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phil

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  1. Hi All, My fiancée's father has a property in Tivoli (near Rome) which was his parent's holiday home. It has been in the family 50 years, but is in a bit of a state now. It is a 3-bed villa, with a lot of land, and was valued (last in 2011) for about €800k. I think the valuations work differently there, as it was done by local authorities for Italian property laws, He and his brother are paying €20k/year in "2nd property tax", since it is now registered in their names. They were offered (in 2016) €250k for he property/land + 6 flats (of which the developer was proposing to build a block of 30 units. This came via a local agent who has kept the property on their books for years, but they don't seem to be doing anything else. They didn't accept as I think they preferred to sell it in one clean sale with no other strings attached. Also, I think property development in Italy is probably not as kosher as it is here in the UK, so they might not have ever received the flats at the end of it - or may have been waiting 5-10 years. As a small-time property investor, I feel I should give some advice/options... My fiancée is quite frustrated that they keep putting it off, paying this tax, and wanting somebody to come along and buy it, without putting any effort in. I know I haven't given many details here, but hopefully that is enough information to go on. Cheers, Phil
  2. Hi All, I have been looking at how much money I should keep back in my property business. I have 4 properties, and by the end of 2022 should have 7 (if all the new builds go to plan!) Below I show some calculations for three properties (a 5-bed HMO, London 3-bed & Midlands 2-bed). Calculation is: a) 6 months mortgage payments b) 6 months council tax (in case property is vacant and I have to pay it) c) 6 months service charge where applicable d) 6-months insurance payments e) 6-month Maintainance fees (worst case) f) Deposit - this is where I need to keep significant funds back for mortgage deposits for new purchases. My Bank (Starling) has "Spaces" where I can keep money for specific reasons, so I have one "space" per property. Am I being too risky / too cautious / over thinking it? Should I also keep a rolling Refurb fund (£10-30k) in the business? I have seen that some investors keep 20% back per property! My level here is more like 2-3%. I have been in property since 2007, but always had well paid, salaried jobs, so never really worried about the properties costing a bit more here or there. But if I want to give up work one day, I need to be a bit more careful! Any incites or ideas would be much appreciated! Cheers, Phil
  3. Hi Greg, we haven’t even started looking yet to be honest, since its so difficult from China. Will be back in the UK long term from September so will start the pursuit then! We tried to do it last September when we were back for a month, but the Stamp duty holiday made everything so much more expensive. I think Off plan (at the moment at least) is good because: - investors have a relaxed pick of what they want, - first time/2-property landlords are scared off by them, or cannot wait for the build time, - people are still thinking about the mass exodus from the Cities, so off-plan city centre hasn’t been quite so hot. - and they should be low Maintainance and simple excel sheet style investments (the average age of the properties in my “non-off plan” part of the portfolio is about 80years, and they of course need a lot more work). As soon as furlough ends, the market cools down (2022?) we will exercise the spreadsheet. PM me if you want me to email you the excel version. Cheers, Phil
  4. Hi gmk, To answer your question: 1) the spreadsheet is looking fantastic and seems to hold water against a few different scenarios when I was testing it a few months ago. but… 2) I have not acted on it yet at all….! We currently live in China (until next week), so when we are back in the UK - if it’s possible to find any BMV deals - we will crack on with it. In the meantime since last posting we have bought two off plan apartments in Leeds. So much easier, but feels like cheating somehow! Cheers, Phil
  5. Hi Stephen, Thanks - yes my broker has given me a few options, with specific Refurb B2L deals. I think I was just trying to work out exactly the difference between Mortgage and Cash upfront... which I think I have finally done. All - Please see my updated version! This one makes more sense: - If you have the means, buying with cash is more economical (forgetting any Opportunity cost of maybe buying two at a time and doing them in parallel...) than with a mortgage upfront. - Buying with a mortgage upfront makes the Yeilds and "Net Dividend" (as I call it) look better - But the overall ROI, after 5-years, will be better with the Cash purcahse Cheers, Phil
