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johnnybrixton

What would you do with £200k starting off?

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Finding this forum and PH generally really useful and giving me so much to think about? Throwing this out there, if you had £200k to start up next year, what would you do with the aim of having a steady income within 5 years? North West area is my choice of location as its my hometown area and heading back that way after years down south.

 

Best wishes and good luck everyone.

 

john

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Where abouts in the North West are you from John? 

It depends on your goals really, but if I had that money, my priority is cash flow, I'd be sizing that up as potential deposit + fees for 8ish properties. 250-300pm cash flow on each would be fantastic for me! 

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johnny, in your others posts you mentioned Liverpool.

that being the place, likely you'd be looking for either 'fix & flip' 'buy to let', 'buy fix up, then let' or 'maybe buy, fix up, refurb to a rooming house', rent rooms', 'single family let' or a combination of those?

take a look at the comparable property prices as well as the rents in Walton (eck!), Aintree, Vauxhall, Bootle, Wavertree, Kensington, Fairfield, all within easy distance to Lime Street, the docks, colleges/university.

when you do the numbers its all about 'net ROI' and that could be one property with 10 rooms to 3-4 bedroom or even a one-bedroom flat.

in Liverpool, ideally, properties within walking distance of trains/transport, shops or college/university.

if you could net pre-tax 10%/yr on £200k would that work, or would you want to leverage to get higher yields likely with more risk? 

 

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There are so many different strategies and most depend on your circumstances and what you like to do. The first question is do you work full time and do you have a family - as this dictates how much available free time you have. Are you hoping that 200k could be enough to swap you day job to go full time into property over a period of time? Its more tricky if trying to hold a full time job whilst managing to spend 200k building a portfolio / doing projects. 

I'm pretty open minded on area and property type and generally follow the £...

I generally look at margin first - as this is your ability to recycle your cash and grow. So the property needs to have a large enough margin such that if I refinance it after refurb I can get all  my money back out without reducing my cash pot. Then I either sell (most often), or keep if yield is good, capital growth is likely and easy enough to manage not to reduce my time from other projects.

Examples - I'm trying to buy a 2bed flat in London Brixton area for circa 210K, refurb and sell for hopefully 340-375k

I'm trying to convert a hotel into 10 flats in Llandudno North wales which is buy for circa 250k, spend circa 500k and end sales val circa 1.35mill - currently a fraction short of funds on this one.

Also converting an existing block of 4 flats into 7 flats in Windermere and converting and office into 5 flats in Burton On Trent.

Anyway best of luck on your property journey - everyones is different and you need to find what both works for you and what you enjoy.

 

PS - Getting a good team around you like any business is invaluable - from mortgage brokers, to builders, to advisors, people to bounce ideas off / give 2nd opinions, architects, accountants, solicitors, property sourcers, financial backers etc (you never have enough projects and you never have enough funds).  

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19 hours ago, matt hall said:

Where abouts in the North West are you from John? 

It depends on your goals really, but if I had that money, my priority is cash flow, I'd be sizing that up as potential deposit + fees for 8ish properties. 250-300pm cash flow on each would be fantastic for me! 

Im originally from Halewood but now have family in Widnes and Wilmslow Matt. Based in London at present until next year and they big move home and start my developing journey. Hope life is good.

 

john

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4 hours ago, andrew peers said:

There are so many different strategies and most depend on your circumstances and what you like to do. The first question is do you work full time and do you have a family - as this dictates how much available free time you have. Are you hoping that 200k could be enough to swap you day job to go full time into property over a period of time? Its more tricky if trying to hold a full time job whilst managing to spend 200k building a portfolio / doing projects. 

I'm pretty open minded on area and property type and generally follow the £...

I generally look at margin first - as this is your ability to recycle your cash and grow. So the property needs to have a large enough margin such that if I refinance it after refurb I can get all  my money back out without reducing my cash pot. Then I either sell (most often), or keep if yield is good, capital growth is likely and easy enough to manage not to reduce my time from other projects.

Examples - I'm trying to buy a 2bed flat in London Brixton area for circa 210K, refurb and sell for hopefully 340-375k

I'm trying to convert a hotel into 10 flats in Llandudno North wales which is buy for circa 250k, spend circa 500k and end sales val circa 1.35mill - currently a fraction short of funds on this one.

Also converting an existing block of 4 flats into 7 flats in Windermere and converting and office into 5 flats in Burton On Trent.

