Your type of investments for your future?

[jaspa888]

In the NW there are 2-3 bed houses available for <£100k, for these do you still tend to get a mortgage out or look to save for a while & buy cash; what is the better option, I guess for less experienced folk maybe cash is better to avoid the curve balls during the day to day running stuff.

Also, a big chunk of these houses are on very long leases, does that bother you, being in the city I found it odd but it seems to be the norm up there, you know the average asian terraced street close to town

The only time I buy for 100% cash is when getting something in an auction, where the purchase price is substantially below open market value. These properties are usually unmortgageable anyway. And putting down only 20% deposit also allows you to buy multiple properties with your cash via mortgages. The % return on cash investment is also better when buying via a mortgage - my main metric.

90% of the properties in the NW are leasehold, with peppercorn (i.e. negligible) ground rent and long, long leases. This is not an issue at all with lenders. The only problem you get is with new build flats with doubling ground rent and lease length < 85 years. I avoid these at all costs.

 

[shaz619]

The only time I buy for 100% cash is when getting something in an auction, where the purchase price is substantially below open market value. These properties are usually unmortgageable anyway. And putting down only 20% deposit also allows you to buy multiple properties with your cash via mortgages. The % return on cash investment is also better when buying via a mortgage - my main metric.

90% of the properties in the NW are leasehold, with peppercorn (i.e. negligible) ground rent and long, long leases. This is not an issue at all with lenders. The only problem you get is with new build flats with doubling ground rent and lease length < 85 years. I avoid these at all costs.

For sure the mortgage route opens up for further investment, but even in this market with the high interest rates? Do you go for repayment or interest only especially those houses that might be <100k, also how is the return on cash investment better via a mortgage, is that based on selling the property or the rental yield

 

[ElRaja]

For sure the mortgage route opens up for further investment, but even in this market with the high interest rates? Do you go for repayment or interest only especially those houses that might be <100k, also how is the return on cash investment better via a mortgage, is that based on selling the property or the rental yield

always interest only, why would u want to repay a mortgage on an investment property?

 

[shaz619]

always interest only, why would u want to repay a mortgage on an investment property?

I know it’s a good debt but am not entirely comfortable with it. A lot of the time, people who go that route know what they are doing and have a big portfolio, but if the plan is to have 1-2 properties (possibly in a familiar area even if it is distant & can maybe pass it on ?), and you already have a high level of debt perhaps from your own mortgage then maybe you don’t want to expand that. I am open to the other takes on it but I am only taking into account properties which are <100k or the sorts which get picked up in auction and are done up, e.g. something which isn’t completely beyond your reach buying outright.

 

[ElRaja]

I know it’s a good debt but am not entirely comfortable with it. A lot of the time, people who go that route know what they are doing and have a big portfolio, but if the plan is to have 1-2 properties (possibly in a familiar area even if it is distant & can maybe pass it on ?), and you already have a high level of debt perhaps from your own mortgage then maybe you don’t want to expand that. I am open to the other takes on it but I am only taking into account properties which are <100k or the sorts which get picked up in auction and are done up, e.g. something which isn’t completely beyond your reach buying outright.

your personal mortgage is different, i fully understand and probably ascribe to getting rid of that debt, its your house, u never want the stress of ever losing your home. but your BTL portoflio is a business, its seperate from your personal finances and if you incorporate, and invest well, your rentals should cover your repayments. its simply a matter of money in v money out, best case scenaario it gives your the financial freedom to work as and when you want, and worse case scenario, you lose everything, you still have ur primary income and your home.

maybe its my mentality, but if im taking on the additional mental stress of building a BTL portfolio, the only way it makes sense is if i can maximise my return, and thus minimise my time to potential financial freedom, hence mortgaging always makes sense.

 

[Hitman]

I hope crypto is soon regulated in India.

