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Found 24 results

  1. Hi everyone, I have been looking to purchase my first property, hopefully soon. I have viewings booked for quite a few properties next weekend, and I will be booking another few in another city for the weekend after. I spend weeks in front of my little spreadsheet which would give me all the numbers I want to see when considering the property. I spent another week or so reading about taxes as an individual and a limited company (also had a chat with an accountant) and I decided to go forward as a limited company. These numbers are based on an actual property that I am looking into: Purchase price: £110,000 Solicitor/Broker fee: £2,200 Ground rent/Service charge: £1,400 Monthly Rent: £625 (I believe this is what it is currently let for) LTV: 75% Interest rate: 4.5% Management/Repairs: 18% Voids: 4 weeks After imputing all the above parameters into my little calculator, it shows me that the annual profit after all expenses is £277 and the ROI is 0.77%. Those are not particularly exiting numbers. This is not even enough to cover the accountant's fee. Even if I get the property for £100,00, I would end up with £600 annual profit. Would you be able to share your experiences and maybe comment on the numbers above? What would be needed to be done to get the ROI higher? Is it higher rent or buying at much lower price or something else? Your comments would be very welcome and much appreciated! Thanks
  2. Hey Can anyone recommend a software program that will allow me to me to measure how my business and property portfolio is doing? I'd really like it to measure both things in one program (general business performance, and portfolio performance) and it's vital that it will allow me to forecast/test the effect that potential purchases would have. I'd love to - Be able to test what happens to my business cashflow if I buy/remortgage specific properties at a specific points in the year. Compare the performance of two possible purchases to see which is likely to perform best for me in 5/10 year's time Keep track of the overall health of my investments As a bonus, it would also be great to be able to do basic accounting things like create Profit/Loss statements etc Is there a program / app / web-service that will allow me to do all of these things? I could probably fashion something myself in excel, but it'll likely take days of work to build and test and there are better uses of time if it already exists Any pointers gratefully received!
  3. Hi All, I'm using ROI, amongst other metrics, to determine if it's worth investing in a given buy-to-let property or not. However, I'm struggling with a couple of things, which are related, and as a newbie, I'd love your input on them. I see most of the people using ROI, and even many calculators online or spreadsheet, don't include capital growth in their ROI calculations. I'm not sure I understand why they wouldn't include capital growth in their calculations. Yes, it's impossible to predict, but on average it's fair to say you could use a 3.5% capital growth in your calculation. Do you include capital growth/appreciation in your ROI calculations? Do you use any formula in particular? I've seen various posts where people say the expected ROI depends on many factors, both personal and the specific property. I agree with that. But at the same time, I've read posts online of people saying that they wouldn't even touch a simple buy-to-let deal if the ROI is not at least 10% (I've seen a person going as high as 20%). Based on my research, achieving an ROI of 10% is almost impossible with a standard buy-to-let. Definitely highly unlikely. Am I missing something here? Are they maybe including capital growth in their calculations, hence making the 10% (and even 20%) realistic? Cheers, Sacha
  4. Hi everyone, Really looking for advice here as keep hitting a brick wall! I just can't seem to stack any number up to generate a ROI of even over 3%! Please advise if i am doing something wrong or need to change: See below example: I am investing in my local area and decided to buy a property every year @ 100K Here is one i wouldn't mind getting as looks low maintenance - For arguments sake, lets keep price @ £100k I am investing through my LTD with 75 LTV (Based on 4% workings) Stamp Duty:- £3k Deposit £25k Solicitor Fees:- £1,000 Total Money In = £29,000 Morgage 4% Rent based on research and knowledge of area: £495 (Max) Mortgage Payments £250 Per Month (4%) Expense Before Tax Applied:- £173.10 - WORKING OUT HERE:- (£495 - Rent) MINUS 12% Estate Agent = £59.40 - Insurance = £12.50 - Mortgage Interest £250. Corporation Tax 19.00% = £32.89 Maintenance 10% = £49.50 Total Cashflow = £90.71 A Month but now the next bit sucks all profit out of the deal! Estate Agent Fees / other fees: Tenant Deposit Protection - £54 (Potentially) Electric Safety Cert - £60 A Year Gas Safety Certificate: £45 A Year Tenant Referencing:- £20 A Year (Potentially) Which if i factor those above costs in, i am left with £61.21 Profit per month @ a ROI of 0.0253 Getting frustrated with it now as I am only after a 4% ROI and really want to start buying as i've got a a pot of money around 70k and want it to start earning me some interest. Any help would be greatly appreciated as just can't seem to move forward! Cheers Ashley
