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Dino V

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Everything posted by Dino V

  1. Used Searchlight Finance several times, Simon Allen is a member on here. Experienced with BTL and ltd co etc and really helpful in advising on the best way forward based on your strategy/plans etc
  2. Bought a property in 2020 (completed 23rd December!). Tenanted since, 8% gross yield, gone up about 30%. I'm more than happy with that.
  3. 1) It depends what your strategy is and what you're trying to achieve, plus your age. If time is on your side, buying a property in a high growth area and then saving for the next one, using the rent to help will take a while, but ultimately you'll have a portfolio of properties that are growing quickly and probably have decent rents. Once you have 'enough' you can start to draw the profit or you can sell some of the properties to pay off any mortgages leaving you with unencumbered properties paying rent, or sell the lot and invest the money elsewhere / blow it etc. Inflation is an important part of all that and whilst it's worth working through all the podcasts, I'd recommend having a look at some from this year sooner, specifically some of the recent ones around inflation. An alternative is higher yield properties where the rent will build up more quickly, allowing the portfolio to build more quickly. That could be cheaper property in high yield areas or something like HMOs. You probably won't get the same levels of capital growth which ultimately will mean the total return is likely to be lower, but if you want the income, that may not be a concern. Finally, the quickest way to do either is to force the appreciation on the property to allow you to remortgage to a higher value and pull your deposit back out. Usually that means some sort of refurbishment but will often mean you need the cash to buy, pay for the refurbishment and hold for a period until the remortgage is complete. 2) Finding tenants is the easy bit. You can use something like OpenRent to create you own advert, put it on a local Facebook group etc. The bigger problem is compliance, both as you get a new tenant and throughout the tenancy, plus being the direct contact for the tenants for any issues. People will argue both ways, but whilst I'm working, I don't want another job as a letting agent, so I'm more than happy to pay some of the rent for that service. 3) Not that I've ever found, annoyingly. In fairness, there's usually less negotiation on rents, so properties will usually go for what they're advertised at, assuming it's a market level rent. If there's one outlier, don't base your expectations on that, but if similar properties are advertised at similar prices, you can assume it's about right. As a check, you can ring a letting agent, explain your looking to buy and see what they suggest the rent would be. Depending how honest they are, they may suggest on the high side. Some would suggest ringing back as a potential tenant moving to the area, describe the sort of property you want and see what they say you'd need to pay in rent. You might find that's a little low, so the real answer will be between the two.
  4. Have a Starling account for our limited company and really happy with them. We already had a business account and a property before transferring to them, so didn't have any issues setting it up. If it's a problem without an existing running business, try opening an account with another bank first - we had Santander for a year whilst it was free and transferred from there. It's all automatic with any direct debits etc transferred over, so not an issue for the business
  5. Considering the value of your flat has probably gone up several percent since you agreed the offer, I'd set a date for exchange of completion in reasonably short period, say next Friday. If that's not done, tell them you'll put in back on the market.
  6. The terms of the loan usually suggest they can, or can at least ask the borrower to repay enough of the loan to get back to the original LTV. But why would they want to call the loan in, assuming the borrower is still making the payments? Most likely it couldn't be repaid, as you wouldn't be able to borrow what was required, so they end up with an asset that's potentially worth less than the debt, especially when they try and dispose of it. Most BTL is now 75% LTV originally, so even though the property value may drop, it's still likely to be in excess of the loan as long as they don't disrupt the market by calling lots of loans in, so they'd still be protected if the borrower stopped making payments.
  7. Overpay for any property and you risk negative equity. The closer to the top of the market you buy, the greater the risk. My last purchase was December 2020, so I could now take a fairly hefty correction just to get back to what we paid let alone into negative equity. That doesn't mean we wouldn't buy again now, but I'm not seeing the deals at the moment so need a bit of a slowdown to make it feel worthwhile. The yield depends where you're buying and how you calculate it. Working on gross yield, as simplest assuming no mortgage, I'd be looking for at least 6%, plus any capital growth. For areas with more dubious growth prospects, I'd want 8%. That makes it worthwhile doing, especially with leverage. Might need rents to rise a bit in most areas to get back to that. Are the prospects better than a simple index fund? Maybe, maybe not. I don't choose, I invest in both as I feel that gives a more diversified portfolio. I'm also more interested in the rent than the capital growth as a future retirement income. Rent is therefore a bit smoother than stocks, so allows me to feel comfortable getting the income I'll want in times like now when the market is going through a correction. But that's where having a strategy aligned to your goals is important.
