General (main property discussion here) - How are we going to make money in 2005?

Development? Hold cash? Buy BMV? Take advantage of those that have entered BTL at the wrong time?

What does everyone think?

julie,

difficult time. personally i will focus on very short-term development opportunities so as not to be overly exposed to the market at any one point in time. this is however always my strategy.

also look for reversionary yields and desperate sellers.

thats my tip for what it is worth. i also don't believe that the market will slow down too much. underlying economy too strong for that. perhaps a slight softening though.

1.stay clear of the rogue property mentors / sourcing companies..... 2. forget all this talk of discount when buying off-plan 3. in fact stay clear of off-plan all together (not proven as rental area) 4. buy income not properties that project capital appreciation 5. look for desperate sellers

these are my early new year's resolutions.

tom

tom - agreed about the off-plan. stephen - i agree about the desperate sellers.

i think the link between these two is key to staying safe.

jo

Buy yield. Look for under rented properties where you can increase the rent.

Buy in auctions as there are still plenty of bargain and always will be.

I’m looking into getting on the property ladder by buying an investment property. I live in London and it is unrealistic for me to buy at London prices.

I have read countless articles over the last year saying yields are dropping off fast and all these easy profits are at an end. I have also heard the contrary and have friends still buying in the north east especially.

Should I just go ahead and buy, do I have much to lose and what are my risks? I can’t help but feel that if I waited another year and the situation remains the same, I would have missed out on yet another year of returns.

Properties on this site seem to have good yields – I think it has to be 6% and above to be worthwhile for me. Should I take the plunge?

All advice welcome!!

Chris

6% is a good place to start......well definately 1% above your borrowing rate.

Anyone else? What are you expecting for 2005?

Julian

chris,

out of interest where are you looking?

tom

London might not be out of your reach. Remember you only need to put 10-20% down and if you can find over 6.5% in London you are doing well!

I started investing in London with really not a lot. It can be done. Also London has unbelievable demand for rented accomodation.

FS

ok - whats everyone up to? i for one am full of beans and in need of some inspiration.

tom

Good tip, look to buy close to Universities that cannot expand there current accomodation so llok to the private landlord.

Wales is very good and my local one is great. Student are good earners 4 to an average house costing 90K rent been £60 each. The yeild is good.

Alex oakhill mortgage services ltd

I am looking at buy to sell in London and South East. You need high prices to make the money you require for the hard work.

Owen

Interesting Owen. Where abouts are you concentrating your efforts?

Julian

Alex - where are you finding these properties?

Care to share your secrets?

Regards

Russell

London prices weakened slightly over xmas so now yields look more attractive. Worth a look.

FS

fs,

i am actively seeking opportunties in central london. where is your top tip for solid tenants with limited churn and 6.5% yields? does this exist.

i am quite interested in the portfolios of central london studios on the site

http://www.landlordtrader.co.uk/view_portfolio.php?portfolio_id=28

they look in great areas and ideal for corporate lets?

any thoughts appreciated.

tom

Hi Tom, I've noticed a lot of you guys are quite willing to accept 6% or 7% yields. Is there a reason for this? Are you just looking at capital growth?

I made a couple of quick sums and if you use a letting agent, you would be taking a loss.

Are you subsidising the property for a while until it rises in price considerably?

Just interested, as I am new to this!

Cheers

Simon

Hi Property Innovations, what's with the name. The properties i buy are in the Newcastle under Lyme area os Staffs, this makes it ideal for Keele students and the yields are above 10%.

Regards secrets there are not any on this site were all here to help each other.

All the best

Al;ex

Hi Alex,

PI is my company name. Do you ever get offered properties you are not in a position to move on? WOuld you consider passing them on for a fee?

Do you buy these BMV?

Regards

Russell

BMV??

Below Market Value I would guess Frank.

Hi Guy's, Property Innovations there are a few below BMV but then id be a mug to pass them on just brought one at 73K ill spend 5K on it and it should value up at 95K min but im not in it for that i brought it as it will give 4 letting rooms at £60 each so the yield is to good to sell.