  5. Hey all, Can anyone clarify how Yield, Equity & ROI should be calculated when following a Buy, Refurbish, Refinance strategy? Most online resources only discuss these in terms of purchasing a property and letting it out / selling it, rather than refinancing it. I want to make sure my metrics are comparable with everyone else's! Theoretical BRR Scenario: I buy a property for £120k using a bridging loan and a deposit of £48k I spend 6 months renovating it, with the finance costs & renovation totaling £25k I then refinance onto a BTL mortgage with the property valued by the mortgage co at £180k and a deposit of £72k (mortgage £108k) This releases £35k once the original deposit (£48k) & costs (£25k) are deducted The net rental income of the property is £4.5k pa Yield = Net profit / Cost But is this the original purchase cost (£120k) or the valuation (£180k) 3.75% or 2.5% ? Equity = The market value of a property - the debts secured against it I'm pretty sure I know the answer to this, but confirm that 'debts' does not include debts to me (ie. the £25k) It's simply £180k value - £108k mortgage = £72k ROI =Annual profit generated / money invested Am I right in calculating it like this: 4.5 / ( 48 + 25 + (72-48)) 4.5 / 97 = 4.64% Thanks for the help, it's much appreciated!
  6. Hello Everyone. I am completely new to the property hub forum, but I have been listening to the podcast for well over a year. I currently live in Weymouth in a 4 bedroom semi detached house, of which two of the rooms I rent out to my mates. I am starting to build up a good amount of capital and I am looking to invest ideally within a 30-40 minute drive of where I live. I have a budget of between £130-150k. I have seen a some opportunities in Weymouth, however most deals I have looked at struggle to achieve much more then a 10-12% ROI. Was wondering if anyone else lives around this area or has any tips or advice regarding potential hot spots in the Dorset/Devon/Somerset/Hampshire area that has the potential for higher returns for this sort of budget? Many thanks
  7. Happy Easter All, I was curious what ROI percentage and net yield do you look from from a buy-to-let? Thank you in advance. Joe
  8. Hi Guys, Shutzy here, a guy just getting back into the property investment world again. Looking forward to the fun and the challenges and the motivation and support from all of those on this forum and finally the rewards of deciding if I want to work today or not. cheers Shutzy
  9. We're looking at purchasing our second BtL. First property is a 2 bed house, which has done very well for us in terms of capital growth and steady rental return. Our plan was to go for another 2 bed house but we've changed tack. We've had an offer accepted on a one bed flat with a tenant in situ. The numbers are: Rent £475 pcm Service charge and ground rent £40 pcm Mortgage (interest only) £180. Purchase price is £88000, deposit of £22k plus other legal and stamp duty costs (approx £4500). The flat is in a conversion which has been done well and is walking distance to town. No parking involved, but good on street parking very close. The current rent is about as cheap as one bed flats go for in this area, but it is a compact apartment - not a studio - but still compact. Our view is that this is ideal for couples setting up together for the first time, especially as the kitchen currently has all appliances fitted (even a washing machine and dishwasher). I know these will become a liability when they need repairing or replacing. The numbers seem to work well, but my concern is over capital growth as I suspect this will be quite limited and perhaps non-existent. We're looking for a steady income stream for the next 15 to 20 years, rather than selling it on after a few years. What I'm wondering is whether we've missed something here. Do the numbers stack up? Advice welcome, please! Thank you.
  10. Hi all, I currently own a property outright which i am considering either selling or remortgaging with the intent of renting out. I bought it back in 2012 and since then it has increased enough in value to be able to pull out all of the original cash we put in if we were to remortgage. Now ,if I am right, by remortgaging that means the ROI would be infinite...? but I'm not sure what that means for the net and gross values and how this would impact my decision on if this is a good property to keep or sell and buy another instead. How would I calculate these figures when remortgaging. Up to now I've been using the basis of looking for properties that offer at least 10% ROI. Hope I've given enough info. TIA!
