be a legal S24 avoidance loophole
Buy a FHL
Let out for a year for plausibility.
Then ask lender for CTL on a standard AST
It seems lenders will
No S24 tax on the FHL loan as that is what it still is!
Something worth investigating.
I think it might have been on property118
Paul many thanks for such a carefully-considered reply. FHL just sounds (from the admittedly very little I know about it) like it might be very hard going, dealing with demanding guests all the time. But making money is the name of the game so I shall think more about it.
Forget Brighton.I am getting out of the game and selling my34 properties in and around the city as and when they become vacant. The yields net of expenses are rubbish in our area.I am now buying commercial in and around Crawley.I love living in Brighton but being a landlord here frankly i would not bother.
interesting thoughts, I have long considered Crawley. What prompted you to look at commercial over residential? Also is there potential overlap in what we are looking to achieve? Perhaps you could send me details of properties you may be looking to offload in Brighton?