MarkJ Posted October 25, 2007 Report Share Posted October 25, 2007 I currently have a decent sum sitting in a Building Society making 6.5%. I'm considering buying a couple of BTLs (have one so far), however in my local market 3-bed semis are going for 190k-200k and rent is £600 - £650. I would prefer to be in 3-bed semis in 'nice' area to ensure quality tennants and low hassle levels due to my inexperience as a LL. Capital growth on the local area is somewhere close to 10% at the present time. So, the question is, am I better off just leaving it in the Building Society? On the other side, I feel I really should have a property portfolio - money in the BS is just dull !!! Cheers Mark Link to comment Share on other sites More sharing options...
Reg Posted October 25, 2007 Report Share Posted October 25, 2007 Getting a phone call from a tenant/letting agent out of the blue (usually in the evening) with a problem which could be costly sure isn't dull. Give me dull any time!! I'm in a similiar situation to yourself, I have one BTL and my own house, a year ago I considered buying another BTL but I'm leaving my savings in the bank for now. The yield of BTL at the moment doesn't add up. I'm even considering selling my BTL (had it two years), certainly not the bed of roses I thought it would be when I bought it. If you buy a new BTL now, you certainly won't be making 6.5% anytime soon, maybe in 10 years time, but personally I don't want to get another BTL and pay someone to live in it, whilst dealing with all the agro that comes with it. Reg. (Ever so slightly bitter but still positive rookie landlord) Link to comment Share on other sites More sharing options...
Trenners Posted October 25, 2007 Report Share Posted October 25, 2007 Hi Mark, Well - £650 rent assuming no void periods equates to £7,800 rent per year against a purchase price of about £195,000 means a yield of 4% BEFORE costs such as insurance, letting agent fees, maintenance, gas safety certificates, repairs etc etc. You will be lucky to see 3% after costs and void periods. So, you are going to be reliant on capital growth to make the numbers stack up. If capital growth is 3.5% next year (ie: equal to inflation) then you will gain the same return as leaving the money in the bank. If capital growth is more than 3.5% then it was a good decision to buy ... and if not then .... etc etc etc My advice - look to buy a 3 bed semi for £185,000 or less in your area (from someone who NEEDS to sell rather than just WANTS to sell) from a divorcing couple, repossession, got to sell because of relocation etc,. This will improve the yield to 4.22% just by negotiating on the purchase price. Good luck, Mark Link to comment Share on other sites More sharing options...
paul99 Posted October 25, 2007 Report Share Posted October 25, 2007 On the other side, I feel I really should have a property portfolio - money in the BS is just dull !!! I agree Mark, money in the BS = dull! Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 26, 2007 Report Share Posted October 26, 2007 Go make 100 "silly" offers ..............(20% below market value ....not to be confused with asking price!) YOU ONLY NEED ONE TO YES YES .......TRUST ME ONE WILL SAY YES !!! Then you will have intrinsic val to protect you from market drop and a good yield of at least 8% pa GO PROVE ME WRONG .................. Like falling off a log ( but first GET ON the log and STAY on long enough !!!!!!) Simon Link to comment Share on other sites More sharing options...
MarkJ Posted October 26, 2007 Author Report Share Posted October 26, 2007 Thanks to all that have replied so far. Good to hear alternative views. Reg - cheer up, think of the cap gains when you sell ! Trenners - thanks for making the calculations simpler to a novice like me. Rodent - sounds good. How do I find 'market value' (as opposed to asking price)? And wont this tactic simply piss off all the local estate agents? Link to comment Share on other sites More sharing options...
Trenners Posted October 26, 2007 Report Share Posted October 26, 2007 Hi Markj, Don't use estate agents - if you do you will end up paying £3,000 more than you need to because their fee (£3,000) will be included in the price that you negotiate. Cut out the middleman - go direct - contact the sellers directly. As Simon says (isn't that a childrens game?) - make lots of low offers DIRECT to the seller - if you get lucky then one will accept the offer - and you won't annoy the estate agents (because you won't be using them!) Let us know what happens ..... Mark Link to comment Share on other sites More sharing options...
Matthew Posted October 26, 2007 Report Share Posted October 26, 2007 Hi Mate, Also try & think outside the box and look for the property that will get the best return possible. For example, I bought an end of terrace 3 bed 2 reception house, which was rented out as a whole for £955 per month before i bought it. I now get £1850 per month renting it out on a room by room basis, more work for you (benefit of less risk imo), but for £10,740 per annum extra, it is definately worth it. I bought that place for £195,000. You may find there are a lot more individuals looking for rooms than people looking for a 3 bed semi. Have a look on Gumtree, spareroom.co.uk for your area and see what you can get per room. Otherewise, steer clear, £600 to £650 is just a terrible return and I would go nowhere near it. Regards, Mat. Link to comment Share on other sites More sharing options...