  8. Not to worry you, but the PG would be 100% of the loan - if the house was somehow worth nothing, you'd still be liable for the full mortgage. With that out of the way, how realistic are your examples? 2008 certainly shows that if you buy at the peak, you could find yourself in negative equity for quite a while - we've got a property that's still worth less than it originally sold for in 2007! Are we still on the same situation as 2007? Not currently for a number of reasons. Prices haven't reached those sorts of levels, yet, but mainly that credit is still nowhere near the same levels. Back then, you could have got a 90%+ mortgage easily and you'll still hear stories of same day mortgages for an increased value etc. We aren't anywhere near those levels of madness yet. So is there a risk with a 75% mortgage? Probably. If you bought a £200k house and it almost immediately dropped by 30%, you're in negative equity. But is that a problem? The bank could in theory enforce any clauses about maximum 75% LTV, but that would mean they'd need to know the price had dropped that far and then what - they insist you pay them £10k to reduce the LTV, you refuse, they take the property back which is now worth less than the mortgage, have to sell it, have all the associated costs and then try and get any shortfall from you?! As long as you're making the mortgage payments, are they really going to think that's a good idea? And that last bit is the key. Negative equity is only an issue if you want to either sell or remortgage to improve the rates. As long as the property has a tenant who at least covers the mortgage and other costs, there's no need to do that and you can just ride it out. The advantage of more properties is the reduced risks relating to voids. If you've got one property and no tenant, you're covering the mortgage, insurance, potentially service charge etc. If you've got ten properties and one is void, it's not a big issue. You can also have some unencumbered properties in a larger portfolio, so if needs must you can quickly sell to pay off a debt elsewhere. Remember as well you don't need to use leverage or at least to levels that make you uncomfortable. You could buy a property for cash and then there's no risk, other than potentially losing some of the capital or you could save a bigger deposit and get a 65% LTV mortgage etc.
  9. I once went to a free two day course. Still wasn't worth the money and nothing that hadn't been done by the same person on YouTube. That's bus fare I'm never getting back...
  10. There will probably be easier and cheaper ways to get to a C rating. It's not a requirement yet anyway, but start with LED bulbs everywhere; thermostat including room thermostats and; loft insulation. If that lot plus double glazing doesn't get it to a C, it's likely to be exempt if they ever bring the legislation in, as the costs would be prohibitive I'm looking forward to how they propose heat pumps on back to back terraces, or £20k of works on a £50k house. Even better if you can't evict the tenant as not their fault, but you also can't rent to them as illegal due to EPC. Guess the councils and Shelter will just have to house people themselves...
  11. Anything you can claim now is always better than longer term. Say the roof is £1k, how much will that be worth in 20 years or more? If you never sell, you'll never see the benefit. I'd question why it would be a capital expense though. It's currently a roof and will still be a roof, just with modern technology. Same as changing single glazed windows to double. We also had a flat roof replaced a couple of years ago and changed it to a pitched, tiled roof. Not sure about planning/building regs, but one of the roofers we got quotes from suggested it, so I chose not to ask... Now hopefully maintenance free for many years to come and looks so much better than any flat roof.
  12. I've got one that was part of a package bought from Rob Dix's Property Geek website about 5 years ago. It's really simple to use and throws out all the numbers in the right way for filing a return, whether personal or limited. Looking on his website, I can't see it anymore, so not sure if still available, but if he's not selling it, it would be a good resource to provide may through the University, as it was a Google sheet you took a copy of and could use in Google or Excel etc. There were also workbooks for analysing deals and refurbs etc. If you don't gett one, may be worth sending an email on his other website (propertygeek.net) to see if it's still available
  13. That's usually the simplest and cheapest way forward. Solicitor will be able to sort
  14. Everything's going to be ok... providing you're clear on a few things. The main on his what you're trying to achieve ie your goal. If you're after capital growth, Hull may not be the best area although there will be nicer parts which are more expensive and will probably grow the fastest. If you want cashflow, then Hull's probably a good place. You've got the university, so students are an option and with the port, there will always be some level of employment regardless of other businesses. As you're local, you'll know the places to avoid ie those areas you wouldn't want to be at night or leave your car parked. That's a huge advantage over someone from another city who's seen the yields but doesn't know what's good or bad. Also, avoid the cheapest areas, even if they're not the same as the worst areas, even if they yield very well. Move up a price category from that and you should still get the yield, but you'll also get better growth and you'll probably have slightly higher rent. My main recommendation would be to find a good, local letting agent and you may need some recommendations on that. A good agent isn't going to want property that's hard to let or that is likely to have problem tenants who don't pay etc. Like you, they want a tenant who stays long term and pays on time, as they get their percentage for doing very little. I've found the local, single office agents are better than the national chains as the staff seem to stay longer and everything is local rather than centralised in a different city. In terms of flat or house, either works and has pros and cons. I prefer houses but also have a flat. A 2 bed terrace will always be in demand, but if you can find a 3 bed, ideally with a garden, you've got a family home and are likely to have longer term tenants, especially if it's within the catchment area of a good school. You're looking long term, so even a bad buy will probably turn out alright. A good property doesn't even need to be that cheap - people can get obsessed about below market value, which has been very difficult recently, but even if you pay 5% too much, if it's rented out consistently for 15 years and has probably increased in value by 50%+, will you remember that you overpaid a bit?
