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skyrider skyrider is offline
Maven
Join Date: Dec 2005
Posts: 84
* Anyone want to go into property? *

Anyone interesting in getting into property?

I'm planning to get into property investment soon, more as a stream of second income and longer-term investment to complement another business, with the option of either buy-to-let investments or buying land and then gaining planning permission (although Gordon Brown may decide to tax this soon, grr..).

A common misconception is that you need lots of cash to get into property.. this is not always the case. I'm looking into ways to invest with minimal money down. For example, taking out a 90% mortgage with a vendor deposits, which effectively mean you could potentially purchase a property with 0% deposit. You would only have to pay legal fees of around £1500 (and possibly stamp duty if its value is over £120k).

Would be great to hear from anyone wanting to get into property in a similar way!

Alex.
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big_phoenix big_phoenix is offline
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Join Date: Oct 2005
Posts: 443
Wow no money down.

Does that apply each month too when the mortgage company is demanding £700 and you have no one in the property?

Does the plumber work for nothing when the bathroom floods?

Have you taken in to account the fact that most lenders will lend up to 75% max on B2L mortgages and even less if it is your second?

What about the vendors making some 5% deposit paid deals (more common than 10%) only available to first time buyers or Buy to LIVE customers.

£600 per year service charges too on leashold properties.

The management company fees of 12% each and every month, after all you are busy working on your real business so have no time to manage the place.
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TheChillPill TheChillPill is offline
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Join Date: Dec 2005
Posts: 53
I used to 'dabble' with property myself, and I think you may be a little optimistic with getting a 90% mortgage on an investment property. You need to have a very good track record before a bank will lend that amount. A friend of mine deals with property on a fairly large scale - around 10 million a year - and he still can't get higher than 85%. 70% is most common, 80% at a push.

Getting a mortgage from the regular outlets (ie Mortgage companies) will be near enough impossible unless you have security elsewhere too. If you don't, you're more likely to need bridging finance from your bank, rather than a mortgage.
EDIT: above only applies if you are renovating. I may have mis-read your post first time around.

Finally, I would say getting in to the property market now is a higher gamble than I would feel comfortable with. The market can't really stand much of an increase any further, and is more likely to start falling slowly. Could be wrong, but I personally wouldn't put my own money in the hat at the moment.
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Jon123 Jon123 is offline
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Join Date: Sep 2005
Posts: 285
My advise might be to invest in property in european countries that have not yet joined the eu. as prices are likely to rocked when thos countries join. so places you can get a lot for your money.
Jon
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streamline streamline is offline
Maven
Join Date: Nov 2005
Location: Buckinghamshire
Posts: 69
properties

Hi Alex,

One of my companies is an international real estate company. We have properties in Spain, Tunsia, Dubai, Turkey, France, Florida, Cyprus etc.

If you are looking to buy a property thier are loads of options especially in Cyprus, as there is a great deal that you may be able to take advantage of. Plus there are many of the developers who are offering a guaranteed rental income fo the first few years - which really can help.

If you would like some more information, please send me a email, and I will send some links over to you.
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skyrider skyrider is offline
Maven
Join Date: Dec 2005
Posts: 84
Quote:
Originally posted by big_phoenix
Wow no money down.

Does that apply each month too when the mortgage company is demanding £700 and you have no one in the property?

Does the plumber work for nothing when the bathroom floods?

Have you taken in to account the fact that most lenders will lend up to 75% max on B2L mortgages and even less if it is your second?

What about the vendors making some 5% deposit paid deals (more common than 10%) only available to first time buyers or Buy to LIVE customers.

£600 per year service charges too on leashold properties.

The management company fees of 12% each and every month, after all you are busy working on your real business so have no time to manage the place.
Firstly, properties I'm looking at are new so are unliekly to need more than small contingency for repairs etc.

Also, would arrange tennant (most likely young professionals) on 12 month agreement before purchase if possible.

Managment companies are only necessary when you have more properties than you can manage on your own.

I agree, getting mortgage at 90% is less likely than 80% or perhaps 85%, but there are many options if you are willing to take calculated risks and be open minded with the possibilities :-)
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TheChillPill TheChillPill is offline
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Join Date: Dec 2005
Posts: 53
If you are looking at new properties, there is no way you will be able to get the figures to stack up.

People usually rent because they either don't have deposits for a mortgage, or can't afford a mortgage on a property of suitable size.

However, in your instance you are looking at a vendor deposit - your tenant could do the same. Likewise, you need the rent to cover the cost of the mortgage - if the tenant can afford the rent, they can afford the mortgage.
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skyrider skyrider is offline
Maven
Join Date: Dec 2005
Posts: 84
Quote:
Originally posted by TheChillPill
If you are looking at new properties, there is no way you will be able to get the figures to stack up.