  11. Hi, I'm looking for advice going forward with regards to living off my rental income and future remortgages. I'm thinking forward and looking at the possibility of living off my rental income in the near future. I'm looking to save up a lump sum to live off initially and would like advice from full-time property investors. 1st question is, once living solely on rental income, how easy is it to remortgage your BTL's and home mortgage? Have you done this? which lenders do it and what criteria are they looking for the least? and what's a typical rate of the mortgage? Most of my BTL's are on a 5 year fixed, 70% LTV and home mortgage is remortgagable in August 2018, 50% LTV. 2nd question is, Again living solely on your rental income, how many BTL's or cash flow would you have in your personal name before using a LTD company for other purchases? Would you buy in your personal name until your near the 40% tax rate? Thank you so much for your advice. Have a great day Paul
  12. Hi guys, I feel I have found a great deal local to me. The property is currently listed at under 40k but I think it could sell for less. However, properties in the same area, even on the same street, are selling for 70k+. The property is slightly run down and so would need refurbishing, but would this boost the value to that 70k mark? My numbers at the minute are: 10k deposit 30k mortgage (or bridging loan) 10k renovation refinance at 70k 52.5k mortgage -30k first mortgage/ bridging loan -10k deposit -10k renovation = 2.5k which covers fees, interest and council tax etc while the house is being renovated. If these numbers add up then I have a no money in property with 17.5k equity. However, how can I tell if the value of the house will reach 70k? There isn't a huge amount of work to do to it and I feel it is currently being sold at below market value. Yet with new carpets, an extra bedroom added (in the loft which is practically ready to be made into a bedroom), possibly a cellar conversion, would this increase the value that much? A 75% increase in value seems a lot, yet if this is below market value and its possibly worth 55k, that's only a 28% increase. Any advice would be much appreciated. Just lacking confidence as this would be my first investment.
  13. I'm just getting into this property thing, having been an accidental landlord in London. We sold the house last year to release equity for various reasons and are looking at re-investing some in the Notts area. I am currently looking at a 2/3 bed townhouse in an area that I have long considered to be a growth area. It is currently going through a regeneration program (that links in with others such as 'the gateway to the City') and has seen investment from private p. development companies buying up plots of land for eco housing etc. The schools are improving, its located near the river, new tram link, great road links, business parks, city and hospital. It is also next to the town which I live, that is extremely popular (with property prices going over the 550k mark for a 4/5 bed semi) and becoming rapidly too expensive for many. The ripple effect has already started with house prices having increased 50-60k over the last year. Those selling in the 'old' part don't hang around and prices have been driven up 20-25k since the start of the year. Wish I'd been able to get in earlier! Anyhow the property I am looking at is in the 'newer' part, which is currently not so sort after. However it is on a lovely, quiet and well maintained cul de sac with lots of off street parking. It is less than 5 mins walk to the tram stop, riverside and there is a bus stop around the corner. The City Centre (and train station) is a 10-15 mins walk and it has castle views! There is easy access to the ring road and other main link roads and motorway. All of which, I think is great. The property itself is approx 30-40 years old. It's a 3 storey townhouse with off street parking and a car port/garage on the ground floor. It is marketed as 3 beds "with flexible living" but in reality the room on the ground floor has the only garden access, is small and isn't really suitable as a bedroom. The kitchen and lounge are on the first floor and the bedrooms on the top floor. The garden is a decent size and probably too big for rental, as lets face it tenants don't look after them! My thoughts are to offer cash BMV, put in some carpets and paint then rent out whilst planning etc., is obtained and a builder becomes available (long waiting lists!). I have been told £675 pcm. Then when the planning comes in turn the car port into a double bedroom and extend into the garden (no planning) making another proper double, with a separate hallway and access to the garden. There is also a downstairs toilet that I'd look into converting to a shower room. I have had one quote for a builder for 40k (inc VAT) for this. The work would be solely to the ground floor so it is possibly feasible that I could rent as a 2 bed at a reduced rate whilst the work is completed, as the top 2 floors would be unaffected (other than noise and inconvenience)? My question is whether the figures add up and how to calculate the ROI after refurb and refinance. I'd be buying cash. We would also have the cash for the refurb or could do a company to company loan at 3%. I have had a go at using a BTL BRR calculator but unsure I have filled it in correctly? Property is on the market at 120k. Screenshot below. Any thoughts would be appreciated!