Anyway best of luck on your property journey - everyones is different and you need to find what both works for you and what you enjoy.

 

PS - Getting a good team around you like any business is invaluable - from mortgage brokers, to builders, to advisors, people to bounce ideas off / give 2nd opinions, architects, accountants, solicitors, property sourcers, financial backers etc (you never have enough projects and you never have enough funds).  

Hi Andrew

I should have 100% of my time to dedicate to this. Great insight to what youre doing and very helpful, thank you. John

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Great - then its crucial to start buying well so hone your due diligence process, start practicing looks at projects and assessing them - see what others think of the ones you think are good and start gathering knowledge and contacts - the doing part (refurb) nothing beats experience and using a decent team of builders happy to educate you a little as you go - ensure you start working out best places to buy materials from. secret to doing works right, don't guess, if unsure ask and don't cut corners with building control. 

I've been in the biz yrs and still use ebay to check some prices / occasionally find a new supplier. 

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On 10/11/2019 at 2:14 PM, johnnybrixton said:

Im originally from Halewood but now have family in Widnes and Wilmslow Matt. Based in London at present until next year and they big move home and start my developing journey. Hope life is good.

 

john

Ah very nice (200k naturally wouldn't get you 8 deposits in Wilmslow!). I invest in Wigan and Bolton at the moment, which work great for me as a cash flow play, with the potential for decent capital growth too. Happy to help in any way if you are considering those towns. 

Cheers

Matt 

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On 10/12/2019 at 8:33 PM, matt hall said:

Ah very nice (200k naturally wouldn't get you 8 deposits in Wilmslow!). I invest in Wigan and Bolton at the moment, which work great for me as a cash flow play, with the potential for decent capital growth too. Happy to help in any way if you are considering those towns. 

Cheers

Matt 

Hey Matt

 

Im checking out Warrington also. If you have any rough cost examples ie on a £75-90k property and the costs asscociated with one (rental, mortgage with say a 30% deposit, profit), that would be really helpful? getting comparisons together, its not going to happen until next year but Im keen to look at examples from different areas in the North West?

 

John

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Start small - buy one property with a deposit & mortgage of 60-75%, add value, sell or rent out. See how it goes before committing the rest of your funds.

There is a lot to learn and if you get it wrong it can be very costly. Learn the business before committing to it full time. You may hate doing up a property, you may hate being a LL so try a bit of both before you commit all your funds.

Good Luck :) 

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6 hours ago, johnnybrixton said:

Hey Matt

 

Im checking out Warrington also. If you have any rough cost examples ie on a £75-90k property and the costs asscociated with one (rental, mortgage with say a 30% deposit, profit), that would be really helpful? getting comparisons together, its not going to happen until next year but Im keen to look at examples from different areas in the North West?

 

John

No problem John. I'll give you info on my 2 Wigan properties as they are my best for cashflow as that's my focus. Both the below were 75%LTV

1- purchase price £72,500, 3 bed semi, £525 rent, £143.87 mortgage, I've got it fully managed so after management fee, insurance and boiler cover it nets £286.61pm

2-purchase price £75,000, 2 bed terraced, £475 rent, £122.81 mortgage, after fees, insurance, boiler cover it nets £298.9pm

Let me now if you want any more info on any of these, or if I can help in any other way :)

 

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matt, combined that's approx 19% net on a £36,875 investment/money at risk, is really, really good.... well done.

like to ask if you could fill in some blanks?

have/did you included legals, conveyances, mortgage set up & stamp in the purchase prices to get to the net ROI % of each one, or does it matter?

how are you dealing with any income tax (if any) on these investments?

Thanks

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9 hours ago, reinvestor said:

matt, combined that's approx 19% net on a £36,875 investment/money at risk, is really, really good.... well done.

like to ask if you could fill in some blanks?

have/did you included legals, conveyances, mortgage set up & stamp in the purchase prices to get to the net ROI % of each one, or does it matter?

how are you dealing with any income tax (if any) on these investments?

Thanks

Hello, I'd add approx 6k on top of the figures for those properties combined to include stamp and all fees so from your workings we call it 43k we are looking approx 13.6% ROI

ROI is always an interesting one as people have different methods of calculating, I just use more of a sense check on cash flow these days, I aim for £22k with a max purchase price of £75k, and then as long as the net cashflow is over £250pm I'm happy to go for it. But that's purely down to my target being a specific income level. Always like to hope on some capital appreciation, but the cash flow is priority for me at the moment. 