 

[jaspa888]

For sure the mortgage route opens up for further investment, but even in this market with the high interest rates? Do you go for repayment or interest only especially those houses that might be <100k, also how is the return on cash investment better via a mortgage, is that based on selling the property or the rental yield

Pretty much every investor in this sector goes for interest only as yield is the primary metric. Also, make sure to buy in a limited company as the mortgage interest is tax deductible (not so in personal name). Paying down the mortgage was a thing back in the 1990s when properties were cheap and BTL mortgages were not a thing. But property is not a good investment for capital appreciation these days, so keep your monthly costs as low as possible.

Return on investment is better for a mortgaged property than cash because interest rates are still relatively [historically] low. I have attached a screenshot of what the live deal I mentioned earlier would look like if purchased as a cash deal. RoI is much less attractive.

I know it’s a good debt but am not entirely comfortable with it. A lot of the time, people who go that route know what they are doing and have a big portfolio, but if the plan is to have 1-2 properties (possibly in a familiar area even if it is distant & can maybe pass it on ?), and you already have a high level of debt perhaps from your own mortgage then maybe you don’t want to expand that. I am open to the other takes on it but I am only taking into account properties which are <100k or the sorts which get picked up in auction and are done up, e.g. something which isn’t completely beyond your reach buying outright.

My own plans in the future are based around my entire BTL portfolio being leveraged at 60% LTV, and giving me a passive income.

To be honest, I plan to not own any property personally including my main residence. Instead, I will sell my house when I choose to retire and invest in funds. I can then live where I want in the world, when I want, on the income from these funds. This gives full flexibility of movement - something I personally want. This works because renting is generally cheaper than owning in most of the UK.

An example. My house is worth, say, £500k. If I sold it, and invested in, say, a global index fund earning a conservative 7%pa. That gives me £35k per year... easily enough to pay rent and bills to rent that same £500k property. But if I want to move to another country for a few months, I can rent there instead and not have the hassle of trying to sell the first property.

 

[shaz619]

Pretty much every investor in this sector goes for interest only as yield is the primary metric. Also, make sure to buy in a limited company as the mortgage interest is tax deductible (not so in personal name). Paying down the mortgage was a thing back in the 1990s when properties were cheap and BTL mortgages were not a thing. But property is not a good investment for capital appreciation these days, so keep your monthly costs as low as possible.

Return on investment is better for a mortgaged property than cash because interest rates are still relatively [historically] low. I have attached a screenshot of what the live deal I mentioned earlier would look like if purchased as a cash deal. RoI is much less attractive.




My own plans in the future are based around my entire BTL portfolio being leveraged at 60% LTV, and giving me a passive income.

To be honest, I plan to not own any property personally including my main residence. Instead, I will sell my house when I choose to retire and invest in funds. I can then live where I want in the world, when I want, on the income from these funds. This gives full flexibility of movement - something I personally want. This works because renting is generally cheaper than owning in most of the UK.

An example. My house is worth, say, £500k. If I sold it, and invested in, say, a global index fund earning a conservative 7%pa. That gives me £35k per year... easily enough to pay rent and bills to rent that same £500k property. But if I want to move to another country for a few months, I can rent there instead and not have the hassle of trying to sell the first property.

Would you be setting up a limited company right away when you’re getting into BTL’s or wait? Yes unfortunately we can’t do it like our predecessors, for many people in the UK it’s difficult to get on the property ladder to begin with. Looking at those two examples the mortgage option is much better! unless you can buy for cash close to what you’d pay for a deposit, post 2020 though we’ve missed that boat.

A question for yourself, if you intend to buy tracker funds, stocks or get into dividend investing towards the end, wouldn’t you prefer to do that right now anyway opposed to the BTL portfolio? And do you really feel BTL’s can still work for the next couple of decades in the UK given the growing concern around restricting landlords more and more.

Ah right so you’d still keep your BTL investments but at 60% LTV you’d take out the equity and invest that in tracker funds & go live in Dubai ? Do you have like an aim for an x number of BTL’s to own before you do that.

