Funds Insider - Opening the door to funds

Welcome to the Citywire Funds Insider Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error
A new BTL proposition part 2
+ Reply to discussion
Options
Harry Turnbull
Posted: 22 June 2024 12:18:47(UTC)
#1

Joined: 27/05/2024(UTC)
Posts: 12

Thanks: 2 times
Was thanked: 4 time(s) in 2 post(s)
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.
Back to top Quote
3 users thanked Harry Turnbull for this post.
Guest on 22/06/2024(UTC), ANDREW FOSTER on 22/06/2024(UTC), lenahan on 26/06/2024(UTC)
Thrugelmir
Posted: 22 June 2024 12:44:52(UTC)
#2

Joined: 01/06/2012(UTC)
Posts: 5,329
Is Part 3 going to follow shortly?
Back to top Quote
Newbie
Posted: 22 June 2024 14:55:13(UTC)
#3

Joined: 31/01/2012(UTC)
Posts: 3,818
Now that you mention Hartlepool.
Erm . ..
No !
Better investment - find a way out ...... of Hartlpool.
Never been there, no plans to.
Back to top Quote
Harry Turnbull
Posted: 23 June 2024 10:02:53(UTC)
#4

Joined: 27/05/2024(UTC)
Posts: 12

Thanks: 2 times
Was thanked: 4 time(s) in 2 post(s)
Yes part three will be following and why not? This is a first time investor journey.
Back to top Quote
jonathan rowe
Posted: 24 June 2024 17:11:16(UTC)
#5

Joined: 30/03/2018(UTC)
Posts: 176

Thanks: 48 times
Was thanked: 302 time(s) in 120 post(s)
Harry Turnbull;309470 wrote:
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.


Friend of mine had some of these, the attaction is that housing benefit, pays ~600/month under LHA and that's a chunky yield

Very high chance of problem tenants, prolonged repossession court battle and having the place totally trashed

Not worth the hassle
Back to top Quote
1 user thanked jonathan rowe for this post.
lenahan on 26/06/2024(UTC)
Newbie
Posted: 24 June 2024 17:42:33(UTC)
#10

Joined: 31/01/2012(UTC)
Posts: 3,818
jonathan rowe;309656 wrote:
Harry Turnbull;309470 wrote:
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.


Friend of mine had some of these, the attaction is that housing benefit, pays ~600/month under LHA and that's a chunky yield

Very high chance of problem tenants, prolonged repossession court battle and having the place totally trashed

Not worth the hassle


Lets put some numbers and context.
Imagine you have a tenant for say 10 years with no issues and pays you £1k per month (part of which is benefits the guaranteed the chunky part)
You get £12k a year so £120k.
Now say your mortgage was also fixed for 10 years and you paid £60k in mortgage interest.
Lets forget the tax issues. Great.
Now in Yr 11 something goes wrong, maybe tenants child grows up, maybe their spouse dies, etc etc.
Now their benefits gets re-assessed and out goes the £600 chunky bit.
On top the tenant now has to make a choice of food, heating clothing etc or your rent. Food it is
They end up going radio silent and baton down the hatches - you aint getting in.
But you still have to make the mortgage payments of £500 per month (on top of your own expenses).
If you have the monies great, but say goodbye to any savings.
Now you have to follow the procedures, go to court, get bailiffs etc - this not only takes time but incurs cost.
Serve notice 2 months, court date 4 months, Bailiffs appointed 3 months all this on the provisio that all i;s dotted and t;s crossed if not double time - thus say 1 year.
So you have had to pay £6k in Mortgage interest, all other costs of say another £2k
Now a year later you get to see the bombsite.war zone which was your property.
Initially you cannot throw anything away and have to keep the couch, bed, clothes, lamps, pieces of wood which are classed as table and chairs, mouldy shower curtains not to forget vermin infested fridge and appliances which you supplied, vechiles etc on the basis the tenant has a right to collect them.
Couple of weeks later you realise they are not coming back for anything and if they do then it is for a carrier bad which had their hair drier and nail polish in it.
You then gaze upon heaps and heaps of stuff and try getting quotes and they come in circa £5k ish on a good day.
Now you look at the carnage and what it would take to get property in a condition to either rent again or sell.
You realise that it could cost £30k ish as you need pretty much a full refurb.
So you call in an estate agent and buyer knocks you down £40-50k.
It then dawns on you that whilst you made circa £60k in the last decade you have just given up £40-50k of it in the last 12 months.
To add insult to injury you cannot write this loss off unless you do the work as Capital improvements and increase the value of your property and claim it against CGT (on the basis that it has made a gain). Nor can you write it off against income as your rental income for that year is zero.
Which is why I am of the view that capital appreciation is very important. - a £10k deposit to a 20K capital gain is a 2x return. Much better than a £10k deposit to a £10k return of deposit.
Back to top Quote
 |  Edit by user
5 users thanked Newbie for this post.
Tim D on 24/06/2024(UTC), Jay P on 24/06/2024(UTC), MBA MBA on 25/06/2024(UTC), lenahan on 26/06/2024(UTC), Jonathan7 on 21/12/2024(UTC)
Neminem Laedit
Posted: 24 June 2024 20:31:20(UTC)
#6

Joined: 17/09/2018(UTC)
Posts: 1,473
jonathan rowe;309656 wrote:
Harry Turnbull;309470 wrote:
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.