  14. Hi everyone, Just wondering whats everyones minimum ROI? The best i'm seeing for flats in Liverpool city centre is about 12-13% using a 75% mortgage. To calculate my basic ROI I use: 25% of purchase price (75% mortgage) Mortgage costs at 2.5% interest Rent Service charge Ground rent Agent fees 10% pm Look forward to hearing from you lot! Max
  15. Hello there I am thinking of purchasing my first BTL property in Birmingham and would appreciate some input. I wanted to buy in the city centre (B16) because I expect house prices to rise in the long term due to the various regeneration projects . My focus is on capital growth, although I know I should not count on it. At the same time I know I should not settle with an ROI that is too low as I need some margin to avoid a negative ROI. Having crunched the numbers on my chosen property, I realised to my surprise that the the ROI is very low - 3.81% if I buy it personally (1.34% after tax!) and 1.37% if I use a limited company. Here are the figures, on the basis of a personal loan: Achievable price £185,000 (Asking price is £195,000) Income Monthly rent £875 Annual rent £10,500 One-off Cost 30% deposit at max price £55,500 Solicitors fees & disbursements £1,972 Stamp duty £6,750 Broker fees £495 Mortgage fee £995 Survey £600 Travels £100 Refurbishment £8,000 Total £74,412 Recurring Cost Service Charge £1,646 Ground Rent £150 Letting Agent Fees £1,050 Repairs £438 Interest (assume 2.71% p.a.) £3,509 Void £875 Total £7,668 Yield Gross yield 5.68% Net yield 1.53% ROI before tax 3.81% ROI after tax 1.34% What are your thoughts about the numbers? Do you think it would be sensible at all to proceed with this deal? Or is investing in the city centre a bad idea to start with? This is a typical property in the area with a typical price and typical rent. So if this one does not work out, I wonder how any other investments in the city centre could. I look forward to your replies! Thank you.
  16. Hi all, just wanted to share this article from the Irish Times with the European BTL League table. For those looking to possibly invest outside of the UK (25th 4% ROI) https://www.irishtimes.com/business/commercial-property/housing-crisis-no-wonder-ireland-has-eu-s-top-rental-yields-1.3242622
  17. Hello everyone Recently I've prepared some calculation for my first buy-to-let property scenario. In my calculation I've made the following assumpions: - Buy £80k property with 75% mortgage of 60k - The interest-only repayment calculated on the mortgage site for 35 years and interest rate of 3% was equal to £150 per month - The gross rent can be £533 per month or 6400 yearly (I assumed 8% ROI when purchased BMV) - After mortgage the net-income will be £533-£150 = £383 Is that calculation right? Is it possible to get ~£380 net profit after mortgage from £20k deposit? Of course I am aware of the costs like void periods or maintanance, but even if I discount 20% of the net yield it is still about £300 net profit.
  18. Hi all, I'm in the early stages of setting up a company for building modern homes in a very popular tourist destination in Spain. My business partners (who already have experience as they have done similar projects in nearby locations) and I have already bought various plots of land UMV. Wewould use the same building team as they have used in their other projects and have various estate agents who seem really interested in our project. Our problem that we encounter is that we are looking for a loan 120k/€ but our loanee has had some problems and won't be able to loan us any money. Our terms are 10% roi on the 120k over 2.5 years.Our collateral is that if we don't give the money back the loanee would be the sole proprietor of a house worth 220k/€. So my questions are : 1- where would you recommend looking for alternative financing?(for cash-flow issues we are trying to stay away from banks if we can) 2- which flaws can you see in our "business plan"? Many thanks for your time.
  19. Hi all, Looking for a range of opinions on my current dilemma. I have 2 x BTL properties. Property 1 - 2 bed mid terraced modern house in Devon, Rents for £675, Value £175k, ROI of just over 5% once all costs are taken into account including things like building a fund for replacement boiler etc. It's bringing in around £2k per year gross profit before tax. Property 2 - 2 bed flat in Stevenage, Value £210-230k ish, rents for £800, Just bought this after a horribly delayed purchase process. Washing its face but not stellar, hoping rents rise a little once things settle and all the empty units get sold/let. Listening to the podcast and reading around for capital growth all the advice seems to be focus in the North West. So I'm considering selling the Devon house to invest in the North West. If I sell I'll release £42k after all costs and a little bit of CGT which as an example I could put into a 2 bed flat in Bradford (or other Northwest location) through RMP. Purchase price of around £120k rents for £625, £39k invested delivers an ROI of around 5.5% once all costs including repairs provision are taken into account. Annual profit around £2k. So pretty much the same as my Devon house I already have. So .....given that the profits are broadly similar is the potential upside of the capital growth in the North West sufficient to warrant selling the Devon property to invest up north. I have very much a long term view and want to be a hands off investor so no self management etc. Thoughts/Opinions much appreciated. Thanks all Noel
  20. Hello! I'm looking at houses in Bradford and Leeds and was wondering what other people target ROI was for these markets? The houses I'm looking at are getting ROI of about 10-12%, how does this compare to others? Is this a good range to aim for? The houses I'm looking at are all below 100k min 2 bedroom within 3 miles of LS7. Also, my budget is 75k, I'm seeing lots a good properties at 85-90k, would an offer of 75k be considered taking the mick? How much below the guide price is the average selling price these days in these areas or regionally?