 

[shaz619]

your personal mortgage is different, i fully understand and probably ascribe to getting rid of that debt, its your house, u never want the stress of ever losing your home. but your BTL portoflio is a business, its seperate from your personal finances and if you incorporate, and invest well, your rentals should cover your repayments. its simply a matter of money in v money out, best case scenaario it gives your the financial freedom to work as and when you want, and worse case scenario, you lose everything, you still have ur primary income and your home.

maybe its my mentality, but if im taking on the additional mental stress of building a BTL portfolio, the only way it makes sense is if i can maximise my return, and thus minimise my time to potential financial freedom, hence mortgaging always makes sense.

What would be your ideal plan to get to that flexible point so you’re not too tied down to your current employment, how many BTL’s do you plan to have for example and I guess the bigger question, before you begin, would you prioritise a big emergency fund first &/or managing the debt in your own home (or at the least securing a long term fix as rates are still stupidly high as it’s a tough act to balance e.g paying down your house vs investing).

 

[jaspa888]

Would you be setting up a limited company right away when you’re getting into BTL’s or wait? Yes unfortunately we can’t do it like our predecessors, for many people in the UK it’s difficult to get on the property ladder to begin with. Looking at those two examples the mortgage option is much better! unless you can buy for cash close to what you’d pay for a deposit, post 2020 though we’ve missed that boat.

A question for yourself, if you intend to buy tracker funds, stocks or get into dividend investing towards the end, wouldn’t you prefer to do that right now anyway opposed to the BTL portfolio? And do you really feel BTL’s can still work for the next couple of decades in the UK given the growing concern around restricting landlords more and more.

Ah right so you’d still keep your BTL investments but at 60% LTV you’d take out the equity and invest that in tracker funds & go live in Dubai ? Do you have like an aim for an x number of BTL’s to own before you do that.

I would set up a limited company immediately for your first and all future purchases. Easy and cheap enough (£15) for you to do by yourself. It becomes difficult to transfer a personal property to the limited company later as you have to then pay stamp duty all over again.

Your second question. The BTL portfolio and stock investments provide different outcomes for me. The former is to give me a passive income for retirement. The latter is to grow my wealth to pass on or give away, as I do not access the funds. I have structured the portfolio so all dividends are automatically reinvested back into the fund. At some point, I may choose to sell my BTL portfolio and reinvest those into the stock portfolio too, and then I would live off some of those dividends.

For younger people, I would recommend investing regular monthly amounts into global funds via a tax efficient ISA, and not access it so that it compounds over time. Property is good, but nowhere near lucrative enough these days based on prices, and the incoming renters reform legislation you are referring to.

I have told the same to younger members of my extended family. A screenshot of a spreadsheet I share with them shows the power of compounding over 10, 20 and 30 years. Invest just £200 monthly with 8% annual growth (to account for inflation) and it becomes £300k in 30 years. But the real eye opener is what % of total portfolio value is from growth over time. You cannot replicate that with a property IMHO.

 

[shaz619]

I would set up a limited company immediately for your first and all future purchases. Easy and cheap enough (£15) for you to do by yourself. It becomes difficult to transfer a personal property to the limited company later as you have to then pay stamp duty all over again.

Your second question. The BTL portfolio and stock investments provide different outcomes for me. The former is to give me a passive income for retirement. The latter is to grow my wealth to pass on or give away, as I do not access the funds. I have structured the portfolio so all dividends are automatically reinvested back into the fund. At some point, I may choose to sell my BTL portfolio and reinvest those into the stock portfolio too, and then I would live off some of those dividends.

For younger people, I would recommend investing regular monthly amounts into global funds via a tax efficient ISA, and not access it so that it compounds over time. Property is good, but nowhere near lucrative enough these days based on prices, and the incoming renters reform legislation you are referring to.

