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Best way to invest 100k in property: How would you do it?


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One of the most common questions we get asked on Ask Rob & Rob and by email is "How do I invest such-and-such an amount of money?" 

We can talk about what we'd do, but there are only two of us and there are hundreds of different views and approaches here in the forum! So let's turn this into a thread where we can direct people to get as many different perspectives as possible.

The most common amounts we get asked about are £50k and £100k. Let's choose £100k, because it allows for more options.

So: What's the best way to invest £100k in property?

Obviously, it depends on what you're trying to achieve. So let us know:

  • What you'd do with the money (What and where? How much borrowing? What strategy?)
  • What you'd be aiming to achieve as a result of your investment (A certain income? Capital growth? In what period of time?)

Looking forward to seeing your ideas!

 

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Hi Rob, with £100,000 I would  get involved into some flips. I would flip properties to generate lumps of cash to put deposits down on a mixture of high yield (support income stream) and capital growth areas (long term wealth generation). I would/am very keen on using flips as almost your cash flow for your OVERALL property business. With the original £100,000 you could get into a lot of flips around the country and maybe look at JV finance to access some of the Southern parts of the country to complete flips in.

My idea is to use the Northern part of the country for the monthly income stream and use the South for LONG term capital growth.

I would build up complexity of different strategies each year .After a couple of years of flipping and single let BTL'S, I would start looking at  HMO'S then developments.

Thats is what I would do...

Thomas Oliver

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But Thomas, would the overall plan be greatest by going for two properties with good capital appreciation and good yield, rather than taking one property with great capital growth and one with great rental yield?

I don't think >7% is easily found for either, whereas a rental yield of 4% and capital growth of 3% sounds feasible.

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If I had 100K specifically for investing, my plan would be to buy a house outside of the South East that can be renovated to increase value - and depending on what the rental income would be. I would either keep it, or flip it to grow the capital amount. And rinse & repeat with another property. 

If the increase in value is substantial enough - I may pull out some of the money out of the mortgage to place on another property. Depending what the mortgage size is and risk involved. 

Is this a good strategy? Have never done it before. :)

 

 

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Henry g, I thought 4% rental yield and 3% cap growth would be feasible and quite the norm, but I get plenty of emails from property sourcers working with developers advertising new/nearly new apartments in cities promising net yields of 7/8%. I've not invested in these myself so I can't say for sure that this is in fact the case but if it is, then 7/8% would be a great and seemingly easy way to get a good cash flow stream?

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Hello all, 

I actually do have £100K and I'm looking for ideas, so please keep them coming. I recently joined PH after reading Rob's book. 

I'm looking at renovating/flipping but so far I'm finding £100k doesn't buy you much to flip and the potential profit is lower than I expected.

Any advice would be very welcome 

thanks!

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My strategy (fairly similar to Thomas's) would be to flip 1 property at a time, reinvesting the capital back into the next flip, and investing the profit into a hassle free, perhaps new build flat in a fast growing city centre eg. Manchester, Liverpool.

75%LTV on 100k 1 beds/studios for example. These would be to hold for the long term and with growth as a priority, although ideally you'll find a property with a good yield too. All rental income received from investments would stay in the property bank account, to save up for more deposits. Review portfolio regularly, be careful not to over leverage and be pessimistic with the stress testing. I like the idea of property that's easy to rent out, to reliable tenants in desirable areas. Also gotta be in it for the long term! 

This only works if you're ok with your current work, but as things grow maybe in a few years you'll have more income coming in than you think.

Once a competent 'flipper', and with some money in the pot perhaps, look into developments, commercial to resi etc

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I am a complete novice/newbie but I like this topic because I am thinking of what to do with a similar amout of money.