  21. Taking into account the new tax regulation for individuals many people are forming limited companies and buying properties under the limited company. What is the best efficient options? Can the limited company allow us save more money on the long run? Please share your views and experience. Regards,
  22. Hey, we are complete newbies who are renting our main residential house whilst we take a mid-life gap year. During this gap year, we have read Rich Dad, Poor Dad, and so have decided that a 5 bed house in a premium school catchment area isn't the best use of the assets of two childless people. We have made the decision that we are going to buy a smaller house in a less family friendly place to reduce our ongoing costs. The main residential house has 75% equity due to improvements, mortgage repayments and overall property value increases. Can anyone give any advice on how we can decide whether we sell this house to realise the equity or if it is better to remortgage and continue to let. Either way we will be using the capital released to buy property to let. Our aim is to have an income large enough to enable travel and work freedom. Thanks in advance everyone! Michelle & Greg
  23. Hi all, looking for some guidance here please! I'm in a position where I'm ready to invest in a couple of properties. I have the funds and an idea of where I would like to invest, but would like to ensure that when I'm comparing properties it is offering a true like-for-like comparison between properties, is representative of what I can expect to achieve when the property is eventually let out, and is generally considered a good investment. In particular I am unsure exactly how best to calculate the return on investment. I've (unsuccessfully) tried to raise this as an "Ask Rob & Rob", so figured I'd put it out to the masses. I've heard Rob & Rob mention on podcasts that they typically don't entertain investments that have less than 10% ROI, unless there are other mitigating reasons (particularly strong capital growth potential, for instance). I am interested to hear what other investors' benchmarks are, and more importantly how this is calculated. 10% seems like a reasonable target, as it is a good return and allows for a buffer in case of unforeseen market changes (interest rate rises etc.). Most of the properties that I am looking at have an ROI of between 7-10%, but this can very much depend on what I am factoring into the equation. This is where I would like some advice / guidance. As it stands, my ROI calculation consists of the following: Capital Invested: - Deposit - Stamp Duty - Legals - Costs to get the property ready to le (refurb, furnishing etc.) Income: - Rent (easy!) Expenses: - Mortgage interest - Service charges, ground rent etc. (where applicable) - Letting costs / management fees - Insurance - Maintenance costs / allowance - Void allowance It is those last two expenses in particular that I am interested to hear about, as I'm unsure whether these should be factored into the ROI calculation. It is obviously prudent to factor in an allowance when assessing cashflow in case these events happen, however I'm not sure this would be included in the ROI targets that R&R are looking for. If 10% is a general indication of a good investment I just want to ensure that I understand how that 10% is calculated so that I know whether my own deals offer comparable value. I appreciate that targets will differ from investor to investor, and situation to situation, but any guidance on generally accepted practice for calculating ROI will be very much appreciated. p.s. - I am also assuming that ROI is always calculated as pre-tax ROI...? Thanks! Tom
  24. Hi all, A topic that has been discussed directly/indirectly over and again in forums, podcasts (!, well done R&R), and books (well done again R&R), I thought it would be interesting for those starting out including myself to set a reasonable baseline, and to gauge the current aggregate mood on two of members' most fundamental data points, yield and ROI. With the wide range of opinions, acknowledging the lack of a correct answer, and all things being equal which is not the case in property, what would you the investor, and the aspiring, prefer your gross yield, net yield, and ROI to be in your typical 70–75% LTV BTL property? Or, what do you aim for? I imagine a short answer e.g. 10/7/15 (gross/net/ROI %) would be as interesting as a paragraph! More answers, more statistical power :-) `
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