  15. That level of base rate would take it back up to what it was during the financial crisis and that period was a low base rate. Go before that and you were generally looking at about 6%, with periods of >10%. What's my strategy? Hope I can time taking out an annuity when base rates are 10%+, as will have a comfortable pension without having to use a lot of my capital 😉 As for property, it only really affects flips if the market stalls or very low yield properties which wouldn't work at higher rates. If your plan is longer term and cashflow positive it doesn't really bother me, as higher rates just means more renters
  16. The company can repay the loan you made to it without tax, e.g. you pay in £50k, it can repay you the £50k once it has the money available. It can't pay you for your financing costs directly e.g. you're personally paying £100/month on the remortgage of your home, the company can't pay that. It could pay interest on what you loaned them, although there is tax to pay on that. You mentioned dividends and yes, the company can pay you dividends from any profit after tax, but you'd be getting that regardless of the loan.
  17. It should just be repayment of a director loan, so should be simple for your accountant to show.
  18. No, the company can't pay your personal mortgage payments related to your deposit. However, it can pay you interest on the money you've lent it. Speak to your accountant about that and you'll need to complete CT61 forms.
  19. If you're looking in the city centre, probably not. Might find some one beds towards the top end of that budget. Most don't advertise the service charge, but that's a reason I don't generally bother with flats and it's something you've got little control over and is a major cost if you get a void period. But the original poster wasn't looking at the city centre, he was asking about various areas in Greater Manchester and there's plenty of properties available in that price range. The number is getting less with growth over the last few years and good properties are definitely being snapped up quickly, but there's still opportunity for those looking.
  20. You can still find 2 beds in the city centre for under £250k, there's still some at under £200k but needs a bit more work due to the EWS forms. The OP wasn't looking at the city centre though and there's plenty of choice in some of the areas he mentioned
  21. Not sure where you were looking, but definitely not Manchester. Even city centre flats don't start at those prices. And you could get two two-bed terraces in Salford for that.
  22. Can't tell you much about Crewe other than be careful, as with any town/city, as there's not much between the places you'd want and the places you wouldn't. Have had a couple of drives around but never convinced and HS2 will go into the wrong area, so not sure it'll make much difference. Can advise a bit more around Manchester, as live there and have a couple of properties in Walkden (which have been good for capital growth recently, although be careful as estate agents describe Walkden and Little Hulton as Worsley). Basic advice on greater Manchester is that the north east is generally cheaper than the southwest, although pockets in each that differ. If you want capital growth, I'd suggest the south and west, but you'll be lucky to find anything in budget and if you do, it's probably in a pocket to avoid. You might just about get into Walkden still; will find some things around Eccles but probably not where the transport is best; have probably missed out on Stockport. I grew up in and around Failsworth. Generally ok, but the growth has been slow, despite having all the fundamentals - it's 15 mins from Manchester city centre or centre of Oldham; has good public transport, especially with the tram; good motorway connections etc. You'll still get reasonable yield and will get some growth as Manchester continues to grow, but it'll be at the lower end of the growth for Manchester. Same for places on the Ashton tran line, but again, good connectivity so maybe it'll change when everywhere else becomes too expensive.
  23. If you Google tax, cinema and boat you should find some info. They were a couple of test cases for HMRC and still define capital or revenue expense. But I'd assume everything in a flip is capital, so not sure how that works if it was originally a house.
  24. If you replace carpet with carpet, it would be revenue regardless of the cost. It dates back to two test cases about a boat and a cinema, apparently. The boat wasn't seaworthy and would have sunk, therefore repairs were a capital expense as it didn't meet the requirements of a boat without the work. The cinema was a mess, think post war and a possible bombing, but could still be used as a cinema, so improving the seats/decoration was a revenue expense, as it encouraged more customers, allowed higher prices etc Back to the OP's question, it's an interesting one, as if you'd bought the properties to flip it would be different than improving an existing rental and then deciding to sell - they were a cinema rather than a boat, so to speak. I suspect it could be interpreted either way and, for such small amounts, HMRC wouldn't query as long as the rest of the CGT was paid. I'm not an accountant and you'd need to discuss with yours, but I'd be tempted to record in whichever way is the most favourable and argue the reasoning in the unlikely event they queried it.
  25. We've got a flat in Liverpool that has probably gone up 30-40% since we bought it in late 2018 as a repossession. It's value is still less than it sold for in 2007. Whether a property is above levels people overpaid in 2005-7 wouldn't concern me. I'd be more interested in the price compared to others in the block but also others in surrounding blocks - if that block is a lot cheaper than others, it may suggest an issue. You don't mention if you know the area and that would be the only other concern - if you don't know the area is it in decline, perhaps had one major employer who's disappeared etc. If there's no concerns with the current location and price, what it went for previously is meaningless whether very high or very low
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