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Found 15 results

  1. It's no secret that leveraged property investment has been very lucrative in recent decades, but people have been made bankrupt as well, especially in 2008. I'm trying to get to grips with how people with larger portfolios sleep at night with lots of mortgage debt to their name. Let's say I have one Buy-To-Let worth £200k with £150k debt against it and it's held in an SPV with a 20% personal guarantee (PG). The most I can lose personally is 20% of debt, so £30k. This isn't too scary, unless I've spent all my money it probably won't bankrupt me and it's not an insurmountable amount of money to rebuild. Anyone hoping to grow big though is going to one day end up with much more debt than this, perhaps they will end up with 20 of the same property, worth a total of £4M with £3M debt and the same 20% PG. Now they are personally liable for up to £600k! That's a much scarier amount. I can think of a few ways investors might justify these risks and I'd be interested to get your thoughts. A) prices will never fall more than 25% and so negative equity will never occur, and if the property needs remortaging at this price (which won't be possible without putting new money in because of the new value) then it can be easily sold to cover the debt. B ) before prices get anywhere near dropping by 25%, the government will step in to support the housing market C) The investor has sufficient other assets to cover any insolvency in their property portfolio I get the impression that a lot of people are either not thinking about this risk or thinking of A and B. In my eyes at the moment, only C is really that safe. If the properties are held personally or with a larger PG, then much more is at risk. As an investor grows their portfolio, they might be under the impression that they are unstoppable, but if they keep up a mortgage LTV of 75% across their portfolio, they are no more safe against bankruptcy than someone with a single property, and in fact have more to lose. Please let me know what you think, do you have a way to mitigate against these risks? Am I missing something? Thanks
  2. While it seems common place to refinance properties owned in an SPV and use the proceeds to fund the deposit on further properties, what options are there to access that equity if one doesn't want to grow there property portfolio any further..? Since equity released by refinancing is not a profit, I imagine it is therefore impossible to extract the equity through dividends - one would instead have to sell a property and record a profit?? This seems like a significant drawback to me compared to owning property in my own name, considering that I don't intend to just forever buy more and more property... (but might want to buy enough to otherwise make an SPV worthwhile..) Looking forward to hearing what people have to say on this. Thanks in advance!
  3. Hi, I'm an IT contractor working through my own limited company. This company has surplus profits from which I would like to invest in property. I've been advised by my accountant to set-up a new LTD company to do this with. I've been advised that I can then loan money to the new property investment company from my existing limited company. Does anyone know whether I need to produce a formal loan agreement for this? My accountant has said no , but that doesn't feel right to me. Surely the particulars of the loan would need to be documented, even if I am owner of both companies? Thanks, Jit
  4. Hi I am based in an apartment block in London with around 30 flats. I am on the board of directors. We have a combination of leaseholders and I believe some flats own the freehold too. We wanted to enquire into taking out a large loan in order to complete some much needed building works. We would then figure out how much is needed to be paid back by each flat over as many years as possible. Does anyone know a company that specialises in loans of this nature please ? Thanks
  5. Hi, Recently I came across great opportunity for BRR or flip. It would do well for both. However the best option was to take it by cash or similarly with bridging finance. I decided to sent an enquiry for bridging loan and after assessing the numbers it looks like it's pretty pricey! I'm not 100% sure if I understand all of the number rightly but I was expecting gross interest at around 12-15% max whist my quote exceeds 20%... I copied the quote below and I've got few points to confirm: Net loan £52,578 - so for £85,000 property I can only get financing of 52,578 - That is already a non-starter... Bridging costs £4,921 (as per quote below) Rolling interest 0.89% for 12months - gives us total of £6,450 - presumably if I pay back the loan within 9months this will be around £5,000 (not exactly but let's round the number) Above points mean that taking a loan of £52,578 costs me £11,371 for 12 months or almost £9,900 for 9months, so effectively 21.6% or 18.8% in relation to net loan. Is it normally that expensive? I had the impression that bridging finance is bit cheaper since many investors take this type of loan which makes their deal still worthwhile but seeing these figures there is no chance that I can get any money out of a deal. Please see my reference finance quotation for a property worth 85k.
  6. Hi everyone. I'm new here but listened to Rob and Rob's podcast for quite a while. I'm hoping someone can help me. This is the first year I've had to do tax returns (I own one BTL since January 2019). There is plenty of advice online about section 24 and I'm aware 50% of it can be offset for the tax year 2018-2019. But I can't find anything about what the tax rules are for interest on other financing. I remortgaged my residential property to pay the deposit for my BTL property. Can I claim the interest I pay on that as an expense for tax purposes? Also what about if I borrow the money for the deposit from a bank or relative and pay interest on that? Is that tax deductable? Anyone's help would be much appreciated as I imagine this is quite a common situation. Thank you
  7. I bought my first property through help to buy and i would like to buy my 2nd property as an investment, can one remortgage the help to buy house and pay off the equity loan or change the mortgage from Help to buy to a normal mortgage?
