Could you still start a property company?
Discussion
I know it sounds a bit of of an odd question but it seems that you'd need a lot of deposit, especially in the SE to do this. I have one property with £150k equity in it and a rental income of £1200. I can't (maybe) buy another of this type because the numbers don't stack up. The property was about £150k when I bought it and the same ones are now around £320k. To make any decent return, the deposit(s) would have to be really big.
I think my head may have been turned by a few YT videos but I often think to myself that the money from my current rental requires very little work from me and is constant whereas in my business there are always ups and downs and daily challenges etc.
I see property gurus (
) telling me that I can build a decent/big income from property with no/little money down etc. Seems to good to be true and so it probably is, or is it? I've done it with one property so...
I've seen the recent thread on a guy doing this but it seemed that he had a lot of equity to put down.
It just seems that I'm potentially working hard instead of smart (and have done for most of my life)
I think my head may have been turned by a few YT videos but I often think to myself that the money from my current rental requires very little work from me and is constant whereas in my business there are always ups and downs and daily challenges etc.
I see property gurus (
) telling me that I can build a decent/big income from property with no/little money down etc. Seems to good to be true and so it probably is, or is it? I've done it with one property so...I've seen the recent thread on a guy doing this but it seemed that he had a lot of equity to put down.
It just seems that I'm potentially working hard instead of smart (and have done for most of my life
)Yes and no.
If we are talking about residential property, have a look at the costs involved, which the "property gurus" will keep quiet about. Think voids/non payment/selective licencing (more and more councils are bringing this in, easy money for them)/estate agent fees/management fees/repairs/tax,etc etc.
Think of worst case scenario and if it still looks viable, then go for it.
Whatever you decide, do not pay any "gurus" (seeing an accountant or a financial advisor would be better use of your money).
If we are talking about residential property, have a look at the costs involved, which the "property gurus" will keep quiet about. Think voids/non payment/selective licencing (more and more councils are bringing this in, easy money for them)/estate agent fees/management fees/repairs/tax,etc etc.
Think of worst case scenario and if it still looks viable, then go for it.
Whatever you decide, do not pay any "gurus" (seeing an accountant or a financial advisor would be better use of your money).
I'm currently renting for the first time in ages and ended up having a long chat with my landlord earlier this week.
He's got a lot of property having started about ten years ago. he was happy to say that it wouldn't be possible to do what he did starting now, and also that he now hates doing what he's doing, spending more time getting legal on tenants, or chasing recalcitrant tradesmen isn't an enjoyable life, for returns that if starting now wouldn't be much over base rate after voids, damage repair, maintenance etc are taken into account.
He's got a lot of property having started about ten years ago. he was happy to say that it wouldn't be possible to do what he did starting now, and also that he now hates doing what he's doing, spending more time getting legal on tenants, or chasing recalcitrant tradesmen isn't an enjoyable life, for returns that if starting now wouldn't be much over base rate after voids, damage repair, maintenance etc are taken into account.
I don't think I could get into BTL now. I did much number crunching and modeling a few years ago and the returns were uninpressive for my Essex corner of the country given that it would be requiring big deposits and difficult to scale up quickly without significant risk. Now with potential added tax burden and other regulatory hurdles to jump, it's clearly undesirable for the smaller BTL and the playing field has tilted to the bigger property companies who can more efficiently manage a fleet of houses.
I may revisit the situation when i retire and maybe take on my parents "portfolio".
I may revisit the situation when i retire and maybe take on my parents "portfolio".
Don't you have to go further afield if you want to make it work at smaller input levels (i.e. oop North) or do something different to make it work in the more expensive locations.
As an example - Our old house in Cambridge sold for 550K to a BTL company. They made it a 5 bed HMO by turning the living room into another bedroom and rent the rooms out for £650 each.
3K+ per month on a 550K purchase price. 3 years on, and I'd imagine they are pretty pleased with the return + growth on it!