MarkJ Posted October 26, 2007 Author Report Share Posted October 26, 2007 Direct to the seller? How do I get to view the property without going via the Estate Agent? Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 26, 2007 Report Share Posted October 26, 2007 Good plan 1 silly offers 2 direct to owner (where possible) 3 HMO will always give better return (but as Mat points out more work!) 4 Do your figs and start makin offers! If you want to become an expert on prices go look at 100 2bed flats , 100 3bed houses or whatever you are interested in ,,,then look at the possible returns on each one work oout overheads etc ....you will have a very good idea of what "market price is long before you have looked at 100 props!! Also use my propertyspy and of other comp sites to see what houses are selling at in any particular area..... Just glean as much info from as many sources as you can ..................you can never have too much of it ...!! One of my mates recently bought a 2 bed repo which he happened upon by chance ....MV £120k and put a very cheeky offer in of 80K ......which was rejected s he upped his offer to 85K with completion in 28days and cash purchase...............which was accepted ......... END of story NO.... Becase this world is full of people then he understands that you need to build rapour with others and give to get in this life ...he gave the young girl at the estate agents a very decent bottle of wine and £50 cash in an envelope and genuinely thanked her for her efforts in helping him secure the prop..... TWO weeks later she called him to say they had just been instructed on another repo on the same estate ...and would he be interested?!!!!!!!!!! he got that one for 89K .............. and another bottle of wine +£50 Now then new kitchens and bathrooms, windows, doors, carpets, curtains plus full redec a bit of landscaping and 3 months later one is let at £550pcm (house owes 88k so 6600pa on 88K =7.5%rppa AND equity of 41K - house now valued at 129K) The other house has just been put on the market - fully dressed with furniture - for 129K and he is lookiing forward to 40K (less legal etc) very soon !!! In short That is approx 80k profit in 3 months ....any one interested in £900 a day profit ??!!! So can it be done ? I think so ! Was he just lucky ? the more you look the more luck you find ! TO finish this story ..... Did he work hard ?...not a chance ...he likes his golf to much ...he in fact doesn't know one end of a hammer from the other and did absolutely NO work himself on either prop ! So is he some sort of genius ? ........Nope he is the village idiot of 27 villages and a founder member of DENSA not to be confused with mensa!!!!LOL But he does have an incredible ability to get on with people and does not procrastinate , he just gets on with it ...!!! MAYBE he will never be able to pull off another deal like this again .....but there again maybe he will !!! I'm off down to the offey to buy a bottle of champange and then i'm off to my local estate agents now ! MARKJ Rodent - sounds good. How do I find 'market value' (as opposed to asking price)? And wont this tactic simply piss off all the local estate agents? Not if you are careful .......and EA realises you are a serious punter ....the last one i battered on price was a 2 bed flat at 100k vacant possesion which was very dated , perfectly livable but i qualified my offer by pointing out that it needed a new kitchen, bathroom interior doors carpets and new windows the cost of this was around 15K and i wasn't taking on the grief for nothing so 5 k for hassle factor so offered 80k...my offer was rejected but same day EA called back to say he would take 83K ..i upped to 81k final offer which was immediately accepted .........I had of course OVER estimated my costs significantly and did the whole flat for just under 6K so it owes me 86k and has been rented at £495 pcm for the past 3 three years (6.9%rtn) and the one next door has recently sol for 117K so i have 31k sitting there!! To make this one highly rentable i put a jacuzzi bath in .....which is prob the reason why most simlar flays rent at £425-450 but i get £495 for mine .....10%-15% more .....10%-15% more rent accross a sizable portfolio makes the difference between going bankcrupt and getting rich !!! Money in BS .....very DULL in every sense of the word !!!! LOL Simon Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 26, 2007 Report Share Posted October 26, 2007 Direct to the seller? How do I get to view the property without going via the Estate Agent? Ummmmmmmmm Hmmmmmmmmmmmm.....AAAAAAAhhhhhhhhhhhhhhhhh.......... Try Knocking on the door with the "For Sale" sign outside !!!!!!!!!!!!!!!!!!haha LOL Simon Link to comment Share on other sites More sharing options...
paul99 Posted October 26, 2007 Report Share Posted October 26, 2007 Try Knocking on the door with the "For Sale" sign outside !!!!!!!!!!!!!!!!!!haha LOL Simon Arf! Link to comment Share on other sites More sharing options...
Trenners Posted October 27, 2007 Report Share Posted October 27, 2007 Hi Markj, Direct to the seller? How do I get to view the property without going via the Estate Agent? Answer: Put a business card through the door or put a leaflet through the door saying that if the want to sell DIRECT then ask them to call you. I never knock on the door - it's good to prepare the seller for the DIRECT conversation......... ALSO ... the seller calls me then they have decided that they are interested in dealing direct (otherwise they wouldn't have called me) and there is a possibility they NEED to sell and are more than willing to drop the price .... I haven't used an estate agent in a couple of years now .... Mark Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 27, 2007 Report Share Posted October 27, 2007 Fair point Mark ! But you do risk tel no being passed to agent and miss an opportunity to begin building an immediate rapour, clearly if no ans then i would leave a card .....Also if i see any neighbours i will "have a chat" and start collecting as much info as possible, like how long has it been on market ..repo, bereavement, divorce, etc etc what does occ do for living , best time to catch them in etc ....done skillfully this and a whole lot more info can be gleaned in a very normal conversation without sounding like the spanish inquisition.... Have to say that i am of the same attitude as Mark .......avoid involving estate agents wherever possible ....it will save you and vendor a pile of cash, even if you agree to just split the EA fee between you, vendor is going to be £1500 better off and so will you ...and that is b4 you start negotiating on price .....which is a much bigger thread on its own!! Simon Link to comment Share on other sites More sharing options...
paul99 Posted October 29, 2007 Report Share Posted October 29, 2007 I think that's a good idea Mark, though even more effective may be a short informal note saying you're interested and mention the mutual advantage of swerving the EA - perhaps more friendly and appreciated than a cold business card. Simon's too, regarding 'having a chat' with the neighbours, but do be careful not to appear overly sneaky, could backfire if the neighbour reports back to the owner! Link to comment Share on other sites More sharing options...
MarkJ Posted November 3, 2007 Author Report Share Posted November 3, 2007 Ok...... I'm IN !!! Boring old Building Society - NO !!! Sexy Landlording - YES !!! Link to comment Share on other sites More sharing options...
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