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new to all this - hello!...and help, please.


chickpea

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If buying a flat i would advise that you:

1 Ask to see a copy of last year service charge accounts

2Check to see if a reserve fund is in place

3 Get it confirmed in writing that there are no major works planned for the block and if so does the reserve fund cover the cost.

4 Is there a management company in charge of the block

5 Try to speak to other leaseholder and ask there opinion of the management of the block.

6 If there is a commercial unit on the lower level that could stop you ever going for a right to manage

7 Check the ground rent charges and ask in writing for the wording of how it is increased in future years because some leases are worded in such a manner that you will find the ground increases hugely in later years.

There is no reason why any of this information is withheld because ltd companies info is in the public domain and if they start to be cagey that should ring alarm bells

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Grampa - the apartment is a brand new build, with the first "owners" moving in only 2 weeks ago, so no past history of service charges or management issues.

The ground rent is set, but the maintenance charges we've been quoted are estimates - should that worry us?

There's no commercial space - ground floor is all apartments.

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Sometimes with a new build, the estimate service charges are made as low as possible to make the property more appealing to sell. You could find the lease have a provision for certain works to be done in 3 or 5 years such as painting the windows or the outside and the estimate service charge hasnt taken that into account. Does the estimate have a reserve /sinking fund element to it? If not it should do.

If i were you I would buget another 20% at least onto that estimate into your figures to be on the safe side.

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I've got a mix......3 bed, 2 bed, 1 bed and a freehold flat.

Would I buy another flat right now? No.

2 bed houses are always popular and easy to let but there again so is my 1 bed house easy to let.

I have always paid cash for my properties going back 20 + years but that is me...I have always flown by the seat of my pants and havn't made too many wrong turns. This is probably why I am not a multi-millionaire. :D

The last lot of super-duper BTL'ers from Essex... the School teachers... remember them? They are now bankrupt!

http://www.dailymail.co.uk/news/article-1210885/Maths-teacher-property-tycoons-700-homes-sale-go.html

I'll just keep bimbling along in the hope that one day Monti Carlo is within my reach and the yacht in the harbour.....(very unlikely!)

Mel.

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I have always paid cash for my properties going back 20 + years but that is me...I have always flown by the seat of my pants and havn't made too many wrong turns. This is probably why I am not a multi-millionaire. :D

If you have been spending your own money instead of borrowing it from someone else......especially when the money supply was plentiful ( pre 2008) thats a major contributor to your lack of millionnaire status.

The last lot of super-duper BTL'ers from Essex... the School teachers... remember them? They are now bankrupt!

Not all the super- duper BTL'ers from Essex are bankrupt ! Some of us are doing very nicely.

I'll just keep bimbling along in the hope that one day Monti Carlo is within my reach and the yacht in the harbour.....(very unlikely!)

Thats not the sort of attitude that will see you achieve either any time soon.

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But I havn't told you how many properties I cashed in Richlist during the boom-times. :D

There has to be a time in the future for every Landlord when you have to cash in your chips after a winning streak.

Cash in the bank!.........and a few properties to keep going with......and I am still buying property but like I have said before on the forum I really am a small time renovator/developer of property which is why I enjoy a good night's sleep....no worries! :D

Mel.

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So...today's news is that we have decided to go with property no.1, having found a tracker mortgage with the Coventry which is capped, has set up fees of £250 including a survey,and which is £50 less per month (until interest rates rise) than the previous quote I based my figures on.

It's a 65/35 LTV, which will leave us a good contingency fund for the unexpected.

The house itself is in great condition - brand new swanky bathroom, oak floor in the lounge, very smartly decorated (obviously a well-loved home) PLUS it has a small loft conversion,suitable for use as a home office.

Rent should be £525 per month, giving us a modest profit of a couple of grand a year for our £43k investment.

We have binned the apartment, and are seeing another 2 bed on Monday.

Exciting times!:)

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But I havn't told you how many properties I cashed in Richlist during the boom-times. :D

There has to be a time in the future for every Landlord when you have to cash in your chips after a winning streak.

Yes I really can't wait to pay my 40% capital gains tax ! sad.gifI've always thought it something to look forward to. I expect you already know that there are still ways around it.

......and I am still buying property but like I have said before on the forum I really am a small time renovator/developer of property which is why I enjoy a good night's sleep....no worries! :D

Oh.....even worse......you have to pay income tax instead of CGTon your profits. No way round income tax and nearly always likely to be 40%. Good luck.

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I certainly do Richlist......I have a cracking good accountant.

Good luck Tracy with your purchase but do your homework before signing up.

Prices in your part of the World have not dropped by very much so I doubt if you will experience any major property value falls over the next year.

Keep us all posted on your progress though.

Mel.

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This doesn't sound like a particularly good buy.

By my calculations the property costs £122K with a £43K deposit and an £80K mortgage. You will be paying around £4000 a year in repayments. Rent is £6300 pa.

Thats a gross yield of around 5% and probably less than 4% return after tax and expenses on your £43K investment.

Capital values are unlikely to see rises in the near term.

Good luck.....you might need it.

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It's probably not a particularly good buy but I don't think it's a bad buy either.

Repayments are £3159 per year, so slightly better than your calculations, Richlist.

Was it you that said we could get 3% if we put it in some kind of bond? If that's so, anything over 3% from this property is ok by me - plus, we intend to hang on to the property for the long term so capital growth of some description as well.:)

We've asked a variety of estate agents about the property and all have assured us it will let all day, every day and will sell easily - it's in an area that's held it's own pretty much over the last few years and is coming up all the time.

Of course, it's a risk - but it seems a safe bet right now.

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It's probably not a particularly good buy but I don't think it's a bad buy either.

