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Please can you give your views/advice on the following figures for my BTL I have just purchased.
Property value £175,000-£180-000
purchase price £167,000
monthly rent £850pcm
interest only mortgage £249
landlord insurance £15pcm
I would like to see how much deposit and stamp duty you have paid and will then calculate return on my investment.
Buying below market value is a good start but thats a cushion against difficult times.
One needs to know about the property. If it’s next to Buckingham palace it’s the yield of the century for example and I expect a short lease interest for that value.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Gross yield is roughly 6.10 based on your above figures.
Depends if the area has a strong potential for capital appreciation but without that not a very healthy return.
Hi all, your thoughts please..
My wife and I brought our first BTL in December 2017. The remortgage is due at the end of this year. It is a 3 bed mid terraced in an “ok” area but has no scope to “add value” so I’m a bit stuck as to what our next move should be.
My view/plan is to move it on to a variable rate when the remortgage is due in December 2019 then look to sell it which would release our initial deposit/investment plus the profit on top and reinvest it into a new property, but one which I could buy BMV as much as possible, add real value, remortgage after 6 months, pull as much of my money back out in order to recycle and go again asap but keep the property and rent it out.
I would also appreciate what you think regarding my current ROI/yeild etc as I don’t really understand them too much.
Property value £175,000 - £180,000
Purchase price £167,000
2.39% Interest Only mortgage £249pcm
(no other deductions)
Thank you. Look forward to some views and advice!
You have roughly saved 13K based on your higher side evaluation of this property( 180 K). You have paid £5850 stamp duty plus mortgage and solicitor costs so roughly 7K in total .13-7 = 6K is your safety margin just in case you have to go back to market to liquidate.So from that side you are pretty much covered.
But I would like a very healthy ROI especially with all the new tax changes.
Ok thanks. What’s your views on my issue above?
It seems counter-productive to sell a property imho at any time , but especially in the current market conditions. The property may take a long time to sell and might not achieve market value, not to mention that there are significant costs associated with selling a property.You should speak to a mortgage broker about re-mortgaging the property to a higher LTV. That may allow you to release equity and purchase another property.Don't cut down a tree to go and buy another tree, when the tree you already has can give you a clipping (equity) to grow another tree.Get professional mortgage advice and perhaps be a little patient to allow your tree to grow some equity. It's putting net cash in your pocket month on month, and that is not something to give up without exploring all options with a professional broker. The team at Property Tribes Financial Services on 01206 654444 would be pleased to assist you.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
My reason for selling is because after making a big mistake in not doing my homework before purchasing and buying a property that isn’t in an amazing area for capital growth alongside having no scope to add any value, it doesn’t allow me to grow.My thinking was to sell up and sit on the money and do my homework fully in order to move forward with a different approach. Mainly allowing me to pull my money back out of the deal and go again, as this is the only capital I have to play with.I live in Norfolk but would love to look at other options such as rent to rent and options but have searched for local help and advice but have become stuck due to the lack of it.
But i agree, net cash-flow per month of £585 before tax is good to help me build a bigger pot. But after speaking to an Independent mortgage broker I was informed that based on my current LTV from my main residence (which I initially remortgaged to pull the funds for the first property) i would have hardly any room to borrow anymore based on the current market allowing me to “pull” equity from both my main res and BTL.
My advice is to sit tight, don’t jump around. If you now evict the tenant and put it on the market you stand to lose a lot of money whereas you are now making money.
Pulling money out only really works in a rising market.
If this property is in Norfolk, then is there any possibility it would work as a holiday let?For what a single occupancy BTL will typically achieve in rent for a month, as a rough idea, a holiday let will achieve in income in a week.Also holiday lets are not subject to Section 24.See - Holiday let - every portfolio should have oneI would also recommend that you speak to the PT Broker Team on 01206 654444 to fully understand your position as there may be a way to access equity from your BTL.Explore every option for keeping this property before going down the route of selling.You have guaranteed money in the bank here. All your future ideas are based on theory and theory isn't actual cash in the bank in very uncertain market conditions ....