So, this is my idea. I believe this might work if you get properties that are way below the market value up North. From the way I see it, lets say you buy a property for £60K that is meant to cost £80K. You could use an additional £20K to add some value like add an extension or additional room. This could bring the value up to £120. You can then remortgage  and release maybe £100K. You can then repeat this a couple of times until you have good capital for a deposit on long term investments down south. This way, you have built some portfolio up north that you could sell after a couple of years and then some down south that you could keep for a long time. However, the only problem I see with this method is the time. I heard that it could take 6 months for you to remortgage/refinance a property. Is this correct? Need some suggestions. Thanks.

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Hi Rob,

First post on this forum so here we go.  We have gradually built up our portfolio in the North west with a mix of Flats and houses.  £100k, to me is 5 x 2 bed flats/terraces at about the £65k mark with £20k allocated to each for deposit, Stamp Duty and legals.  Using your "Fundamentals February" and leveraging, our goals are long term capital growth 20+ years for retirement.  In the short term making a decent return to gradually build the deposit for the next BTL.  Rental in the region of £475/£500 pcm, Finance costs £130 pcm on a Ltd Company BTL, service charge £70 pcm.  We also tend to find the flats we are buying at 10 years old were bought off plan in 2007/2008 for considerably more that are paying for them, some times at a 50% discount from the original selling price.   It seems to have worked for the last 15 years with steady portfolio growth.  We seem to find flats at this price return a better yield rather than more expensive 3 bed semi detached properties.  We have also taken the view that the cheaper more affordable properties will be easier to dispose in the future as they will be in reach of first time buyers.  Interested in your views.

Will

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Hi all

This was a situation I actually found myself in 2016. I had received a £100K inheritance and didn't have a clue what to do as I was very new to property investment at the time. Whether rightly or wrongly in hindsight, I set up a Ltd company and bought 2 properties here in Nottingham on 2 2 bed terrace houses. My strategy is to hold for the  long term as I am 38 now and want to hold and have a modest income supplementing part time work that I do. I plan to use the capital built up in the two properties when I remortgage in 2 years time to purchase my third. I stupidly didn't put the 2 properties I bought on a interest only mortgage but at least I am paying down some capital that I will be able to use in the future. The Robs podcast on inflation had been a real eye opener. 

Cheers

Becky 

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Hi Guys,

I have never invested in property before. I have decided to, strangely enough I have 150K. This is my plan. I would appreciated any advice on where I might be going wrong.

1. Set up a Limited Company

2. Get three personal buy to lets (Under 100k using 20k deposit) . This is to help reduce dependency on salary.

3. On the limited company buy one house at a time and flip. Leave profit back in Ltd company and keep flipping till I build up relationships with builders and have enough to do more (2/3 flips)

Any good builder recommendations will be much appreciated.

Best Regards

 

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Quote

 

For best returns with least effort, spread funds widely in secured property Peer 2 Peer briging loans with first £20k in an IFISA wrapper.

Yes there will be the odd default but quite a few of the P2P platforms are very effective at recoveries.

Bob

 

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43 minutes ago, t007osh said:

Hi Guys,

I have never invested in property before. I have decided to, strangely enough I have 150K. This is my plan. I would appreciated any advice on where I might be going wrong.

1. Set up a Limited Company

2. Get three personal buy to lets (Under 100k using 20k deposit) . This is to help reduce dependency on salary.

3. On the limited company buy one house at a time and flip. Leave profit back in Ltd company and keep flipping till I build up relationships with builders and have enough to do more (2/3 flips)

Any good builder recommendations will be much appreciated.

Best Regards

 

t007osh,


Seems like a sensible plan.  On the personal BTL, I would take a view now prior to purchasing.  If your a 40% tax payer or close to the threshold consider Ltd Company now.  We have a mixed portfolio, and will start to move them into our Ltd Company when property values get near to our CGT threshold on our personal BTL. 

Regards

Will

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2 hours ago, matthew perkins said:

Henry g, I thought 4% rental yield and 3% cap growth would be feasible and quite the norm, but I get plenty of emails from property sourcers working with developers advertising new/nearly new apartments in cities promising net yields of 7/8%. I've not invested in these myself so I can't say for sure that this is in fact the case but if it is, then 7/8% would be a great and seemingly easy way to get a good cash flow stream?

