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I have some spare cash (50k) and a 100% owned property that i can remortgage if needed. Basically I am looking into property investment and want to start local (warwickshire) with a 100k-ish investment. Reading various forums and articles the trick seems to be to get a bmv property in a rentable area and aim for 6%+ yield. I'm ok with most aspects but not clear on how i go about finding a good deal. The options seem to be

- go with a BMV specialist firm : there seems to be loads of these and some horror stories so no idea where to start

- hit the auctions : fair enough and i will look into this

- find some good estate agents : no idea how to differentiate between good and not-so-good

Secondly, AM i better off getting a remortgage and using that to fund  my investment or just getting a 60% B2L loan?

much appreciated

The question is a bit complicated. Maybe a better way to approach things is to look at the strategic requirements rather than focusing on the tactics. Tactics should follow strategy.

Why do you want to invest? What is the objective? As you would be new to BTL do you have any related experience or skills that would fit well (trade skills, tenant management, finance)?

While waiting for a bit more info let me provide some high level answers to your questions.

The focus on BMV is mostly concerned with buying below the market value so you have an added cushion. Anyone can pay retail. Someone who puts in the time to research and hunt for a deal can eventually find a BMV deal. The level of discount will vary. It does not need to be 30% for the deal to make sense. The reason people sometimes focus on specific discount amounts is they want the property to fit specific loan conditions that may not apply in your case.

How best to finance the BTL purchase? It depends. While putting a loan on your primary residence can be less expensive in terms of financing there is a slight degree of risk. Many BTL lenders will come after you if you default on a BTL loan secured by the BTL property. In other words putting the loan on one property does not remove 100% of the risk that a lender will come after your other property. It is not completely black and white. There is less risk to your home when the loan is on the BTL property. Less but not zero. Hence the financing cost differences might be worth entertaining. You will need to weigh up the variables to reach a personal decision. Others will have suggestions that might help.

The biggest thing to consider is how long you expect to hold the property after purchase. That can impact your decision and how you use your capital. If you expect to hold long term can you weather short term problems? What if you are forced to sell early? Should you keep a specific amount of capital liquid and therefore raise a higher loan amount so you retain more liquidity for the unexpected problems (voids, tenants who will not pay and will not move, repairs that were not planned)?

John Corey 

A bit more information.. I'm not totally  new to property and do have a property that I purchased to rennovate and sell  but ended up renting due to property crash - so I have some useful knowledge. I am somewhat wiser now on the difference between BTS and BTL but have a lot to learn. I'm now thinking long term and hence want to build a portfolio to take me into the next 10 years - ideally while i am still working, hence wishing to start locally.

I plan to spend a couple of months looking into the local area in terms of rental demand and property prices  so hope to be in a position in the new year when i can 'spot a good deal'.

I have been exiting the stock market of late hence have cash available and earning next to nothing in interest so need to find better long term investments

Thanks for the added detail.

As to the "earning next to nothing"...

In real terms you are doing just fine. When inflation is very low you will not earn much above the inflation rate. When inflation is high and you are earning a high interest rate the real return after inflation will still be a small number. For the most part a positive return, small but positive, is all you should expect on liquid cash investments.

When you are in cash you are really storing up your buying power for something in the future. It might be a personal expense coming up, a rainy day (lose of a job) or a major investment when a distressed seller comes along. Buffett has no real issue holding cash with a small return while he waits for a bargain.

I understand the desire to grow your wealth and making your money work harder is key. It will be lumpy along the way as bargains and jumps in the asset value do not happen smoothly or predictably. In the mean time the 'pressure' of earning 'next to nothing' can create a mindset that causes you to dive into something that is actually a bad deal but the end.

As you said you are planning to research things locally for a period, you will reduce the chance of a bad decision. As you learned with BTS vs. BTL it is what you do not know you do not know that tends to create the problems in an investment sector where you are just starting out. 

Feel free to get in touch. Or just keep posting questions so people can share with you what they know.

John Corey 

Normal 0 0 1 69 395 3 1 485 11.1282 0 0 0

I appreciate a lot of people are keen to stick to what they know in terms of the BMV market within the UK as opposed to looking further afield for better returns, but please consider the below exclusive land opportunities I have available (direct from developer, not agent) in the tax haven of the (UK Territory) Cayman Islands.

Regardless if you are looking for a real estate property for investment purposes, or as a site for a future home, investing in land is proven to offer a safer and higher return on your investment than any other financial instrument available today. Traditional investments (stocks, bonds, etc.) over the past couple of years have seen average returns of 4-8%. In contrast, real estate and land investments have realized cash on cash returns of greater than 200%, with less risk.  

Normal 0 0 1 115 661 5 1 811 11.1282 0 0 0 Example of your typical annual ROI in land in the Cayman Islands V.S. traditional UK Buy-To-Let

Cost of a typical 10,000sq/ft plot: £30,000

Deposit: £5,000

Balance: £25,000

O% interest non-status repayment plan amount: £5000 Per Annum

Anticipated annual growth: 20%-30%

At the end of year 1 your plot will be worth: £36,000

Your capital gain: £6,000

Annual return on cost of plot: 20%-30%

Annual return on investment: 60%-90%

Example of a Typical Buy-To-Let ROI

A property costs £100,000
Financed by an £85,000 mortgage and £15,000 invested capital
Costs (letting agents, maintenance etc) are £2400 per annum
Mortgage interest of £4,500 per annum
Net income return per annum is £5,100 (£12,000 less £2,400 and £4,500)
The return on your investment is therefore your net income divided by your invested capital £5,100 / £15,000  = 34% per annum

Even if you buy BMV it will be unlikely to achieve a higher ROI in this current climate than the one illustrated above, at best.

If ultimately you are only interested in UK BMV, I may be able to assist as I have access to a variety of deals offering 25%-35% discounts based on RICS and cashflow positive. I'm also interested in JV opportunities around the UK and am looking for partners to develop sites.

Feel free to get in touch if any of this is of interest.

Regards,

J.Musa

jay@iopin.net

jay.musa@oasis-land.com

07885896056

No thanks,

I already have a speculative  property in morocco and dubai so really don't want to do anything else abroad as the risks are way too high in the current climate - not tro mention the pound being on the floor,. I'm looking at lower risk and sensible returns hence the need to start local in the UK.

As an aside I get the impression from other posters that your offer falls in the 'too good to be true' bucket.

If you want to reduce any risk and have maximum possible control - make it your own business to build and manage your own portfolio.What appear the quick and easy option at the beginning - often turns out to be a bad option - especially if you buy properties spread over a wide geographical area. Until property sourcing is tightly registered and controlled - it a very risky proposition

If you work smartly it need not be very demanding.

Generate your own leads where you want them to be  and learn to converse with potential sellers

Most (not all) lead.deal suppliers, in my expereince, tend to 'gild the lilly' and present their products in a better light than reality. Be careful.