I have told the same to younger members of my extended family. A screenshot of a spreadsheet I share with them shows the power of compounding over 10, 20 and 30 years. Invest just £200 monthly with 8% annual growth (to account for inflation) and it becomes £300k in 30 years. But the real eye opener is what % of total portfolio value is from growth over time. You cannot replicate that with a property IMHO.

What’s your current sort of split between BLT and stock/shares, and do you have a goal for an x number of properties (how many do you manage currently / is there a team if you don’t mind me asking), I guess the negative is the management of them if you have a decent few! Do you invest your returns from BLT in stocks as well? Or keep that for BLT related maintenance or other expenses. Agree on the ISA, the company one use to work better for me as the deposit is taken immediately and you don’t see it, if we can bring that discipline into regular saving/investing into the stock market it can be lucrative long term.

 

[jaspa888]

Don't want to give specific details on here, but it is more than a couple. Mostly HMOs, all in the NW. Management is easy if you have a decent agent, but we are fairly hands-on ourselves, meaning we are maximising rental income while keeping costs low.

Split is roughly 2/3 in property, 1/3 in stocks. I use some the dividends from BTL to live on, and reinvest the rest into ISA and SIPP.

 

[ElRaja]

What would be your ideal plan to get to that flexible point so you’re not too tied down to your current employment, how many BTL’s do you plan to have for example and I guess the bigger question, before you begin, would you prioritise a big emergency fund first &/or managing the debt in your own home (or at the least securing a long term fix as rates are still stupidly high as it’s a tough act to balance e.g paying down your house vs investing).

yes, six months of expenses, however its netted against the small passive income i have from one rental, the debt in my own home is not onerous as its servicing would be included in my emergency fund. my number one concern is minimising stress, id forsake an extra 40% income if it meant taking on 20% more stress.

im also lucky in that i like my job, so even if i had the money i dont think id leave anytime soon. if i could make about 75% of my income from a BTL portfolio then id be willing to walk away if things turned sour.

 

[shaz619]

Something a bit more nerdy / different & you will have a good view on this being a enthusiast @ElRaja but what do you guys think of classic car investment @jaspa888



As we get close to the phantom 2030/2035 buy, it’s quiet possible classic car values plummet? And could they become very good investments if you buy in at the right time?

 

[shaz619]

Petrol is still here to stay.

I know of folk who keep such cars in a unit and I don’t know what the success rate is in terms of annual business, but as a long term investment, surely there could be a decent pay-off, a unit / storage can be pricey though!

 

[ElRaja]

Something a bit more nerdy / different & you will have a good view on this being a enthusiast @ElRaja but what do you guys think of classic car investment @jaspa888

View attachment 157574

As we get close to the phantom 2030/2035 buy, it’s quiet possible classic car values plummet? And could they become very good investments if you buy in at the right time?

its ironic you post a classic since i got a video of the new bmw ix3 pop up on my youtube feed today and thought, hmmm, interesting, lolol.

if there was one bmw classic i wanted more than any other, it was the e24 6 series, followed by the e39 m5. the 3 series never did it for me tbh, dno why. i think the rarer spec Ms will always hold value really well if you get a good deal, wouldnt be surprised if they pass £100,000 mark in the next 10 to 15 years.

theres a golden late 80s merc sl soft top getting ruined a few blocks down from mine, if i had the time or the expertise, would love to do it as a project car.

 

[shaz619]

its ironic you post a classic since i got a video of the new bmw ix3 pop up on my youtube feed today and thought, hmmm, interesting, lolol.

if there was one bmw classic i wanted more than any other, it was the e24 6 series, followed by the e39 m5. the 3 series never did it for me tbh, dno why. i think the rarer spec Ms will always hold value really well if you get a good deal, wouldnt be surprised if they pass £100,000 mark in the next 10 to 15 years.

theres a golden late 80s merc sl soft top getting ruined a few blocks down from mine, if i had the time or the expertise, would love to do it as a project car.

lol I always see them pop up & saw this 333i, I always wondered why South Africa were huge E30 fans, their fandom extended to making their very own M3 with the help of the Germans.

