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Regardless of the property and the amount you are investing the same fundamentals apply in terms of the due diligence you’re going to undertake. I started with the lower end of the market in London but know many people that invested in the Midlands and further North.
Like any market there are pockets of high performing properties regardless of the market conditions.
Since your looking for cashflow, try to find properties where rentals are in demand – students, medical, professionals etc. HMO’s are a great way to drive your cashflow up but they require some work and management so be aware of this.
If you’re going the let the property you need appropriate finance or you could run into all sorts of issues down the track. Some lenders will provide you with “consent to let” which is if you have taken out a residential mortgage but then decide to let the property out. This however can result in more fees.
Best to get some advice from a broker on this though as it’s a moving target.
Hope this helps, good luck!
I lived London for about 9 years and started my investing career over there and still maintain a small portfolio of properties in London.
Availability of finance ebbs and flows depending on the government, recent scandals and the general mood surrounding the economy.
Investors are keen to come up with solutions to financing challenges and there is loads of peer-to-peer, crowd-funding and joint venture scenarios available that are widely used and accepted. Your due diligence to all these options is of course paramount.
With traditional lenders different products exist for pretty much every flavour of investing so make sure you find a good broker and be very forth coming with information about your project – ie, BTL (buy to let) is treated differently to HMO (house of multiple occupancy) even know they are both essentially investment loans.
The minimum mortgage coverage accepted is 125%. That is, the monthly rent is equal to or more than 125% of the loan cost (IO is most commonly used by investors). I rarely came across a product that was viable unless at 25% deposit was chipped in. Yes, higher LVR’s are available but general have prohibitive terms.
As Richard mentioned, exit fees can be horrific – read the fine print and be careful!
There is some really good property meet-up groups in London mixed amongst all the snakeoil sales educator types. Get involved and leave your credit card at home.
Let me know if I can help in any way!
Check out Nick Radge at The Chartist (thechartist.com.au). I’ve been with Nick a few years now. He provides loads of free resources and a paid service which has different systematic and discretionary trading models along with technical and fundamental analysis. Above all though he will teach you how to understand, accept and control risk which is what most people get wrong.
So if you own the whole building, you are the body corporate and will be responsible for such costs?
Scott No Mates: is there a circumstance where the tenants would be required to contribute to the upkeep of common areas which would be detailed in the lease? Using the above example of a small office block. Support the driveway to the car park needed resurfacing. Would it be a possibility that these costs would be chargeable to the tenants under the lease they have signed?
Wadez, I’m watching very closely. My whole portfolio is based in London and now I’m back in Aus earning AUD with some ready to invest.
Will need a little time to see how things are going to play out. Also the GBPAUD held up relatively well so far. If I’m going to put money into London with the certainty ahead I’ll be looking for the GBP to drop to 1.50-1.60.
London as a whole held up well in the GFC but there were pockets of distressed sellers and a not many buyers other than smart money from Asia and Russia and property investors that could get their hands on finance which dried up considerably.
Freedom of movement appears on the cards as far as a trade deal goes so my hope is the city can come out of this not too beat up. The leave camp has backflipped on a number of promises including immigration which is one of the fundemental drivers in the uk market.
For the record I voted remain but now support the process playing out. Bumpy ride ahead.
Where there is problems, uncertainty and doubt, there is opportunity.
I remember being in your position and the most important decision I made was to start. You’ve done that, so congratulations.
It doesn’t seem so popular in Australia (or at least on these forums) but in the UK (where my portfolio is) many people starting out in property look at other ways they can make money through property without having to own it. A couple of examples are rent-to-rent (basically subletting) and deal sourcing (where you go out and find good deals and sell them to investors – I guess this is similar to being a buyers agent).
In terms of your learning, for you current situation this forum (and others) and books would be a good start. Cheap, accessible and packed full of useful information. The events are good for meeting people but leave your credit card at home for the time being.
Don’t underestimate what you can do in the long term with the power of compounding. It might be slow to start, but things will speed up as you progress.
Good luck, stick at it.
My preference has been to rent where I want to live and invest where it makes sense. I like the flexibility of renting and not being tired to a particular property.
Also, the places I want to live don’t fit with my investing strategy and don’t stack up for me. So I get the best of both worlds.
Capital gains tax is payable in the UK based on fair market value of when you left the UK (ie, date you became an Australian resident).
Check out zoopla or right move archives to get advertised and sold prices. The process is self assessment but be careful not to over inflate the figures to minimise the tax.
For all of my properties (they’re in London) we stage imor furnish them, especially after renovation. It’s a ridiculously high demand market but they have all rented the same day as advertised to good tenants at above market rate. I think it depends on where the properties are.
Speak to a specialist accountant that can get you the right structure. Depending on your strategy and broker there will be different requirements in terms of your structure and how it relates the the leverage made available to you. I trade two different strategies (one ASX and one US Stocks) and have a company/ trust structure that works well from a tax perspective and also meets the requirements of my brokers for the leverage that I need.
Good luck :-) – trading is a tough game!
When you say:
the Gov still has a lot of resources it can throw at any short term problems and would rather sacrifice our lifestyles than to have the financial system ruined
What are you referring to and why will it be effective at alleviating short term problems? What is short term in your view?
Thanks for the perspective – really interesting.
I find it hard to imagine interest rates going up to ‘normal’ levels anytime soon. The UK, US and EU have been banging on about a raising rates for the past 5 years and we’re only just starting to see some movement. Also interesting that banks are trending towards decoupling themselves from the RBA’s rates. Could this be a possibility… real borrowing rates rise regardless of the RBA?
I feel as though we may be heading towards scenario one (global financial pressure, rising unemployment etc) but this time round Australia has far less resilience to absorb the shock…
Do you think the asset rich cash poor baby boomers looking to downsize has the potential to accelerate selling?
Thanks again for the perspective.