Investment & Investing

Without risk 5% pa is a dream right now.

Well, yeah - free money! Even with risk I’ll take it in the long term.

Does anyone have any experience of buy to let as an investment. I know the ship has somewhat sailed for the high returns but that could be said for most things. I have the needed 25% deposit for a flat where I am or 25% deposit for two flats in a cheaper area where I don’t live. Pros and cons to both. Yield would be higher on two flats out of area but they would be out of area and two to deal with.

Or are there better things to be looking at right now?

are there better things to be looking at right now?

Stockpiling food and medicine.

Personally I wouldn't go there, far too much hassle and have heard many horror stories. Right now I'm looking at global equity funds which have sustainability embedded in their investment process, beware of the myriad 'greenwashed' funds out there, 3-5 year investment horizon at a minimum. There are also a few covid recovery funds popping but that's more of an opportunistic play.

Personal opinion, not investment advice.

I looked into this when I was trying to sell my place to see how feasible it was to buy without selling (my buyer had just fallen through).

Personally I found that the yield was pretty poor once adjusted for tax which isn't particularly beneficial to buy to let on a small scale. A few empty spells would wipe out any profit. I also wouldn't be surprised if the position got worse.

Basically it was pretty much all about gambling that property prices would continue to increase at a decent rate so you'd get a good return at the end. There have also been noises recently about merging CGT with income tax which would likely significantly bump up any tax on property sales.

The main thing with buy to lets thats changed recently is that Interest can only be written off at your marginal income rate. Effectively high rate income tax will make most investments unviable.
There a big move into setting ltd companies, the rates of borrowing are far higher, and its only matter of time hmrc close that dodge.

Edit: was speaking to a mate yesterday..the bottom line is unless you've got amazing rental yields you need big deposit to make it worthwhile.

Looking for LISA recommendations for my wife please. Does anyone have any thoughts on Nutmeg's JP Morgan LISA?

Looks good if you want someone else to choose which funds you're invested in.
Looks like there's different fees depending on how managed it is, fully managed fees seem a bit high.

We have a couple of BTL investors in the block I’m in. It has been an eye-opener for them. You need to pay close attention to stuff like service charges, sinking funds, lease extension requirements, renovation costs for flat and freehold etc. I would only let a place I’d owned and lived in and knew really well. Hassle.

Is there any money to be made in it do you think? I want to buy a new place and was thinking of hanging onto my current flat for rental income. Service charge would wipe out a month's rent, I extended the lease already to 999 years a few years back and I own part of freehold.

If I got a company to manage it, any idea what they typically take off the top and are they responsible if some deadshit trashes my place or do I still need to cover all that with some kind of rental insurance?

The other option is to just sell it and put it towards a newer place but there's hassle in that too.

If I got a company to manage it, any idea what they typically take off the top and are they responsible if some deadshit trashes my place or do I still need to cover all that with some kind of rental insurance?

My guess is that a management company would charge you 5 / 10 / 15% for doing fuck all, and you'd end up having to pay more to get anything fixed whatever happened.

If someone trashed your place, you will have to pay for it yourself, unless you're insured against it - A management agent will not insure you themselves, but will happily charge a premium on top of the insurance they get for you.

Openrent has a lot of useful add-ons for self-managers - insurance, for example (contingent on having them do the background checks etc...), rent collection (£10 a month, iirc).

If you own the place already, it could be worth it. I'd never actually buy a place to rent it out - there is fuck all money in that, unless you're prepared to be a slumlord.

I'm mortgage-free. I have no interest (sick pun bruh!) in getting a mortgage just to become a landlord. It was more that if I move somewhere I couldn't be arsed with the hassle of trying to sell my place (and I kind of like the idea of having a fully paid off place to fall back on)

there is fuck all money in that

I think that's a bit far fetched, granted the glory days are long behind us, but still a very viable option (esp during current low interest era). But property is proven investment that has out performed nearly every other conventional asset class.
Make sure you do your homework and your sums to make sure your more then covering expenses (esp tax) and keep a pot for potential issues. Most importantly find good tenants. As long as the property is local you can easily manage it yourself.

Selling is a ballache but you’ve got to do it; it’s likely buying in to fairly risk free investments with the £400k or whatever you place will sell for will pay you more £ per month than the rental income.

Granted there’s the chance of the place going up in value but flats...eh unless in a super cool area and you got in at the bottom I think you won’t achieve great gainz in the mid term

I'm mortgage-free.

I wish I was... 😭

If you already own and have lived in the place, it's different story I think. You know it. Owning a share of freehold will reduce risks from that area. Most agents are terrible. The landlords in my block use agents but end up getting involved with many things or risk losing their tenants. Leaks, repairs, the lot. If you're prepared to be on the end of a phone and can do the paperwork, I would manage it yourself.

i wish i was mortgage free.... again

I would manage it yourself

This (although I have zero experience of the leasehold / freehold side of things). Paperwork is fairly minimal, to be honest.

But then I have only one place. I like the idea of leaving my first place alone, so if the second place goes tits up I still have the first place as a roof over my head. Plus I'm looking elsewhere, so I'd have two places in two locations if needed.

My place has doubled in value since I bought it but so has everything else so that's kind of irrelevant. If I find a place to buy that requires the selling of my current place then I'm locked in to waiting for some dickhead buyer and all that nonsense. I'm more inclined to buy a second place and pay it off while leaving the first alone. I guess then it's two smaller places rather than one big place but the risk is less right. I dunno

Depends on the tenant I guess. I don't really want to be dealing with bullshit requests all the time but if I could get someone I trusted doing any work on the place, maybe there's less of an issue then? I've already got a job that takes up too much time, not sure I want to add more paperwork to my life. Maybe I'll just leave it as a very expensive London store room. :)

We had the AGM for our flats the other night. The agents that deal with this seem quite good but I wonder if their rental department are more scummy? I have no idea of responsibilities to tenants either, like am I on the hook for changing light bulbs and dumb shit they should be doing, or is it just bigger issues a landlord deals with?

The landlord I had when I rented was fine but I'm not exactly a hassle to deal with. I'm not fussy and I can do stuff myself. I'd like to be like that landlord but who knows what tenants are like 'in general'.

I think that's a bit far fetched

Is it? I mean, it's a fairly throwaway comment, but at the same time, after SDLT, (planned) expenses, income tax etc..., you're going to be lucky to get 1.5% yield (assuming you're not mortgaging).

[Edit] I guess it depends on where you're doing this

You wouldn't have two places in two locations if you had a tenant?

Make sure it's not too difficult to service your rental property.

It makes zero sense to have it as a storeroom (use the money elsewhere).

Finding a good tenant is important, but also, you never really know? Assume you will have good and bad tenants.

I am not sure how good this calculator is but that doesn't look too bad, I would probably be
in another country if I would be renting out so not sure about the income tax situation.

1 Attachment

My place has doubled in value since I bought it but so has everything else so that's kind of irrelevant.

I'd say this is very relevant unless you want to retire in London. If you can keep it and rent it out to cover cost or even pocket you some money, you then have a pretty risk free investment sitting around costing you nothing or even making you money. As London prices are very likely to rise faster than most other places, you'll cash in nicely when you retire.

But yeah, be prepared to have every single thing break. Mate of mine rented their newly renovated place out and had a call after a few weeks that the extractor fan "just fell off"