Gecko Posted May 10, 2013 Report Share Posted May 10, 2013 Greetings, newbie here with 1st question of no doubt many more to come in future.... I'm just getting started in this game and wonder what the consensus is on ring fencing the properties in my eventual portfolio? What I mean is I'd like to know if it is strictly necessary or desireable to create a company to own the rental properties or just acquire them in my own name and manage them as a sole trader? The accountant I spoke to suggested it isn't necessary to have the properties in company ownership until it gets large enough to make the cost of administering the company viable. Of course having a company has some VAT and possible tax advantages so I would be interested what the consensus of opinion is on this. Company or Private? Link to comment Share on other sites More sharing options...
Richlist Posted May 10, 2013 Report Share Posted May 10, 2013 Private. Link to comment Share on other sites More sharing options...
Carryon Regardless Posted May 11, 2013 Report Share Posted May 11, 2013 Agreed, Extra complications for no realisitic benefit. Link to comment Share on other sites More sharing options...
Melboy Posted May 11, 2013 Report Share Posted May 11, 2013 Private. You will not be big enough to form a Limited Company and VAT reclaim has more disadvantages than advantages for any small business you are thinking of forming. Stay as a sole trader and claim the tax allowances on offer from HMRC. Link to comment Share on other sites More sharing options...
Gecko Posted May 11, 2013 Author Report Share Posted May 11, 2013 Thanks for the feedback folks. 1st property is in the pipeline and I'm itching to get on with it. Surveyor is going in on monday and an offer has been accepted of £54k from the receivers handling this one. A similar flat in the same block is on the market at £89k so with a bit of a refurb I hope to be looking at getting this rented out and having the 1st foot on the ladder. Looking forward to picking your combined brains over the coming weeks! Link to comment Share on other sites More sharing options...
Carryon Regardless Posted May 12, 2013 Report Share Posted May 12, 2013 Hopefully not coming across as pessimistic but, the actual sale value is a much better indication of value than asking price. Looking at land registry recorded prices of those previously sold is what a surveyor will be looking at. Then there are some adjustments for when sold and condition comparison. I always estimated to the high side for renovation cost. Good luck. Link to comment Share on other sites More sharing options...
Mortitia Posted May 12, 2013 Report Share Posted May 12, 2013 Gecko - I do hope you have read carefully the lease/legal documents of this £54K bargain (assuming it is a leasehold flat), taken into account management charges and checked to see if there is a charge to let to tenants? Link to comment Share on other sites More sharing options...
Richlist Posted May 12, 2013 Report Share Posted May 12, 2013 plus.....* have you checked the length of the lease ?* the sevice charges & how they are administered ?* who the freeholder & managing agents are ?* wether there are any large expenses due shortly after you complete ?* etc etcIts so easy to underestimate the cost of repairs/ renovation/ refurbishment. Like others I have done a few and almost all of them end up costing more than the original estimate. Build in a large contingency fund for unexpected problems. Link to comment Share on other sites More sharing options...
Gecko Posted May 12, 2013 Author Report Share Posted May 12, 2013 Thanks again for the suggestions and advice. Yes we have info on the length of the lease and it is 49 years in on a 999 year leasehold but because the vendor is a lawyer acting on behalf of a bank it's proving to be a little tricky getting the basic info on the managing agents and adminsitration charges etc but we have asked. Same problem on trying to find out about any works pending. We won't proceed until we have this info in hand. Idem on Mortitia's point - we certainly need to read the context of the leashold because obviously exclusions like that would be a show stopper. Thanks for the good solid advice and to some extent the reassurance that we are asking the right questions. Regarding resale value that COR pointed out, very good point too. The asking price of the other property in the block would not mean anything without knowing the wider picture of the market in the area but I feel fairly comfortable about the price we are paying and have drafted a refurb budget ranging from £5k (I might get lucky) through £10k (what I expect) to £ 20k (if it turns ugly). I really can't forsee £20k on this even if we have to gut the place and start again, but the funds are there if we had to and then we would still be all done at £10k under the asking price of the other flat. Than is to rent out anyway but I think there's a good buffer in this so I'm dipping a toe into the property investment pond cautiously but with a good healthy dose of realism too. Link to comment Share on other sites More sharing options...
Mortitia Posted May 13, 2013 Report Share Posted May 13, 2013 Once you get the name of the managing agents I would suss them out before exchange. Knock on doors at the block and find some owner occupiers and ask their opinion of the charges, work done and how things proceed in general. If buying a flat I always like to buy one with a share of the freehold rather than pay managing agents hefty fees. Link to comment Share on other sites More sharing options...
Gecko Posted May 14, 2013 Author Report Share Posted May 14, 2013 Surveyors report just in; Summary: Acquire long barge pole - do not touch property with it! Ah well best to learn these things now and not later. The search continues for the commencement of my investment portfolio.... all part of the learning curve. Link to comment Share on other sites More sharing options...
Richlist Posted May 14, 2013 Report Share Posted May 14, 2013 I normally work on the premise that if it looks to good to be true then it probably is. Being offered a property for £54K when similar ones fetch £89K is likely to mean there are serious issues. Nevertheless......still worth the look. Good luck. Link to comment Share on other sites More sharing options...
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