There are a few that i dont buy ive viewed 2 this week and have put an offer in on at 82K it's only a 3 bed so your looking at £7,740pa comming in & a mortgage of £3,833pa. Thats a potential profit of £3,907pa or £325pm.

Let me know ill put you on to it if you like.

Alex M

Alex - how much work is required on the 3-beds mate?

cheers

John

Hi John, The one i put an offer in on requires just a partition and shower max price £300. The area is stamp duty exempt and is 5 minute walk from Newcastle under Lyme town centre so ideal for Keele students. I could possibly get £62.50 to £65 per week per room it is possible, as the upstairs rooms are massive. They pay there own bills.

Good enough yield for you or what?

If you want it ill sort it for you.

Alex M

hi all, i,m desperate to get into property be it bts or btl but cannot find any deals suitable and can't understand where you guys are sourcing these worthwhile deals from.

i'm even more dissilusioned because:

1-i'm from the north east and in my home town terraces are going for at least 70+ with rents around 320 so not worth the hassle

2-i'm in the trade ie.corgi registered,niceic electrics registered and own my own kitchen/bathroom/bedroom installation company and can aquire everything at dirt cheap prices through my fathers showroom so i must be in as good a position as anyone but i just can't find worthwhile projects.

its not for lack of looking either i drive my girlfriend up the wall with this laptop

any advice would be v.much appreciated

christopher,

where in the north-east are you? £320 sounds low for a £70k+ property?

you are right it is not as easy to make money in this market but there are good props out there - just trawl this site there are many good purchases (particularly if you pick them up below market value!!).

tom

hi tom, i'm from bishop auckland yeah the yields are shockingly low i think what happened was most investers snapped the terraced props up last year when they were around 45/50+ the most i,ve seen rents advertised for, are around 365 for a good size terrace. my plan was to release money on my existing mortgage and buy 2/3 houses but its just occured to me if i was to do this am i right in saying this will reduce my tax free allowance when i sell my ppr as my equity will be in the other props? or could i sell these and put the original amount back into my ppr mortgage? any thoughts?

bishop eh? i speak with morgan smith quite regularly and i think that youll find that even over the last few years sale prices are often quite a bit below asking. so that might help?

no change on your tax free allowance (as i understand it!) unless you change what is is your primary residence.

tom

hi, thats what i want to do, i'm happy where i'm living for the moment but in a couple of years time i want to take the next step up the ladder i have 90k equity in my home so i thought i may as well put it too good use, do a few refurbs so to put myself in a stronger position when the time comes to move.

i've heard cgt allowance is £8200 does this mean anything over this is taxed at 40% and if i held a property for 2 years could i get £16400 tax allowance?

one option i would like to do is to rent my house out i could release 50k equity and swop to a btl mortgage which the rent would cover and move my way up the ladder but would i be liable for cgt from the original purchase price?or at the time of remortgaging?ie can i take the money out tax free for my next ppr?

Aaaaaaaah my head hurts v.confusing all this,think i could do with going out for a pint with an accountant

christopher,

best thing is as you said have a pint with an accountant - they will talk you thru how this works. it can be very confusing if you are starting out. worth the money though as tax can be a pig if you don't get it right from the start.

tom

Christopher,

you need to get IR150 Taxation of rents - A guide to property income. (It's published by the inland revenue) and scan it (Then your head will really hurt).

It is my understainding that you can hold a property for up to 3 years and then sell it without incurring CGT, as long as you can prove when you purchased it and when you actively started to market it for sale. (Must be marketed for sale before 3 years not necessarily sold with in 3 ! ).

Please get a second oppinion on this as the latest tax position may have changed.

Any comments anyone else, is this sttill true ?

You can download IR150 and other publications from the Inland Revenue web site, they are pdf files. Good for general info but anything to do with inland revenue is a mas of complexities. A good accountant or tax advisor is a must.

John