Repayments are £3159 per year, so slightly better than your calculations, Richlist.

I don't share that view.

So, you are paying a mortgage of around 4% whilst base rates are at 0.5%. When base rates rise to 2%, 3% and eventually 4% I hope you able to still balance your books when you are paying 6%, 7% or 8% for your mortgage.

Was it you that said we could get 3% if we put it in some kind of bond? If that's so, anything over 3% from this property is ok by me

There are savings account that will pay over 4% tax free.....it just depends how long you are prepared to tie up your money. The latest NS& I bond will pay around 5.3% tax free. Any profits you make from renting will be taxed and so, I don't think you are likely to achieve anything like that sort of return on your £43K +.expenditure.

Along with your £3159 pa for mortgage payments you will presumaly have to consider all of your other costs. I don't know if have already posted some examples. If not here are some thought starters:

Buying costs....legal, SDLT, land registry, searches etc

Preparing the property....furnishing etc

Gas cert

Electrical checks

EPC cert

Agent fees

Rent guarantee insurance

Buildings & contents insurance

Repairs & maintenance

Utility bills during voids

Travel costs

Deposit protection

Provision for bad debt

Accountant / Income tax

etc

......and don't forget your loss of interest/ income on the £43K+ that you will spend buying the property.

Your profits from rental income are unlikely to be better than 4% and considerably less if you encounter problems with agents, rental legislation or your choice of tenants....something quite common with first time landlords.

Capital appreciation is unlikely in the short term. Although you are not alone in living in the forlorn hope of a market improvement at some point in the dim & distant future.

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My pessimistic views toward our good future from BTL must be clear by now.

However I do see some reason for a renew'ing' optimism for it to give equity increase returns somewhat earlier than I would have expected.

From a selfish point the more that go for this the better for me as I don't have interest in further investment and the increase in demand can only be good for my stock value.

The thoughts that this will produce more competition for T's and so reduce rents I don't see as houses will be generally full somehow, demand for accommodation doesn't change. just how they become occupied may.

Our greatest danger toward reducing rents is the HB restricting benefits in the many ways they can and do. Realistically I wouldn't have a business without the long term sick, retired or employed becoming unemployed being or becoming claimants, so I must accept sometimes that significant 'top ups' aren't realistic. Then of course there is the lack of support from the courts when we have been screwed again.

Where I see some cause for optimism is that there are more taking interest in this as a way for them, some wont but some will. Of course some existing LL's will drop out, maybe this will just balance ?

Since banks are told to provide £190 billion this year for business development or suffer penalties the availability of credit should become easier. Most of the last boom was caused by freely available credit, give people money they will play with it and worry about tomorrow as and when they must.

Tracey has significant funds to contribute true but £250 arrangement to include valuation is quite a turnaround in the banking policy of late. If this situation becomes more usual more people will have ago.

Those that should fear the legislation will believe they can handle it. From the outside running a business and developing your status as a property entrepreneur looks exciting, and "you will never know unless you try".

Tracey I read and I see you are more than keen for this. Your responses are more of a justification for doing this rather than not so I wish you good luck.

Yes luck is a massive part of this as none of us have a reliable crystal ball, all made in North Korea probably.

No matter what calculations we do, predicting the unknown 'aint possible. "interest rates won't go very high, maybe 4% and I can handle that", you know the "it will never happen" statements, but in 1990 I was paying 16% interest for my own domestic mortgage, how did that happen ?

Then the main part of our business, the T's. They aren't the investment but have the potential to be the biggest risk to it. All the referencing and credit checks and investigation can't predict their future so we proceed with fingers crossed that they will still have ability and willingness to pay their way as time goes on.

Please proceed cautiously I / we will be interested to follow you story..

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Tracey has significant funds to contribute true but £250 arrangement to include valuation is quite a turnaround in the banking policy of late. If this situation becomes more usual more people will have ago.

Whilst I agree that a £250 arrangement fee is attractive I suspect that its as a result of having a 35% (£43,000) deposit which many first time buyers/ first time landlords just won't have or be able to get. Those people with a small deposit will find interest rates and arrangement fees far from appealing......unless they can't count.

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Oh blimey, I've been busted!...yes, Cor, you have me sussed - once I get an idea into my head, I am like a dog with a bone.

I *hope* I'm doing all the right things to make the best of the situation and go into this with as much knowledge as I can muster. I'm doing as much research as I can, we have contingency funds, we have tried to get the best mortgage deal we could find and the best house for the job. I have a few friends who have bought BTL's, so have picked their brains as much as possible too.

Maybe it's reckless and stupid, but I want to do something "active" with our investment. Both my parents are/were quite serious investors - I inherited a portion of my dad's stocks and shares after he died 3 years ago...but only what was left of a huge fund that was basically lost on the stock market and fraudulent investments. That rather put me off any kind of further investment into shares, funnily enough.

My mother still has her investments - and spends her days watching them go up and down, without ever doing anything with them. When they rise, she waits for them to rise higher....when they start to fall, she can't sell them either.

What can I say?

I'll let you know how things go - and you can feel free to say you told me so when it all goes wrong.;)

:)

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Go for it Tracy.....I agree about watching stocks and shares go up and down is boring and as it happens I too wanted to do something more pro-active back in '89 which led me into property renovation and an accidental property landlord.

I have never taken a loss on property dealing in 25 years but sure have on Shares over the years.....(about £5000 !)

As long as you have your basic maths in place and don't overpay on what your buying you should be alright and as you have said it is a very long time investment over 10 to 15 years.

It was the best thing I ever did for my pension and thank God I didn't become one of the statistics in the great pension company frauds that have been in the news just lately.

Mel.

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