People usually rent because they either don't have deposits for a mortgage, or can't afford a mortgage on a property of suitable size.

However, in your instance you are looking at a vendor deposit - your tenant could do the same. Likewise, you need the rent to cover the cost of the mortgage - if the tenant can afford the rent, they can afford the mortgage.
Thanks for the comment. Adding the figures up can be difficult. However, I know there are ways to do this as I have a friend doing the same thing.

It could be said that they could do the same thing, but isnt this the same as saying about a business idea that 'if it would work, someone would have already done it'? There is an element of risk with vendor deposits many would not be comfortable with (and you might need good negotiating skills to get them to agree) so in many cases its easier to rent.
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big_phoenix big_phoenix is offline
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Join Date: Oct 2005
Posts: 443
Why not open a restaurant in your spare room to help pay the mortgage?

Or is your restaurant going to be a seperate business?
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TheChillPill TheChillPill is offline
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Join Date: Dec 2005
Posts: 53
Quote:
Originally posted by skyrider
Thanks for the comment. Adding the figures up can be difficult. However, I know there are ways to do this as I have a friend doing the same thing.

It could be said that they could do the same thing, but isnt this the same as saying about a business idea that 'if it would work, someone would have already done it'? There is an element of risk with vendor deposits many would not be comfortable with (and you might need good negotiating skills to get them to agree) so in many cases its easier to rent.
It's not really the same as a business idea - ideas can work because you don't face the same challenges as you will here.

Even taking aside the obvious point about people being able to buy the property themselves instead of renting, the mortgage fees on a new property would be above what the rental market would command. Thats why investors stick with apartments for the most part, or renovate a property. Very few buy houses that don't require renovation, and none will buy a brand new property through the same channels as joe public.
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skyrider skyrider is offline
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Join Date: Dec 2005
Posts: 84
Chill Pill,

This isnt necessarily the case. As it happens I am looking at apartments! In terms of renovating, this is what many amateur investors do (although there are obviously good cases for this if you know what you are doing!) and end up doing a wishy washy job like on the various property shows on tv. Many investors do buy new properties. Heard of buying off plan??

Positive responses welcome!!

Thanks,

Alex.
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skyrider skyrider is offline
Maven
Join Date: Dec 2005
Posts: 84
Quote:
Originally posted by big_phoenix
Why not open a restaurant in your spare room to help pay the mortgage?

Or is your restaurant going to be a seperate business?
Seperate obviously. I'm sure you are also open minded and interested in more than one thing? lol
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TheChillPill TheChillPill is offline
Maven
Join Date: Dec 2005
Posts: 53
Quote:
Originally posted by skyrider
Chill Pill,

This isnt necessarily the case. As it happens I am looking at apartments! In terms of renovating, this is what many amateur investors do (although there are obviously good cases for this if you know what you are doing!) and end up doing a wishy washy job like on the various property shows on tv. Many investors do buy new properties. Heard of buying off plan??

Positive responses welcome!!

Thanks,

Alex.
Well, I can only reiterate the fact that I've been in this business before, and a good friend of mine does it for a living. Investors do not buy new properties through the same avenues as joe public. Yes, they do buy off-plan, but you're talking entire blocks here - not one-offs. Builders will laugh you out the door if you go in as an investor and only want to buy one.
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thecyke thecyke is offline
Entrepreneur
Join Date: Sep 2002
Posts: 40
Lot of unconstructive criticism here folks, you may find your opinions and feedback more useful and more likely to register if you attempt something constructive.

Just because you can poop on someone from a great height doesnt mean you should.
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InnoCreate InnoCreate is offline
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Join Date: Oct 2005
Location: Essex
Posts: 413
Ok first off chillpill - people rent yes because they can't get a mortgage, but like my sister she pay's xxx amount of rent a month but she can only get a mortgage for 2/3rds of that. So just because u can afford to pay the rent on a property it doesn't mean your going to be able to get a mortgage on it.

I do think it'll be hard for you sky rider to get a good deal off plan with no deposit - i think normally the builders will expect you to have the money when buying off plan. Normal the vendor deposit schemes only come into play once the properties are built - but then i guess it depends where you live and how boyant the property market is in your area.

A bit of advice finally!!!
Look at the big property development companies and buy from them - give them a ring and ask if they have any properties they're trying to clear - believe it or not the big companies have sales just like any shop where they try and get rid of the old stock before the year end - makes their company accounts look much healthier. I think some of these property's can be up to 30% cheaper.
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