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  • Buy-to-Let

    NMLI Strategy

    DL, I am very surprised to see you are buying anything. Over the last 12 months, you will be the first to admit you have been VERY negative about the state of the BTL market, and if anything I was under the impression that you were more likely going to be dismantling your portfolio, and gravitating towards the world of equity markets.

    What has happened to cause you to change your view so that you're buying again?



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    I know I come across as Negative but this is not true in my own business

    But my negativity has come because of the major changes in the BTL Market 

    My latest purchase is to help out a Landlord in distress and its not the first time it has happened

    the property I am buying will have a yield of  over 8% the Min today I would accept to do a deal

    I have it for 80k but its worth around 100k maybe a little bit more and has a very good working tenant

    its a deal I would be silly to miss

    one swallow dosent make a summer but its nice to see a swallow every now and then


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Thank you dislexic_landlord for your answer. Would you say there’s currently a better strategy for a part time investor?
    Cheers
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    My view is If your going to buy BTL buy on yield find the deposits out of cash and buy only on yeild

    It all depends on how much cash someone has

    BTL will always be a good investment long term Pay down debt and keep the tax strategy right

    But I would also look at ISA and Pensions if you can use them


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    ``The Days of a quick turn around are gone``

    Not gone -  just harder .

    Your one that you  buying at 80K when its worth 100K is a good example of a 20% discount

    As S24 bites for more and more LL`s , then more opportunities will present themselves

    A LL whose been in the game 20 years and is 60 who wants out may take a 20% hit

    If you started with nothing and made 2 million in equity in that 20 years that would feel good

    Walking away with say 1.25 million net after 20% discount and CGT may seem an attractive option

    Gives you 50K spending money every year till you are 85 and zero hassle

    Another generation will always be there chomping at the bit to offer 20% off and do a quick turnaround

    The cycle of the motivated distressed seller continues year in year out

    The well prepared vultures will pounce and take advantage

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    Jonathan Clarke. http://www.buytoletmk.com

    Deals like the one I have just done are hard to find

    even in the NE but you never know whats coming down the track


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Carl

    The idea of constantly taking cash out for reinvestment is much harder now than in the past.  Those of us who started 25/30 years ago did so in an environment of far less compliance, when mortgages were being thrown at us with few checks.  The landscape is now very different, especially for a new entrant.  Banks may take a less than enlightened view on what you are doing (however sensible you can make the figures seem).

    As a valuer, doing both private and bank work, BMV is (to me) a bit of a myth.  Sure some people get good deals, but in these times of property shortages, low interest rates and high employment, there won't be much property sold much below what it is worth.

    Buying a house in need of a refurb and paying less than one nearby which was ready to go is not BMV - the price reflects the condition and works needed.  Basic works do not necessarily add value.  A proper valuation report should include the valuer's evidence and a methodology.  Unfortunately many lenders (due to price pressure from borrowers) only use a tick box report; this gives less analysis.  I do, however, have minor skirmishes with borrowers who believe they have added significant value to their property by undertaking works; sometimes they have done no more than redecoration.  The property market is a bit more sophisticated than that - it is not always easy to add value, especially if you're in a low value area to start with.  Most areas have price caps, so no matter how much you spend your value is limited.  Hopefully any decent valuer will do their job properly and respect the borrowers; personally I always work hard to make sure values I report are well founded.

    Good luck

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    Hi Graham,

    Thanks for your input, it's good to see a surveyor's point of view. Can I ask you a question. If you are doing a valuation for a house that has been refurbed, lets say nothing structural,  re-plastered, new kitchen and bathroom, rewired, new flooring and paint/decor. Let's say circa 20K was spent on it. Let's say there are 5 houses within 1/4 mile with identical layout and decent condition and all sold for 120K within 3 to 6 months. 

    But the house your valuating was bought for 75K, 6 months ago, in an unnmordenised state. What would you value it at?

    I would say you have to say 120K irrespective of what conservatism the mortgage lender wants to apply because that's what the market data shows the true value is?.





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    I am going to make a Guess at this I think the value would be around 105k

    its inbetween the price you paid and the amount you have spent

    if you paid 75K on a 75% Mortgage your debt will be around 56.5 k If its valued at 105k and you use 75% again its going give you a mortgage of around

    79k so you would take out what you put in when you did the referb I dont think you will get your original deposit back

    I think thats the best you will do in such a short period of ownership


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.