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I think going forward Yield is the most important thing in property investment if your using leverage
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.
Yield is naturally important but not always the most important
Say with a good yield you get £300 positive cashflow pcm which is just over 10K in 3 years
Buy a 100K property at 90K though and you get that 3 years yield worth in just one hit
Spend 10K on a refurb and put 20K on its value is another 3 years yield in just one hit
6 years equivalent of yield within just a month of buying is more important than yield often
Aim for both of course yes
But i have forgone a decent yield because the better return is in the building itself - not the tenants rent
Jonathan Clarke. http://www.buytoletmk.com
Yield is king JC if you cant pay the Taxes ect Capital growth is useless
Yield is the fire that keeps the pot boiling you cant boil eggs in cold water
You need enough to pay your way
No Profit is King - Yield is a just one servant of the King . There are many servants which serve the Profit King
I didn`t actually refer to capital growth in my post -
But that is yes another servant - works in the back room mostly biding his time
No I was taking about the servants of.....
1) Buying well at a discount - This servant is busy on every deal
2) Refurbing - These servants are very busy and hands on . Rush rush rush
Many investors have a job / savings and don`t specifically require a good yield servant
Capital Growth is not useless . Its very useful if it doubles in price and I sell as to pay my taxes
An average yield will suffice for many . -
Yield servants are slow and steady workers yes but do take their time sometimes
If I see a deal at 5% yield and can make in one month as much I would in 6 years with a 10% yield then I would consider the 5% yield option as being potentially the best servant to run with on that occasion
I wouldn't reject a 5% yield just because it was 5% if the above applied- Would you?
The pawn servant in chess can sometimes be the most powerful piece
Employ many servants to give the KIng his profit
build to rent is the way JC much more profitable than BTL you can have both 40% capital growth day its finished
and a great yield of over 10%
what more could and investor want
Its the new BTL
Classic deflection tactic again DL
Don`t continue the conversation we were having -
just start on something new and hope JC wont notice
Build to rent is great - but we were talking about a different strategy
your not moving with times JC
The stuff you are talking about is just an old outdated way of property investment
Its past its sell by date
I can ride the thinly veiled criticism
I understand your focus has changed and build to rent is the only game in town for you now
BTL only part worked for you so I understand why you have fallen out of love with it
But for the 1000`s still doing BTL successfully despite the new rules please explain how the principle of buying a 100K property for 90K spending 10K on it and making it into a 120K property is somehow outdated now ?
If your dismiss that strategy without explanation then I feel you lose the crowd
Your classic strategy is what most bog standard LL aspire to do.
They are as far away from BTR as they could fly to the moon! !
Then S24 comes along and upsets the strategy somewhat
Now to make it viable they have to buy cheaper; refurbish for less and hopefully add more value and all that just to be in the same position as they wold have been before there was S24!
Not such an easy trick to pull off!
Buying in a company is problematic.
Which is why there have been far fewer mortgaged LL entering the market.
The advantage an experienced LL like you has over the newbie is you have your experience and can usually add a bit more 'skin in the game' to clinch the deal and make it viable under S24 restrictions.
But the basic strategy is still sound and is one that most LL will consider as their only strategy.
Even if I could BTR I would just not be interested
Guess I'm a very lazy LL!!?
All a LL has to do is find those deals according to your figures with S24 in the mix.
S24 is of course just another tax and if the deal would still work within a LL financial set up then it would still make sense buying in your own name.
Just has to be harder to find a deal that stacks with S24 factored in
Not impossible as you suggest.
Like anything with BTL you have to be in it to win it!
I reckon the key to beating or rather ameliorating S24 is to have just enough 'skin in the game' to make the figures work.
Even more now than ever the buying price and refurbish costs are shown to be the absolute key to future viability.
Buying right is the hardest thing to do.
If it was that easy everyone would be doing it
Well S24 and extra SDLT has severely restricted that situation which of course was GO intention.
For any LL needing a mortgage the figures are now far harder to make viable.
Which I guess is good news for existing LL as they will have less competition etc; etc.
My opinion is simple
BTL with leverage is now just Taxed so high its not worth doing
PRA Lending and S24 have yet to take real effect
If Landlords borrow via a company they are not a great deal better off
The reason Most BTL will not go into Build to Rent is because they don't have a lot of money to start with
Build to rent with cash is very different
I walk around all the rules S24 brings I don't Borrow so PRA has no effect JC
I also avoid Stamp duty to a great extent
Development without leverage is much more profitable than the Old ways of BTL
I built my business on BTL but that was yesterday not today
Time to move on if you really want to make a lot of money
Donald Trump did not build what he owns today buying old property and doing it up
he did it by building new developments
I don`t dispute build to rent is attractive ..Never did . No need to go over the same ground
But BTL is still attractive to those who dont want to or are unable to build to rent
Most people would take 20K if put on the table in front of them
You say these people are outdated and past their sell by date though . That`s not true
Yes in the past they may have made 30K on the same deal
But 20K is 20K .
What you appear to be saying is 20K is not enough profit . 30K was in the past but not now if its only 20K
But now you want more like 50K with build to rent
I can live with that but that doesnt mean BTL is outdated and past its sell by date
BTL is for the masses
Or are you saying no one should even get involved as 20K profit in a month is just not worth it
But some people work 9- 5 for 48 weeks a year for 20K so clearly it is worth it to many
BTL is an excellent gateway to riches
What i would like to know .......
You have been investing in BTL for 30 years or so
But in the last 2 years since S24 you have decided BTL is dead and build to rent is more attractive
The figures you have shared make build to rent much more attractive even than BTL was pre S24
Why didn`t you therefore start build to rent 5 years ago ?
Would someone who had been building to rent from 2012 - 2015 say to you in 2014
DL ...BTL is outdated and past its sell by date why are you still doing it ...... I hope they wouldn't say that
But that is what you are now apparently saying to all the 1000`s of BTL`ers out there
You found a new toy so you are disparaging about any one still playing with the old toy