Ah I know of a someone who got e24, they pursued it after getting a company car, it’s arguably the most beautiful coupe ever made!

The e39 M5 can still be picked up at a decent price, that would actually be a pretty good buy if you find a low miles one in good condition, the closest modern car to this is the G20 M340i, have you seen that? It can also be had with the mild hybrid tech and weights exactly the same as the e39 M5; while the e39 is more analogue the G20 m340i is more digital and pretty good for a daily I reckon.

Yes, the M’s will hold good value, especially something like the E30 M3.

I do hope to have a project down the line & I’ve seen some merc rust boxes near me as well, but what about finding something in really good condition & just storing it etc? Although you’d have to pay in excess of 50k and you don’t get passive income out of it though in the near term.

 

[ElRaja]

lol I always see them pop up & saw this 333i, I always wondered why South Africa were huge E30 fans, their fandom extended to making their very own M3 with the help of the Germans.

Ah I know of a someone who got e24, they pursued it after getting a company car, it’s arguably the most beautiful coupe ever made!

The e39 M5 can still be picked up at a decent price, that would actually be a pretty good buy if you find a low miles one in good condition, the closest modern car to this is the G20 M340i, have you seen that? It can also be had with the mild hybrid tech and weights exactly the same as the e39 M5; while the e39 is more analogue the G20 m340i is more digital and pretty good for a daily I reckon.

Yes, the M’s will hold good value, especially something like the E30 M3.

I do hope to have a project down the line & I’ve seen some merc rust boxes near me as well, but what about finding something in really good condition & just storing it etc? Although you’d have to pay in excess of 50k and you don’t get passive income out of it though in the near term.

im not sure on the economics long term, i dont think anyone is, but the yield i guess is happiness of having a lovely car to play with. id never get a car as a pure investment, id get one that really tickles my fancy, and if it appreciates greatly then thats a bonus.

one of the reasons i love jay leno is he owns and drives all sorts of different and amazing cars. if i was going to buy one car that ticks all the boxes without breaking the bank would be a used JCW mini, like ten years old or so, i think they will hold value very well over the coming years, and would be a lot of fun and practical to drive around the city.

 

[shaz619]

im not sure on the economics long term, i dont think anyone is, but the yield i guess is happiness of having a lovely car to play with. id never get a car as a pure investment, id get one that really tickles my fancy, and if it appreciates greatly then thats a bonus.

one of the reasons i love jay leno is he owns and drives all sorts of different and amazing cars. if i was going to buy one car that ticks all the boxes without breaking the bank would be a used JCW mini, like ten years old or so, i think they will hold value very well over the coming years, and would be a lot of fun and practical to drive around the city.

True that should be an important part of any investment, weighing up the benefit / joy against how much stress you’re going to deal with. I follow his YT from time to time, top guy, Americans have a great automotive culture and due to the climate there are much better at preserving classics unlike us due to the salt on our roads. On the ix3 you mentioned it actually looks decent, the grill reminds me of the E30 lol, the new M3 will have a similar narrow grill but it will be wide as well which doesn’t seem to fit well but it could do when we see it in the flesh.

 

[jaspa888]

Very difficult to make money on classic cars, in my experience. Apart from the super expensive rarities that we all know, the next tier down is very volatile based on wider economic conditions - something that affects all luxury goods. A better bet, IMHO, is to second guess what the next modern classic will be.

My business partner is a self-confessed petrolhead, and he thinks the Alfa Romeo 4C will become valuable in the future as it fulfils the two main criteria: it was made in relatively small numbers (rarity), and it is seen as iconic.

 

[mominsaigol]

AI. Im having my kids go into AI and comp sciences. Ai is the future

 

[jaspa888]

AI. Im having my kids go into AI and comp sciences. Ai is the future

Very astute. I read a quote by the founder of LinkedIn, who said it was not AI that will replace your job in the future, but rather someone who knows how to harness the power of AI better than you do.