As an example - Our old house in Cambridge sold for 550K to a BTL company. They made it a 5 bed HMO by turning the living room into another bedroom and rent the rooms out for £650 each.
3K+ per month on a 550K purchase price. 3 years on, and I'd imagine they are pretty pleased with the return + growth on it!
I took out a £20k loan last year to help with gutting out and renovating my house. Around that time I took over the mortgage to a rental property my father wanted to get rid of.
Tenants moved out around September time and I ended up having to cough up around £10,000 on maintenance but mainly repairs (and associated costs like rubbish removal) to the inside and outside where they'd let it fall into disrepair and the previous agency had obviously failed in their duty of care.
Notable sums included when I was slapped with selective licencing. £850 or so gone, and some of the electrics also needed altering, in addition to the safety testing. Another £1,300 there. The roof and guttering had more issues and £1,500 at least had to go towards that, including scaffolding hire as it is a 19th century back-to-back totalling four floors.
Utopian daytime TV (special credit goes to Homes Under the Hammer, not least the property bubble they've helped create) and YouTube channels lead people to believe it's easy money, especially the dubious Barbie and Ken pretty type couples in their early 20s who are already supposedly living the influencer life whilst developing properties but won't mention the bank of mummy and daddy.
It's far from easy money, especially if someone is on a limited income. Whilst I do have insurance and am considering how to go about making a claim, the loan money I had - albeit earmarked for something different - was a lifeline but ultimately had to be sacrificed.
I'd have been truly stuck otherwise paying for an empty rental property and repairing it on a piecemeal basis.
Copious reserve funds are a must and rolling in the dosh with no money down is a myth as far as I'm concerned!
Tenants moved out around September time and I ended up having to cough up around £10,000 on maintenance but mainly repairs (and associated costs like rubbish removal) to the inside and outside where they'd let it fall into disrepair and the previous agency had obviously failed in their duty of care.
Notable sums included when I was slapped with selective licencing. £850 or so gone, and some of the electrics also needed altering, in addition to the safety testing. Another £1,300 there. The roof and guttering had more issues and £1,500 at least had to go towards that, including scaffolding hire as it is a 19th century back-to-back totalling four floors.
Utopian daytime TV (special credit goes to Homes Under the Hammer, not least the property bubble they've helped create) and YouTube channels lead people to believe it's easy money, especially the dubious Barbie and Ken pretty type couples in their early 20s who are already supposedly living the influencer life whilst developing properties but won't mention the bank of mummy and daddy.
It's far from easy money, especially if someone is on a limited income. Whilst I do have insurance and am considering how to go about making a claim, the loan money I had - albeit earmarked for something different - was a lifeline but ultimately had to be sacrificed.
I'd have been truly stuck otherwise paying for an empty rental property and repairing it on a piecemeal basis.
Copious reserve funds are a must and rolling in the dosh with no money down is a myth as far as I'm concerned!
That's what I thought. To be fair our tenants have been mostly excellent I've done very little for what is a decent return.
I saw some ads on FB recently talking about commercial property investment which honestly looked more interesting and I may look into that but, of course, will need to check out the downsides...
I saw some ads on FB recently talking about commercial property investment which honestly looked more interesting and I may look into that but, of course, will need to check out the downsides...
economically it's possible no problem,
as previously mentioned, aggro from Tenants comes with the territory.
On a personal basis I've had 2 poor ones, one of which I've chased around the UK seeking my money back. Getting your money is a nightmare, "Can't pay, we'll take it away" isn't the real world, a bit like "Homes under the Hammer" as previously mentioned here too
A CCJ will only go so far and once they know your onto them your tenant is usually experienced enough to dodge and weave enough to escape.
a point to note here is quite why the UK Government chose to give rental support payments directly to the tenant NOT to the landlord is a mute point....
despite these pitfalls, if you go into it as a piece of fun it's a worthwhile pastime, full time job, not so much fun I guess.
Final point, as with any investment DO YOUR RESEARCH
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