Friend of mine had some of these, the attaction is that housing benefit, pays ~600/month under LHA and that's a chunky yield

Very high chance of problem tenants, prolonged repossession court battle and having the place totally trashed

Not worth the hassle


I've done quite well for over 20 years, with now* exclusively HB tenants in one of the most deprived areas of the UK. 98.5% of the maximum total rent has been paid, including unavoidable voids. I've only had to evict one, 15 years ago, although a couple of others have come close. A couple of others are now under prophylactic notice, due to the imminent extinction of Section-21.

From experience
DOs
Re-insure yourself, by acquiring multiple cheap properties, ideally 1-bed flats.
Select tenants aged over 50, if possible. Men tend to be more stable, and as a male landlord, they are easier to deal with (although I've had some excellent female tenants). With females, beware the hidden male partner in the background who moves in and then tries to call the shots.
Live close to the properties. A 20 minute drive is a lot more doable than a 2/3 hr drive, and can extinguish more 'flames' before they take hold. If tenants know you live miles away and scarcely visit, the incentives to muck about increase.
Understand the benefits system. Local authorities tend to be much more efficient than Universal Credit, although eventually everyone will be on UC.
Understand how to get HB/UC to deduct any missed payments from the tenant's benefits.
Get paid direct. Ideally have tenants with a disability component, or get them to play up memory/mental disorders. If you can't get paid direct, get them to open a bank account for the rent payment, and give you the card and PIN.
Understand the yield. If it's significantly less than about 13.7% gross, don't buy, and look elsewhere.
Make contact with the local PCSO, etc. Inform on your tenants if you suspect drugs, which are affecting neighbours,etc. Of course, then offer the Plod a spare key, if they are planning a raid...
Understand the tax system. Claim for absolutely everything you can legally claim for.

DON'Ts
Rent to youngsters. (It's now uneconomical anyway to rent to anyone under 35.) They will be a headache, and attract even bigger headaches.[Drugs/Casual vandalism/"parties"/noise,etc.]
Delay if the tenant misses a payment or goes crazy. Don't think things will 'get better'. It never does. Act fast. Have an eviction pack ready for each tenant just in case [Section-21 is going to be abolished in any case, so this is now moot]
Buy and rent houses. The risk/reward matrix simply isn't in your favour.
Rent to working people. On the 2* occasions I rented to a worker, one put the rent on a horse, and he then (thankfully) absconded. The other guy was too proud to sign on, when he lost his job, and again (thankfully) absconded. The benefits system at least offers some redress, on the other hand, for missed payments. I have a tenant who tried to take me for £2k. His meagre benefits are now being significantly deducted to repay me for his stupidity... I think he's down about 20% a month in his income until it's paid off.
Maintain the properties, beyond what is absolutely necessary in your own interest. HB tenants often have a network of family/friends who can re-decorate, etc for free. HB tenants tend to have low expectations - they know the alternative may be a cardboard box, or at best couch-surfing forever.
Buy seemingly attractive house-to-flat conversions, without careful advice. They may not meet building regs, and could be unlettable. [Living rooms/bedrooms that must exit through a kitchen are the classic no-no...]
Back to top Quote
 |  Edit by user
Steve U
Posted: 24 June 2024 21:11:51(UTC)
#7

Joined: 30/08/2017(UTC)
Posts: 335
Neminem Laedit;309677 wrote:
jonathan rowe;309656 wrote:
Harry Turnbull;309470 wrote:
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.


Friend of mine had some of these, the attaction is that housing benefit, pays ~600/month under LHA and that's a chunky yield

Very high chance of problem tenants, prolonged repossession court battle and having the place totally trashed

Not worth the hassle


I've done quite well for over 20 years, with now* exclusively HB tenants in one of the most deprived areas of the UK. 98.5% of the maximum total rent has been paid, including unavoidable voids. I've only had to evict one, 15 years ago, although a couple of others have come close. A couple of others are now under prophylactic notice, due to the imminent extinction of Section-21.