  6. Hi All, I am planning to do some BRRR's in the next couple of years with my partner. Currently we are in Shanghai, planning to return to the UK in August, and getting our house in order (litterally!) by refinancing our portfolio and doing a few Off-plan/new build purchases along the way. I like to plan and have been creating "deal sheets" in excels for all of our considered strategies. Given we can't do much from 6000miles away, now is the perfect time. I am really struggling to make a direct comparison between doing a BRRR deal, buying initially with a Mortgage or Cash. Of course - at the end of the deal - the goal is always to re-finance to keep the ball rolling, but I would like some advice on how to analyze these (fictional) numbers below. The yellow is clearly wrong! In my head: buying with cash up front, rather than a mortgage and all the associated costs, and getting your money out at the end should be the better way to do it. I've included my calculations where necessary... but perhaps the "A - B" for the money recycled & Money left in should be different parameters? Thanks in advance, Phil (Appologies, I could not copy & paste the table from Excel, but below are the numbers in text form, which can possibly be copied into a text document and as a CSV back into Excel!) THE IDEA: Buying a £100k property, spending about £17k in the Refurb, getting it re-valued at £150k "X Buy with 1st Mortgage (65% LTV)" "Y Initially buy with Cash" Delta (x-y) Purchase price £100,000.00 £100,000.00 £- Capital used £35,000.00 £100,000.00 £65,000.00 "Purchasing costs (inc SDLT, Solicotirs, home buyers, Lender fees, Broker etc)" £6,850.00 £4,900.00 -£1,950.00 "Refurb costs (inc. mortgage costs, council tax, insurance etc)" £17,673.00 £15,985.00 -£1,688.00 Total Upfront spend £59,523.00 £120,885.00 New property valuation (hopefully!) £150,000.00 £150,000.00 £- Refinancing costs £3,275.00 £3,275.00 £- Equity Released (65% LTV mortgage) £97,500.00 £97,500.00 £- Total Spend £62,798.00 £124,160.00 £61,362.00 Gross Annual Rent £10,800.00 £10,800.00 £- "Net Annual Rent before refinance (with original/no mortgage) - pessimistic, all costs included, 8% voids included" £5,693.00 £7,487.00 -£1,794.00 "Net Annual Rent after refinance (with new mortgage) - pessimistic, all costs included, 8% voids included" £4,796.00 £4,796.00 £- Money Recycled out (Equity released - Total Spend) £34,702.00 -£26,660.00 Money Left in (Total Spend - Money Released) £28,096.00 £150,820.00 % Money Recycled 55.26% -21.47% Net Rental Yield (Net Annual Rent / Purchase Price + Refurb) 4.08% 4.14% Net Dividend before Refinance (Net Annual Rent / Total Spend 7.64% 3.86% Net Dividend after Refinance (Net Annual Rent / Money Left in) 17.07% 3.18% 5 year ROI (assuming 4% capital growth) 140.30% 101.70%
  7. Hello Property Hub! this is Phil from Shanghai; well actually Cardiff originally, but I’ve been living out in China for the past 3 years. I work in Automotive for a Chinese car company. I have a 3-property portfolio, and I’d like to expand and start taking it a bit more seriously. I have been a bit lax overt the last few years as an expat, employing the “leaky bucket” method of managing my properties- luckily more money is coming in than going out, but I definitely don’t treat it like a real business. My aggressive goal is £7000/month after tax passive income by age 40 (Sept-2025). And then retire from having to work in engineering and perhaps set up my own business and work on more charitable causes. I’ve got a student HMO 5-bed house in the midlands, and two professional lets in London (3bed) & another in the midlands (2bed). I have seen a lot- having bought in 2007/2011/2015; the pain of buying the student house in 2007 has now bounced back, and buying in London in 2011 was great by 2015, but hasn’t done much since. Over the past three years I’ve been paying down my mortgages at a rate of knots (to stop me buying shiny, pointless things!) and I’m in a situation where I have about £470k debt on a £1.1m portfolio. I would like to expand, but will have to do it very hands off. We will be staying in China another 2 years (it’s still exciting and the Auto industry isn’t up to much in the UK at the moment..) so would probably come back to Europe in summer 2021. My current plan is to pay off my mortgage on my student property, which has £60k remaining on it. Fortunately I can access the money quickly by emptying out some underperforming UK equity funds. It has a consent to let residential mortgage on a bad rate (4%) and it’s self managed causing me lots of annoying niggling problems. Then I would like to refinance on a B2L mortgage up to 75% LTV, put it through an agency and hopefully release £150k equity to buy 2-3 more. Then next would be the others, and keep going! As a strategy, does the above sound OK to start? Thanks in advance, Phil
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