4+3=7%, what the capital growth will be on a project showing 7% rental yield is less clear. Are people getting 10% total yield? I don't think so, but I'm sure some will claim this.

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Hi guys, 1st post.

I remortgaged last year to release £50k and am on my fourth flip, 1 on the market, another going on next week and collecting the keys to another 2 in the coming weeks.

I use my and investors money to do this and my end game is to use the capital to create passive income through both commercial and residential leasing. Flats on my patch on the West coast of Scotland buy for £60k and rent for £500pcm. I'm planning to start buying, refurbing, refinancing and letting out. This is a long game for not a great deal of cash each month therefore I plan to continue flipping all the time.

Any thoughts would be great.

Thanks,
Alfie

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Hey guys

This is exactly what I'm trying to figure out for myself currently. Ultimately, I want to have a portfolio producing enough income to choose my 'work', and I'd like to do this within 3 years. My thought is to buy some land with or without planning with the £100k, and get financing to build my main residence on the land. Without the stamp duty liability, and with a well researched buy, I would hope to realise a good uplift in the £100k capital (Double it??).

I would then sell the house, and use the capital to buy some BTL's and keep a portion to flip properties (just because I enjoy it!)

My thinking is that I could increase the value of the £100k quicker than if I was just fliping or buying BTL's.

Your critiques would be most welcome, am I missing something which would make this unfeasible?

Thanks so much all

Simon

 

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To start i'd use cash to buy one BMV (below market value - possibly at auction) - renovate, then mortgage to extract original cash investment, hold and rent.

Then add 1 x HMO for cashflow and 1 x additional purchase for capital growth.  

Then continue an annual mix of a couple of flips, a high yielding btl purchase for cashflow and a purchase for capital growth

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4 hours ago, calderbankw said:

Hi Rob,

First post on this forum so here we go.  We have gradually built up our portfolio in the North west with a mix of Flats and houses.  £100k, to me is 5 x 2 bed flats/terraces at about the £65k mark with £20k allocated to each for deposit, Stamp Duty and legals.  Using your "Fundamentals February" and leveraging, our goals are long term capital growth 20+ years for retirement.  In the short term making a decent return to gradually build the deposit for the next BTL.  Rental in the region of £475/£500 pcm, Finance costs £130 pcm on a Ltd Company BTL, service charge £70 pcm.  We also tend to find the flats we are buying at 10 years old were bought off plan in 2007/2008 for considerably more that are paying for them, some times at a 50% discount from the original selling price.   It seems to have worked for the last 15 years with steady portfolio growth.  We seem to find flats at this price return a better yield rather than more expensive 3 bed semi detached properties.  We have also taken the view that the cheaper more affordable properties will be easier to dispose in the future as they will be in reach of first time buyers.  Interested in your views.

Will

Hi Rob,

I'm completely new to PropertyHub and have been looking at doing a similar thing to what you say you have been doing. I have been looking at the North West and East at 2-bed terraced properties for around £55-70K, but have also looked at 3-bed properties which obviously cost a bit more (around £80K). From your experience, would you expect a higher ROI from 2 or from 3 bedroom apartments/terraced houses? And is it easier to rent out 2 bed as opposed to 3 bed places?

I quite like the idea of renting them out as HMOs but as far as I can understand from this forum and from reading Rob's book, it is more difficult as a completely new property investor investing through an LLC to secure mortgages for these HMO deals.

Any advice and insight would be greatly appreciated.

 

Henrik C

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7 hours ago, cke11y said:

Hello all, 

I actually do have £100K and I'm looking for ideas, so please keep them coming. I recently joined PH after reading Rob's book. 

I'm looking at renovating/flipping but so far I'm finding £100k doesn't buy you much to flip and the potential profit is lower than I expected.

Any advice would be very welcome 

thanks!

