r16chh Posted February 9, 2007 Report Share Posted February 9, 2007 Can someone explain to me how people build a portfolio, i.e. the 15% deposits needed each time when you buy. I currently have my own residents plus 1 buy to let, and looking to do one more soon, but after that I cannot see how I can keep raising the deposits. I really want to know the key to this. Thanks any advice welcome. Link to comment Share on other sites More sharing options...
Trenners Posted February 9, 2007 Report Share Posted February 9, 2007 Hi Rich, Patience .... that is the key. Buy-to-let is a long term investment and not a short term gamble !! Buy your first property, let it out, wait for house prices to go up, re-mortgage your first property to get the deposit for your second property. Buy your second property, let it out, wait for house prices to go up, re-mortgage your first and second properties to get the deposit for your third and fourth properties ..... Buy your third and fourth properties etc etc etc etc Hope that helps .... Mark Link to comment Share on other sites More sharing options...
Matthew Posted February 9, 2007 Report Share Posted February 9, 2007 Trenners way is the norm, however, there is another way: Buy a property in need of work, redecorate without spending too much money (usually means doing it yourself), then get it revalued. I did this recently, bought it for £178,000, spent a few thousand on it and revalued it for £210,000 (although a property the same as mine(4 bed) on the same street is up for £237,500, and a two bed for £202,000). Surveyors can be a bit cautious, which I can kind of understand. You could then get another advance of £27,200. But your rental would have to be good enough to cover it, so I advise you work on getting properties with yields of 10% upwards. Also, if you do this, get a mortgage without any redemption tie ins etc, as otherwise like me the advance will be at the standard rate for the length of the redemption period, in my case another 2.5 years. Link to comment Share on other sites More sharing options...
Reg Posted February 14, 2007 Report Share Posted February 14, 2007 That's abit optumistic Mathew, surely the days of a 10% yield are long gone! (not that they won't happen again in the future at some point), but I would have thought a 5-6% yield is more realistic. Like Rich, I have a one residential property and one buy-to-let property. Although I have quite alot of equity in my residential house, from my point of view all bets are off right now, as the basic buy-to-let numbers don't add up anymore. Either house prices or interest rates (preferably both) need to come down, until that happens I'm staying put. If interest rates continue to rise and there is a property fall then I will be buying again. Link to comment Share on other sites More sharing options...
Matthew Posted February 14, 2007 Report Share Posted February 14, 2007 HMO's are the only ones which add up and there is high demand due to huge savings in economies of scale. For example, somebody renting a one bed flat in my area would expect to pay £600 + £200 bills = £800 per month, they would pay less than half this by renting a room in a shared house, around £5,000 a year saving! You can see why so many poeple are starting to realise that 1 bed flats are not a very attractive proposition unless you are a couple. This is more hassle for the landlord, but a good way of getting your portfolio started and also a less risky strategy in my opinion. It is so much easier to let rooms out than a house or flat as a whole and you get much more money for it. Link to comment Share on other sites More sharing options...
Reg Posted February 14, 2007 Report Share Posted February 14, 2007 Oh, I thought you were relating a 10% yield to letting the whole of a property out. The maths do add up (10%+ yield) if you let rooms out individually, but the downside with HMOs is all the regulations that are now in place. Link to comment Share on other sites More sharing options...
robwalsh25@tiscali.co.uk Posted February 19, 2007 Report Share Posted February 19, 2007 Can someone explain to me how people build a portfolio, i.e. the 15% deposits needed each time when you buy. I currently have my own residents plus 1 buy to let, and looking to do one more soon, but after that I cannot see how I can keep raising the deposits. I really want to know the key to this. Thanks any advice welcome. If you go for a new build property You could always get the developer to pay your deposit for you. Its called Cashback or gifted deposit etc....! Ive done this myself several times and now have 9. Most developers will give you between 10-20% cashback to use as a deposit but be very carefull of developers over pricing the property to allow for the discount. You will normally only get this sort of deal if the builder is desperate to get rid of them very quick. And dont use the property clubs that promise these sorts of deals as they will charge you about 5k plus vat for the deals. Do it yourself, and be prepered to be told to get lost by 9 out of 10 developers. Link to comment Share on other sites More sharing options...
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