  8. Hi Everyone, I'm currently investigating what are the possibilities to invest in property. I'm not owning any property yet, I have limited resources for the initial deposit and I'm based in London. I hesitate between two options for my first property investment: - Buying my own property outside of London with a quick commute (ie Chelmsford or Milton Keynes). The positive point is that I would only need a 5% deposit and I can use the first home buyer scheme. However, I'm concerned that the property I could buy won't increase in value and building in equity will only be based on my monthly repayment. - Investing in buy-to-let in the North (Liverpool or Manchester). The forecasts are planning a great increase in property value however I'm afraid that I will struggle to bring 20% deposit (I'm currently looking into getting a personal loan to not stretch too much of my finance, which is going to make it even more difficult). My investment goal is building wealth in the long term, I'm currently full-time employed and I'm not searching to get high profit from my investments for now (even though profit is still appreciated ) What are your recommendations? Please let me know your thoughts, Many thanks for whoever read this topic Anne-Claire
  9. Hi fellow hubbers, I'm currently reading 'Using a Property Company to Save Tax 17/18' and on page 195 it says: What are the cases where this isn't possible? My understanding of this is that I've taken out a bank loan, which I've then invested into my company as a director's loan, I am able to claim the interest relief when completing my Self-Assessment Tax Return? If this is the case, what boxes/parts of the SA Tax Return form would be completed to account for this?? Thanks for any help in advance!
  10. Hi All. I am from Nottingham. Managed to raise 60k with my friend. We both want to start our property journey buying 1st house doing it up and sell. Ideally want to repeat flips couple times to increase our capital and buy 2 - 3 BTL to start saving towards our future. Now question. Is there any short term loan company you recommend from Nottingham? By short term I mean 4-8 months till we refurb and sell...... Any help, ideas, thoughts from Nottingham people more than welcome.... Apart of the auctions, where else to find out prospective properties for our flips? Thanks Greg
  11. Hey guys! My parents and I are looking to start investing and developing property, but we are completely new to it. As a 26 year old, I haven't even bought a property of my own, so I'm not sure how the process works. (Mortgages, financing, etc). I'm looking to get any practical useful advice on the steps I need to take to get started. Our starting sum isn't much, around 40K, and I was thinking it would be best to start with Buy to Sells to increase our investment sum, and that would then allow us to have the option to get into Buy to Lets as well. I'm not sure what the best cost effective way for me to get started is. Where to source good deals, and what kind of financial advice I need to seek. Any help and direction from someone experienced would help a bunch. I guess I need advice on what I can do with how much I currently have, and how to get started with that amount. Thanks! H
  12. Hi, Me and my partner are looking to buy a plot of land at auction to build a house on in the future. The land does currently have a house on the plot with running water and a kitchen and bathroom (although they are not in a state that anyone would want to use cosmetically) the house has not been lived in for three years and the front door has rotten and therefore will not shut. It also smells very damp. These things make me think the mortgage companies will class the house as uninhabitable and therefore not offer us a mortgage. Does anyone have any experience with houses such as this? We are thinking about making the house habitable to live in before we are ready to build, but have not decided on this yet as we do have the luxury of sitting on it comfortably with somewhere else to live. (The property we live in currently belongs to my Dad however, so we do not have the option of remortgaging a current property to release money). I understand you can get mortgages to build, but because we have no plans for a house yet nor do we have the capital available we would be sitting on the land for five years. This seems to put us out of the running for a self build mortgage. The issue is that I do not know how to fund the purchase of the plot in a way that would allow us to sit on it for 5 years comfortably before we can build and then go down the self build route. Does anyone have any experience with this? I have done lots of research but have had no luck. I believe a bridging loan would be very very expensive and is not the answer for five years and I am under the impression you can not get a mortgage for a building plot alone. Thanks so much guys!
  13. Hi guys, anyone out here familiar with/undertaken the process of loaning deposit funds from a Contractor Ltd Company to an SPV? I want to verify whether this method is viable and can be legitimately classified as a business to business loan under HMRC rules? Thanks in advance
  14. Hello all, I'd love to pick your brains. I own a three bedroom house in Liverpool that I want to develop and turn into student accommodation. Purchased for £60k, the renovation will be £65k. The only problem I have is finding £65k for the renovation. Do you have any suggestions? I have six other properties so could bridge but want to make sure I've explored all options first. Have you ever used a development loan? The build will take 12 weeks then I will refinance to pay off the loan. Thanks in advance.
  15. Hi all, I have a ltd company and we own a piece of land with planning permission for 4 houses. We need a loan to build them. We need a large amount - over £500k. I have spoken to the brokers Totum finance, and to a friend who is a building contractor, who advises me to approach the Banks (Lloyds, RBS, NatWest etc). At the moment, I cannot even get contact numbers out of the three banks and am getting frustrated. Does anyone know how to start this? Any advice would be appreciated. Will I need to prepare an application in advance? If so what wil it need to include? I am thinking: business Profile and experience of directors Plan for the project Costs and sales value (GDV) What we have as assurance against the loan (can this be the land itself, and/or the house of a director etc?) As I say, any advice on getting started would be much appreciated. Thanks Mat
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