Exactly how do you "get into property "

DamianP

You need to be rich.  It's not an option for poor people.   

The good thing is that mostly you will be making money from poor people thereby helping to keep them poor. The more poor people there are, the more opportunities there are! 

octatonic

DamianP said:

You need to be rich.  It's not an option for poor people.   

The good thing is that mostly you will be making money from poor people thereby helping to keep them poor. The more poor people there are, the more opportunities there are! 

Nonsense.
I was working an ordinary job when I started doing this, and was living in rented accommodation.
I continued renting a room in a flat and rented out my first house to a couple.
I wasn't wealthy and we are still relatively small fry.

We mostly rent to young professionals who are saving for their own property.
Many times they live in a property for 2-3 years whilst they are saving and then move out into their own properties.
Not everyone who does this is a slum landlord.

But your previous posts on this topic show that you have an ideological problem with BTL so I don't imagine you're interested in seeing the other side of the argument.

LoFi

ToneControl said:

I buy houses in the North West, averaging £40k-£60k refurbished
<snip>
a 75% mortgage on one of these is about £100-£115 a month

Being a bit picky but your figures are a bit low unless you're talking I/O mortgages - A 75% mortgage on a £40K property is £30K, so if it were a repayment mortgage over 25 years, £100/mo means you'd be paying 0% interest.

(Using the best rate I can find for a BTL at 75% LTV (2.39% fixed for 2 years), you'd be looking at £134/mo for a £40K property rising to £201/mo for a £60K one)

(Edit: This bit directed at OP, not ToneControl) More generally (and as others have said), the days of leveraging expected house price growth to build a portfolio are over, for the moment at least. This means (massively simplified) your rent needs to more than cover your interest, your maintenance, fees, tax liability, opportunity costs (even with current interest rates low, that £15K deposit could be earning 3% securely in a current account) and void periods, otherwise you're effectively losing money. This simply isn't possible for a new purchase in some parts of the country at the moment.

With all that said, ToneControl's figures (even with the repayments adjusted upwards a bit as above) still show it can be done.

littlethoughts

[admin edit]
dumb comment removed.

d8m

I normally go through the front door, but if I've lost my keys I can squeeze through one of the downstairs windows

Sambostar

I've saved about £40k, but being single and self employed the max I could probably borrow is £40k - £50k.  That's a fair bit short of a one bed flat at £150k around here and if I move I lose the work market, so there is no incentive.

Best dig a big hole in the ground I say or live in a caravan.  I know each to their own, but of you are single on a single income and self employed you are kind of royally fucked in the arse.

Hootsmon

Crowbar & balaclava

littlethoughts

I feel sad that that comment was removed as dumb, that was genuinely how my friend got on the property ladder. No more dumb than half the other comments!


Okay here is a serious comment:
Provided you can prove you can generate sufficient rental income, and you have JUST enough collateral up front, there are certain lenders that will give you a buy-to-let mortgage. You will need about a 25% deposit. So if you remortgage your current property to free up some collateral, start processing the mortgage and can either prove you have a tenant lined up willing to pay the rent OR the valuations guy they send round thinks the rental income is enough to cover the mortgage +n% (with n varying with broker and deposit amount) you can get on the buy to let ladder. After doing it once it gets easier. Source: my sister, who is a financial adviser, who has given me similar advice to deal with my shitty housing situation addressed elsewhere.


Alternatively, try and get a relative on the mortgage to increase the amount they'll lend you. Some lenders will mortgage against pension income up to the age of 95 at the end of the mortgage (which sounds insane). Buy a studio in a university town - these yield a good return on investment.

richardhomer

hootsmon said:

Crowbar & balaclava

Technically just crowbar - the balaclava is a means to avoid detection, rather than a means of entry.

Hootsmon

Sambostar said:

I've saved about £40k, but being single and self employed the max I could probably borrow is £40k - £50k.  That's a fair bit short of a one bed flat at £150k around here and if I move I lose the work market, so there is no incentive.

Best dig a big hole in the ground I say or live in a caravan.  I know each to their own, but of you are single on a single income and self employed you are kind of royally fucked in the arse.

@Sambostar

Just spent 10 days in a luxury caravan Bro Sambers, in Dunoon...& very nice it was too......I liked the soothin' sound of the rain upon the roof at night but Hooters did not care for it

one of the "vans" was termed a "lodge" the only difference I could see in it was that it cost 75k....very nice it was too

it takes me all of 5 minutes tae get used tae the smaller space.......really great it was, tae get away from the net/music/vids/soaps/forums for a while and collect wans thoughts

the grounds for the vans are spilt into little areas like.....Islay and so forth. some even have monobloc surrounds ...very nice they were too

anyways I'll have tae rush now 'cause a horrid picture is ememgin,' on this hot  & stuffy day, of you sittin' in yer speedos under that bakin' caravan roof.......

littlethoughts

Sambostar said:

I've saved about £40k, but being single and self employed the max I could probably borrow is £40k - £50k.  That's a fair bit short of a one bed flat at £150k around here and if I move I lose the work market, so there is no incentive.

