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  • Buy-to-Let

    A true lesson of BTL from the North East ...



    Today I am going to see my Mortgage Broker to re arrange a Re-Mortgage and I thought I would take the opportunity to show some genuine figures from the North East :

    The Property is a Two Bed Tyneside flat and I purchased it just after the 2007 crash

    The Property was a repo and it was sold to an investor who had up dated the flat to a high standard  so when I purchased the property I spent very little before it was rented

    The property was purchased by an Irish Investor for £95000 in 2005 which was the going price before the crash

    The property was open to offers over £79000 and I made an offer of £75000 which I thought was a good deal

    Today the value of the property is still around the price I paid in 2007 £75000

    when I did the purchase I used 85% LTV  ie a mortgage £63700

    I imagine when I have this property valued it will value around £70000 to £75000

    so I will have to introduce some cash to bring down the LTV to around 75% £56250

    I will need to use £7500 to stand still

    The property is in a Private area Low crime good schools and transports links

    On the Good side it rents well for around £495 per month and its got good cash flow

    But it just shows what can happen with high leverage

    I will hold onto this property because I know it will increase in value at some point

    But depending on Capital Growth doesn't always work out

    I'm just glad I was not the Irish investor who paid £95000 in 2005

    We are today in Low Growth so heed my little story

    Keep leverage down and buy on high yields

    The Southern Model is very different to the Northern Model and Landlords in my opinion need to factor the difference in

    I think we need a Northern version of "Rich Dad, Poor Dad".

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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.

    an example from my area of London

    bought a mixed use shop and flat for £265k plus costs in 2007, total rent £25k per annun after some minor works

    bought the shop and flat next door in 2018 for £405k, now have planning permission for an extra 3 flats with works now started

    total GDV approx £1.45m with total costs £850k, some of this gain will be capital growth



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    The difference between the two areas is stark

    Of course the knock on effect it the EU vote  - London voted in, the rest of the UK voted out

    Out of interest what sort of Capital Growth do you forecast in the next five years in your area of business?

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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 rest of England (and Wales). Scotland and NI voted to stay.

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    As an example from London:

    We purchased a one bed house in 2004 for £147,500 and spent about £4K on refurbing it.

    The one next door recently sold for £340K.  This property rents out for £1100 pcm.

    An example from High Wycombe:

    We purchased a four bed house for £350K in 2006.  Similar houses are now selling for £450K.  This property rents out for £1500.00 pcm.

    An example from Manchester:

    We purchased a four bed house in 2005 for £180K.  That property today would sell for £190K.  This property rents for £895.00 pcm.

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    I have only been in the game for 4.5 years but even in this time my London properties have edged up both in price and rent. 

    This is why I don’t get the big pile-in into the North.
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    This is only one Property . As I have said, I went on to buy similar  property £45K to £55K and they have all made money

    All have yields of over 8%

    So its not a loss over the period - in fact when I look at capital growth and yields its healthy profits.

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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.

    If you look at Vanessa example you can see 2 Manchester flats cost similar to one in london, but rent is significantly more.
    So basically depends on your strategy, if you want cashflow with lower risk then north works better, if you want capital growth then London works better. But to get the capital out you need to sell or refinance.
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    Slowly working towards financial freedom

    Your Figs are the Normal for the SE

    and I think this is the very reason why the North Voted out of the EU

    Its very unfair to have such differences in wealth

    out of interest where do you forecast growth in your areas in the next 5 years


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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.

    I agree, this difference in wealth is the reason the North voted to leave, but this is not the EU’s fault. 

    The only thing is that the very people who voted to leave will suffer the full consequences of the leave vote, London as a global city will still be ok.
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    The anger in the North is High

    a lot of blame is immigration and Poverty

    The average home owner has seen little return on there homes most have made little to nothing in 10 years

    when folk are hard done by they look for a reason

    Immigration and the EU is there choice

    You cant run such a small country with such devsion

    We are only seeing the start of change and part of that change is the areas outside of the SE bubble need to see some wealth

    The History of the Northern regions has been poverty so even when we leave the EU the NE will be no worse than it is now

    If you have nothing you cant have it taken away it just breeds resentment




    4
    0

    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.