Regarding tax, I just complete self assessment returns at the moment, been able to refine my way of tracking what I need to over the years to make it quite a straightforward process. 

Cheers 

Matt 

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3 hours ago, reinvestor said:

@matt, thanks for filling in the blanks.

are both these properties in your limited company or personal holdings, if personal, any plans to move them to your limited company?

Currently in my personal name. Unlikely to move to Ltd at the moment due to the costs. Might be contrary to mainstream best practice, but I feel the tax reform that hit private investors could very easily be adapted to hit Ltd companies so I'm not keen on spending more to protect myself from something I'm not in control of. Currently just staying in the basic tax bracket at the moment too so that helps the decision. I'd consider it on future properties if it seems logical at that time, but the cynic in me wonders if the government have left the Ltd company loophole open to encourage people to switch during the gradual introduction of the reforms, incurring stamp duty along the way but could then very easily move the goal posts again to raise more tax revenues from property Ltd companies.

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Hello agin

 

Been reading, researching and generally checking out as much as I can about property and wanted some further advice.

1. You find the BTL property you want.

2. Is that when you apply for the mortgage (so I've been told) as you cannot apply for one before you find the property and do the £ numbers.

3. How does this process work in principle? Do sellers mind waiting to see if you get the mortgage etc etc?

4. Is there a dedicated way to find your first 1 or 2 that makes it easier?

Any feedback much appreciated.

john

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5 hours ago, johnnybrixton said:

Hello agin

 

Been reading, researching and generally checking out as much as I can about property and wanted some further advice.

1. You find the BTL property you want.

2. Is that when you apply for the mortgage (so I've been told) as you cannot apply for one before you find the property and do the £ numbers.

3. How does this process work in principle? Do sellers mind waiting to see if you get the mortgage etc etc?

4. Is there a dedicated way to find your first 1 or 2 that makes it easier?

Any feedback much appreciated.

john

Hi John. 

Generally speaking you are ready to start putting offers in that will be taken seriously once you have an agreement in principle, you can generally get one in around half an hour. 

Once you've got that, and get your offer agreed, the broker/adviser will take your application further, you'll have a good idea that you've been fully accepted very quickly (a few days if all is normal with providing documents etc) all subject to the valuation (times for this can vary by location and activity levels). Once all that is approved you'll get an official offer which is usually valid for around 6 months, leaving plenty of time for even the most painfully slow solicitors to pull their finger out and get it done. 

Sellers are generally absolutely fine with this process, the only time they wouldn't be would be if they were expecting a particularly quick sale (which they would have most likely discussed at the outset) 

Give me a shout if you need any help with it :)

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Hi johnny

Hope you dont mind if I refine what Matt said.

Before you do your list 1 to 4...you find a BTL mortgage broker that you get on with andcare comfortable using. You get your ID checked and most of their initial queries out of the way.

You pose dummy properties at broker to gauge market rates and fees and you refine your mortgage lending to your investment strategy.

Then

1..you find BTL property..yes contact broker and send them the link to what you are looking at..give them figures and say"does this one work for me?" Do this before your viewing!

2. Forget mortgage in principals..its a buy to let mortgage, some lenders dont even offer mortgage on principals because lending is about the property as well as you. Get your offer accepted then immediately contact broker and start the application.

3. Yes..everybody waits for a survey and mortgage offer. You state in your offer email that you are buying with a BTL mortgage

4. make it easier? Finding BTL properties or finding finance...define 'make it easier' please

Hope this helps

Conrad


Conrad Paton

+44 7957 959851

conradpaton@yahoo.co.uk

https://www.linkedin.com/in/conrad-paton-424446110

 

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Thanks Matt, as usual very helpful. Still some way to go to get my London place finished and valued, then sold, but aiming still for early next year. I will take up your offer of some advice neare that time. Noticed your Wigan based which is one area we have been attracted to for many reasons.

John

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8 hours ago, johnnybrixton said:

Thanks Matt, as usual very helpful. Still some way to go to get my London place finished and valued, then sold, but aiming still for early next year. I will take up your offer of some advice neare that time. Noticed your Wigan based which is one area we have been attracted to for many reasons.

John

No problem John, get in touch any time 

 

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Hi Conrad

Yes I think i was rather naive in thinking/hoping there is an 'easier' route, but realise that's not possible. Hard work and lots of research seems to be the best option for taking this further. I was over thinking the BTL process and worried it was too complicated, its not, no easy route just common sense once you decide to do it.

 

John

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