From experience
DOs
Re-insure yourself, by acquiring multiple cheap properties, ideally 1-bed flats.
Select tenants aged over 50, if possible. Men tend to be more stable, and as a male landlord, they are easier to deal with (although I've had some excellent female tenants). With females, beware the hidden male partner in the background who moves in and then tries to call the shots.
Live close to the properties. A 20 minute drive is a lot more doable than a 2/3 hr drive, and can extinguish more 'flames' before they take hold. If tenants know you live miles away and scarcely visit, the incentives to muck about increase.
Understand the benefits system. Local authorities tend to be much more efficient than Universal Credit, although eventually everyone will be on UC.
Understand how to get HB/UC to deduct any missed payments from the tenant's benefits.
Get paid direct. Ideally have tenants with a disability component, or get them to play up memory/mental disorders. If you can't get paid direct, get them to open a bank account for the rent payment, and give you the card and PIN.
Understand the yield. If it's significantly less than about 13.7% gross, don't buy, and look elsewhere.
Make contact with the local PCSO, etc. Inform on your tenants if you suspect drugs, which are affecting neighbours,etc. Of course, then offer the Plod a spare key, if they are planning a raid...
Understand the tax system. Claim for absolutely everything you can legally claim for.

DON'Ts
Rent to youngsters. (It's now uneconomical anyway to rent to anyone under 35.) They will be a headache, and attract even bigger headaches.[Drugs/Casual vandalism/"parties"/noise,etc.]
Delay if the tenant misses a payment or goes crazy. Don't think things will 'get better'. It never does. Act fast. Have an eviction pack ready for each tenant just in case [Section-21 is going to be abolished in any case, so this is now moot]
Buy and rent houses. The risk/reward matrix simply isn't in your favour.
Rent to working people. On the 2* occasions I rented to a worker, one put the rent on a horse, and he then (thankfully) absconded. The other guy was too proud to sign on, when he lost his job, and again (thankfully) absconded. The benefits system at least offers some redress on the other hand, for missed payments. I have a tenant who tried to take me for £2k. His meagre benefits are now being significantly deducted to repay me for his stupidity... I think he's down about 20% a month in his income until it's paid off.
Maintain the properties, beyond what is absolutely necessary in your own interest. HB tenants often have a network of family/friends who can re-decorate, etc for free. HB tenants tend to have low expectations - they know the alternative may be a cardboard box, or at best couch-surfing forever.
Buy seemingly attractive house-to-flat conversions, without careful advice. They may not meet building regs, and could be unlettable. [Living rooms/bedrooms that must exit through a kitchen are the classic no-no...]



I have a similar situation- mind me asking what you did - Money Claim On Line and an attachment of earnings ?
Back to top Quote
Newbie
Posted: 24 June 2024 21:28:03(UTC)
#11

Joined: 31/01/2012(UTC)
Posts: 3,818
A lot of contrasting approachs to BTL investing between the likes of NL and I.
I am all for capital growth, looking for multiple x walk away.
Little interest in yield - needs to cover mortgage (and costs) by 1.5 - 2 times.
Only interested in freehold houses - ideally 3 bed with gardens even better with garage /driveway
Buy in decent neighborhoods.
Buy properties which have potential to extent and make bigger - can be gifted to family / can sell garden
A strict no to benefit tenants - not after one incident back in 80's/ 90's.
Professionals in proper professional career - no self-owned directors (bad experience early 2000's)
Professional couple or couple with kids starting school is a good sign - older teenagers not so good.
Charge premium and deliver a good home (not necessarily the Claridges but also not Holiday Inn)
Always weary of tenants who want to pay full year upfront.
I look for long tenants - shorter void periods and less hassle
Single females a worry (as above)
Good neighbors important and need them on your side.
Take out insurance.
Treat it as a business and not a side hustle - if need get someone else to manage it.
Treat BTL as bank - ie when in need of cash, just refinance (within limits)
Average exit is 5x capital return + whatever income in between (after tax)
If possible do use family members names - preferably young and old - not earned income ones
Back to top Quote
 |  Edit by user
1 user thanked Newbie for this post.
Neminem Laedit on 24/06/2024(UTC)
Neminem Laedit
Posted: 24 June 2024 21:28:51(UTC)
#8

Joined: 17/09/2018(UTC)
Posts: 1,473
Steve U;309681 wrote:
Neminem Laedit;309677 wrote:
jonathan rowe;309656 wrote:
Harry Turnbull;309470 wrote:
First of all thanks to those who provided some useful information.
I did a couple of viewings of my own in my old hometown of Hartlepool with tenants in place - one was the most squalid place described as a home that I have ever seen. The guy in there is old and helpless, an utter disgrace and the estate agents should be ashamed (they will be shortly!).
The second agents provided a video of another house and it looked smart. I pressed on a viewing and speaking to the tenant. A different story emerged! Roof + floor issues, major red flags.

I then visited some streets where properties have been acquired by the company I mentioned with their new hassle-free BTL model (Find UK Properties). I've not lived in Hartlepool for over 40 years but even I was shocked at the level of utter poverty. Why on earth would a business pick these s*hithole streets to acquire, refurbish and pass on to investors? At a 20% surcharge to market value in some cases, btw. Spaced out druggies, boarded up homes, refugees. My son was so shocked he advised we did not leave the car and he has done security operations for the Army. 20% over market value, no appreciation and 6% yields.