Best dig a big hole in the ground I say or live in a caravan.  I know each to their own, but of you are single on a single income and self employed you are kind of royally fucked in the arse.

Have you thought about living on a boat? I know a few people who have done that (in a marina, obviously, so there is access to utilities, laundry etc) either buying or renting one then buying a flat. If you can get a lender buying a house boat is pretty reasonable. no stamp duty for one thing.

mellowsun

Not sure if this had been mentioned already but you also need to factor in the extra stamp duty that now applies to BTL and second homes. Also many of the tax breaks have now been removed.

ToneControl

LoFi said:

ToneControl said:

I buy houses in the North West, averaging £40k-£60k refurbished
<snip>
a 75% mortgage on one of these is about £100-£115 a month

Being a bit picky but your figures are a bit low unless you're talking I/O mortgages - A 75% mortgage on a £40K property is £30K, so if it were a repayment mortgage over 25 years, £100/mo means you'd be paying 0% interest.

(Using the best rate I can find for a BTL at 75% LTV (2.39% fixed for 2 years), you'd be looking at £134/mo for a £40K property rising to £201/mo for a £60K one)

(Edit: This bit directed at OP, not ToneControl) More generally (and as others have said), the days of leveraging expected house price growth to build a portfolio are over, for the moment at least. This means (massively simplified) your rent needs to more than cover your interest, your maintenance, fees, tax liability, opportunity costs (even with current interest rates low, that £15K deposit could be earning 3% securely in a current account) and void periods, otherwise you're effectively losing money. This simply isn't possible for a new purchase in some parts of the country at the moment.

With all that said, ToneControl's figures (even with the repayments adjusted upwards a bit as above) still show it can be done.

yes, interest only. My properties cost between  £40k and £60k  incl refurbs. Valuations are usually conservative, but I don't object, since I am just looking to free capital, so the  monthly interest is on less than  your calcs. Hence me expecting 3 houses on  75% LTV for the price of one bought outright (see below).
This is in the currently most prosperous but low housing price area, these things both vary over time
At present, this is Liverpool

For anyone  who is wondering, I spend up to £9k renovating them to a standard beyond any house I ever rented or bought, so I don't have to worry about feeling like a guilty slum landlord

My calculations are that  - say for  £50-60k , you can have one house owned outright. or 3 on  75% LTV.
given fees that gives you twice the income, three times the risk, and three times the benefit if capital gains ever happen in Liverpool. What's great is that my plan does not rely on capital gains. In the south east, capital gains are the only viable plan, and are now harder because of the new tax rules

ToneControl

this book from a bright Aussie chap  shows how  the old leveraged method worked in the south east:
https://www.amazon.co.uk/Plan-Insiders-Achieve-Financial-Properties/dp/0953911985/ref=sr_1_1?ie=UTF8&amp;qid=1468956075&amp;sr=8-1&amp;keywords=1+3+pension+plan

you can't really do this now, but it's a very good  book, explaining  how to make one system work, based on capital growth

Instead, if you c an get rental to vastly exceed interest, you can still use leverage

btw. as an intermediate measure, there are firms which allow you to but shares in  rental  houses, and make a lower return
I will try to find a link, there was one in Manchester

on a similar return level, how about this:
http://www.telegraph.co.uk/finance/personalfinance/investing/10577240/A-buy-to-let-investment-with-6pc-returns-and-no-property-involved.html

maidenfan

Sambostar said:

I've saved about £40k, but being single and self employed the max I could probably borrow is £40k - £50k.  That's a fair bit short of a one bed flat at £150k around here and if I move I lose the work market, so there is no incentive.

Best dig a big hole in the ground I say or live in a caravan.  I know each to their own, but of you are single on a single income and self employed you are kind of royally fucked in the arse.

Have you spoken to a good whole of market broker, someone who specialises in self employed etc, not just the usual high street lenders?

holnrew

Wait, there's an issue with self employment and mortgages?

octatonic

holnrew said:

Wait, there's an issue with self employment and mortgages?

It can make it tricker but it is doable.
I was a self-employed IT contractor when I started doing it.

holnrew

Well with my credit rating it'll be a while before anybody even lets me apply. If I even had the income.

octatonic

holnrew said:

Well with my credit rating it'll be a while before anybody even lets me apply. If I even had the income.

I had a couple of years of contracting behind me but was a relatively new arrival in the UK.
Thanks to Y2K (remember that?) I came in with a decent deposit though, which is usually the biggest struggle for most people.

Sambostar

I can't read, I'm just too pissed