Look up north. West Yorkshire. I'm in Wakefield and investing here. The houses I rent out get snapped up really quickly with good quality tenants too. Easy commute into Leeds. 2 great train stations here too. Houses still good value to invest in. Bought 4 more in the last 12 months. Rents slightly higher than market average but houses are really nice with low maintenance gardens etc, we are attracting professional tenants who are all looking after the places really well.

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Loving the response to this post, so thought I would chime in with my own 2 cents...

I was in a similar position but I had around £150k to invest. My capital came from selling a portfolio in New Zealand - and there's no capital gains tax in NZ! I moved back home to the west coast of Scotland with the intent of building a portfolio ASAP. Like alfonso mentioned above, property is relatively cheap here and rents are high which produces great cashflow.

Over the next 20 months, I was involved in 10 property deals: I bought our family home, added 7 BTL's to our portfolio and sourced 2 off-market properties and managed the refurb for clients. The majority of properties in my portfolio are 2-3 bed terraced houses which I picked up for £40-70k, and then used the BRR strategy to recycle most of my cash out the deal. All my properties are rented and the before tax monthly cashflow (after mortgage, insurance, management and maintenance fund) is £1,995, so £285 per property on average.

The cashflow from my portfolio allowed me to quit my high-stress, long-hours job just before Christmas. I'm 30 years old and I'm effectively retired. I spend my days with my wife and 5-month old daughter, working on a hobby business and I've recently taken over the management of my portfolio (adding another £290/month to cashflow).

Achieving financial independence as soon as possible has always been my goal. For me, I would rather have my time and freedom to do as I choose than work a job I hate, no matter how much it paid. Therefore, my strategy has always prioritised high yield properties to replace income from my job. I accept that I may not make as much money in the long run if I was to target areas likely to experience strong capital growth, but living life on my own terms now is a much greater reward for me.

Whatever way you decide to invest your £100k should be tied to your values and life goals. The true value of money is in letting us experience life to it's fullest.

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1 hour ago, jamie stewart said:

Loving the response to this post, so thought I would chime in with my own 2 cents...

I was in a similar position but I had around £150k to invest. My capital came from selling a portfolio in New Zealand - and there's no capital gains tax in NZ! I moved back home to the west coast of Scotland with the intent of building a portfolio ASAP. Like alfonso mentioned above, property is relatively cheap here and rents are high which produces great cashflow.

Over the next 20 months, I was involved in 10 property deals: I bought our family home, added 7 BTL's to our portfolio and sourced 2 off-market properties and managed the refurb for clients. The majority of properties in my portfolio are 2-3 bed terraced houses which I picked up for £40-70k, and then used the BRR strategy to recycle most of my cash out the deal. All my properties are rented and the before tax monthly cashflow (after mortgage, insurance, management and maintenance fund) is £1,995, so £285 per property on average.

The cashflow from my portfolio allowed me to quit my high-stress, long-hours job just before Christmas. I'm 30 years old and I'm effectively retired. I spend my days with my wife and 5-month old daughter, working on a hobby business and I've recently taken over the management of my portfolio (adding another £290/month to cashflow).

Achieving financial independence as soon as possible has always been my goal. For me, I would rather have my time and freedom to do as I choose than work a job I hate, no matter how much it paid. Therefore, my strategy has always prioritised high yield properties to replace income from my job. I accept that I may not make as much money in the long run if I was to target areas likely to experience strong capital growth, but living life on my own terms now is a much greater reward for me.

Whatever way you decide to invest your £100k should be tied to your values and life goals. The true value of money is in letting us experience life to it's fullest.

I'm really envious mate. Exactly the same reasons I'm interested in property investment and I feel exactly the same way about my job 

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42 minutes ago, ben kershaw said:

I'm really envious mate. Exactly the same reasons I'm interested in property investment and I feel exactly the same way about my job 

Try not let the job get you down Ben - easier said than done, I know. You will eventually get there. It took me 6 years to reach the point I could quit my job. My advice would be to save as much as you can, keep motivated by attending meetups and reading books, and keep educating yourself between purchases to make each one better than the last.

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