How to invest into property with cash pot of £250k .

[flexible]

Hello everyone, 

I have cash about £250k and want to invest into property. I am currently not working and have full-time on hand to work with potential property business that may start. I will appreciate your help! Thanks

[Darren McNeill]

Hi Felixble,

What location do you live in? I have done the same 6 years ago and now I have created 4 large property companies and have 21 of my own BTL's (I started with just £20k cash!).  The below is a link to my journal as I started blogging before I had bought my first property:

 

I suppose how you start depends on what it is you actually want from this?  With £250k you could easily just go out and buy 8 rental properties where I operate which would bring you in roughly £2k after mortgages and fees (If the property cleared £250PCM).   This would mean say an initial property purchase at say £75k, £10k renovation to add future value and lets say a 2 year revaluation at £95k.  Rough figures would give you £299PCM after costs for the first 2 years (at 5.5% APR) and then at the 2 year revaluation point you would release approx £13k back out and have £320PCM after costs (At an APR of 4%).

 

If you used the above as a base and bought 8 similar properties (for simplicity) you would have a net monthly income of £2,392 per month for the first 2 years, and then would release £104k once remortgaged and would then have £2,560PCM after costs.

The £104k you could then potentially buy 3 more properties similar to the above, which would increase your years 3-4 PCM to £2,689PCM.  At year 4 (using same numbers above), you would release £39k from these 3 and potentially further money from the initial 8.  Rinse and repeat.

Of course all of the above is all good on paper (doesn't include any tax, voids, maintenance etc) but its more to show you a rough idea of what could be achieved with minimal effort.  You have also said though that you do not work at the minute so you would need to live off the rental income, and whether that is sufficient for your lifestyle I do not know.  Ideally if you could do the above and work, that would help speed everything up as £2,392 over 19 months (take first 3 months for renovation works and advertising) that would be a gross rental income of £45,448 0ver the period.  You could also do the above buying cash and then refinancing, but when I compared the options between cash buys and mortgage buys I found the mortgage buys stacks up better as you have more properties generating rental income over  a longer period.

 

Second option would be to try and get into flips.  I am finding right now that it's a good time to buy and we have just submitted an offer for another flip for a client returning them around £40k in profit if we sell for the estimated resell price.  You would need to consider paying yourself over a 12 month period minimum (so deducting from your £250k pot) to cover your timescale for purchasing/renovating and selling.  You can then take any profit and add to your pot for the 2nd flip (again deducting funds so you can live) and build up a pot of cash.  Some flips you may decide to keep, refinance and pull out almost (maybe all) of your money.  You may do what i did which was to do flips on once side and BTL's on the other side and use the flip profits to fund the BTL purchases.

 

I think your best bet is to get a pen and paper and plot out a few different scenarios to see what could work best for you?

 

Darren

 

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[barry hughes]

Darren,

Great post above and I'm sure a lot of members here even including experienced property investors like myself appreciate you actually putting some number down and different scenarios, the rinse and repeat cycle like you have described above would probably be one of the most popular buy to let strategies but i always wondered about this kind of strategy in a falling market how does it work then for example what you described above, would it have been possible to do this during the period 2008-2012.

Barry

[Darren McNeill]

On 1/25/2023 at 9:23 AM, barry hughes said:

Darren,

Great post above and I'm sure a lot of members here even including experienced property investors like myself appreciate you actually putting some number down and different scenarios, the rinse and repeat cycle like you have described above would probably be one of the most popular buy to let strategies but i always wondered about this kind of strategy in a falling market how does it work then for example what you described above, would it have been possible to do this during the period 2008-2012.

Barry

The examples above are for the current market.

If you notice they have included a renovation of £10k which would cover new carpets, redecorating and potentially a new kitchen/bathroom (obvs depending upon what the property needed).  This is something that we do week in/week out for myself and for my clients, and its relatively easy to get the capital uplift because of these works.  People always think you need to completely gut a property to make decent money, but you just need to buy at the right initial price.  Right now is AMAZING for bargains, and I have picked up a couple in the last week and another 3 just before Christmas as everyone is being cautious.  Give it 8-10 months and prices will have gone up again.  We are now seeing properties around the £60k mark returning £525PCM which were selling far higher 6 months ago.

 

Darren

 

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       Whatsapp Direct By Clicking Here                     

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