Friend of mine had some of these, the attaction is that housing benefit, pays ~600/month under LHA and that's a chunky yield

Very high chance of problem tenants, prolonged repossession court battle and having the place totally trashed

Not worth the hassle


I've done quite well for over 20 years, with now* exclusively HB tenants in one of the most deprived areas of the UK. 98.5% of the maximum total rent has been paid, including unavoidable voids. I've only had to evict one, 15 years ago, although a couple of others have come close. A couple of others are now under prophylactic notice, due to the imminent extinction of Section-21.

From experience
DOs
Re-insure yourself, by acquiring multiple cheap properties, ideally 1-bed flats.
Select tenants aged over 50, if possible. Men tend to be more stable, and as a male landlord, they are easier to deal with (although I've had some excellent female tenants). With females, beware the hidden male partner in the background who moves in and then tries to call the shots.
Live close to the properties. A 20 minute drive is a lot more doable than a 2/3 hr drive, and can extinguish more 'flames' before they take hold. If tenants know you live miles away and scarcely visit, the incentives to muck about increase.
Understand the benefits system. Local authorities tend to be much more efficient than Universal Credit, although eventually everyone will be on UC.
Understand how to get HB/UC to deduct any missed payments from the tenant's benefits.
Get paid direct. Ideally have tenants with a disability component, or get them to play up memory/mental disorders. If you can't get paid direct, get them to open a bank account for the rent payment, and give you the card and PIN.
Understand the yield. If it's significantly less than about 13.7% gross, don't buy, and look elsewhere.
Make contact with the local PCSO, etc. Inform on your tenants if you suspect drugs, which are affecting neighbours,etc. Of course, then offer the Plod a spare key, if they are planning a raid...
Understand the tax system. Claim for absolutely everything you can legally claim for.

DON'Ts
Rent to youngsters. (It's now uneconomical anyway to rent to anyone under 35.) They will be a headache, and attract even bigger headaches.[Drugs/Casual vandalism/"parties"/noise,etc.]
Delay if the tenant misses a payment or goes crazy. Don't think things will 'get better'. It never does. Act fast. Have an eviction pack ready for each tenant just in case [Section-21 is going to be abolished in any case, so this is now moot]
Buy and rent houses. The risk/reward matrix simply isn't in your favour.
Rent to working people. On the 2* occasions I rented to a worker, one put the rent on a horse, and he then (thankfully) absconded. The other guy was too proud to sign on, when he lost his job, and again (thankfully) absconded. The benefits system at least offers some redress on the other hand, for missed payments. I have a tenant who tried to take me for £2k. His meagre benefits are now being significantly deducted to repay me for his stupidity... I think he's down about 20% a month in his income until it's paid off.
Maintain the properties, beyond what is absolutely necessary in your own interest. HB tenants often have a network of family/friends who can re-decorate, etc for free. HB tenants tend to have low expectations - they know the alternative may be a cardboard box, or at best couch-surfing forever.
Buy seemingly attractive house-to-flat conversions, without careful advice. They may not meet building regs, and could be unlettable. [Living rooms/bedrooms that must exit through a kitchen are the classic no-no...]



I have a similar situation- mind me asking what you did - Money Claim On Line and an attachment of earnings ?


The actual eviction, 15 years ago, was under a very different landscape. I did it all myself, and when it got to court [muppet tenant didn't turn up] the lady judge congratulated me on covering all the bases, and granted me possession. [I had some previous experience in another sphere of running rings around clowns-in-gowns, both on and off the bench, as a litigant-in-person, and so was quite confident]

Nowadays, I would use a dedicated specialist. The complications are too great. I can recommend EVICTHEM [one "T"] in Oldham. [contact: Andrew]

Can't speak for money orders, etc. If I have a problem, I just want possession, and am happy to write-off arrears. [Not worth the hassle chasing people on benefits for years who are no longer your tenant.]

Beware counter-claims. Ambulance-chasing lawyers may be able to mount a claim against YOU, on behalf of the tenant...

If you're talking exclusively about a benefits tenant.
I simply rung up UC and said I was going to evict him if his arrears were not forthcoming from his benefits.
Issued him a Section-21 notice and copied it to UC, with a schedule of arrears...

He's still my tenant, and still paying off his arrears.[UC deduct it from his own benefits, and pay it directly to me, along with his monthly rent.]
Back to top Quote
 |  Edit by user
2 users thanked Neminem Laedit for this post.
Steve U on 24/06/2024(UTC), Guest on 25/06/2024(UTC)
2 Pages12Next page
+ Reply to discussion

Markets

Other markets