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Post by Humph on Oct 24, 2020 16:56:41 GMT
That is the question.
We have another house that we rent out. Had it for donkeys years. No mortgage on it, or our main dwelling. Anyway, the most recent tenants moved out at the end of September, and we've been spending a lot of time over there re-decorating, re-furbishing and so on. Nearly done now. Very bored with paint, frog tape, ladders, sandpaper, cutting in ( how I hate cutting in ) and Radio 2 ( she likes Radio 2 )
Agonising about whether to re-let it or sell it. Selling could advance the inception of the cunning plan, or at least phase 1 of the CP. Renting keeps the investment I suppose.
It'd maybe fetch enough on a good day to fund two flats ( think we'd get more rent from two flats than one house ) or, straw hat, Duster etc here we come...
Would've bought a little something in France in a heartbeat as a holiday let/home before Brovid cocked it all up.
Think I'll open a bottle of something distilled on Speyside and ponder it all.
Hmmm, one flat and an Aston maybe...😉
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Post by dixinormus on Oct 24, 2020 19:17:45 GMT
Good time to sell (rising house prices), but if you don’t reinvest your gains (spend!) you’ll get nothing at the bank by way of interest.
Also depends if you want to “retire” or not yet? You can’t exactly head off on a world cruise these days can you?!
Sell house and buy flats etc? More costs and fees, solicitors, inevitable new kitchen required etc..!
Reckon I would sit tight with what you have got for a couple more years first and see where the world is heading. Just my 2p worth..!
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Post by Deleted on Oct 24, 2020 20:25:26 GMT
At least property is increasing in value at around 2.5%. Where else are you going to put the money unless you are cashing your chips in to retire but then you'd still want to see some kind of increase as you are still relatively young/fit ?
We are about ten years behind you, a few places dotted around mortgage free and with the increasing red tape the UK is becoming less and less attractive.
Do you get an EU residency get out of Brexit pass with your place in France ?
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EspadaIII
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Post by EspadaIII on Oct 24, 2020 20:30:24 GMT
This is one question I can answer as a professional....
1. Do you realise that flats have service charges that cannot be ignored. Whilst the managers of a block do remove some headaches for you like insurance and roof repairs, you cannot decide to 'make do and mend' to save money if the managers and other owners decide to renovate.
2. You will pay CGT on the sale of this investment and will pay SDLT (Stamp Duty Land Tax) with a surcharge of 3% over the standard homebuyers rate when you buy the flats. You will have three sets of lawyers costs and lawyers are not called the Deal Prevention Unit by surveyors for nothing. They are pedantic bastards who create delays to rack the fees up. And that's ones I like and use myself.
3. Generally a nice house in a pleasant area will be good for a family who should be better capable of looking after the house than young professionals or others who rent flats.
4. We (Espadrille) manage 400 houses and flats. It's much easier to deal with houses. No neighbours upstairs causing floods.
Yes, house prices are rising but I agree with Dixi. Unless you already know of two good flats in good blocks with low service charges and no medium term major works, I would also sit tight.
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Post by Humph on Oct 24, 2020 21:30:25 GMT
Thanks all, for the input.
Re CGT, many years ago, we put the property in my wife's name ( she only works part time and is a basic rate taxpayer ) so it might not be too scary.
After costs/tax, the rental return isn't huge, it's better than any bank would pay of course, but it's not much of an income generator.
One thought might be to realise the cash and start an amateur property development sideline. You know the sort of thing, buying sound but mildly tatty houses, doing them up enough to add a bit of value, sell on, rinse and repeat...not looking for a get rich quick route, but to earn more from the cash tied up in the property than it is generating as a renter.
Any thunks on that one?
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Post by Deleted on Oct 24, 2020 21:36:58 GMT
One thought might be to realise the cash and start an amateur property development sideline. You know the sort of thing, buying sound but mildly tatty houses, doing them up enough to add a bit of value, sell on, rinse and repeat...not looking for a get rich quick route, but to earn more from the cash tied up in the property than it is generating as a renter. Any thunks on that one? Your earlier comments indicate that might not be for you: "Very bored with paint, frog tape, ladders, sandpaper, cutting in ( how I hate cutting in ) and Radio 2 ( she likes Radio 2 )" If you're bored with what you've got how does the prospect of pulling something, unknown, apart and rebuilding appeal ?
P.S. What have you gone for to whet your whistle while you ponder ?
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Post by Humph on Oct 24, 2020 21:52:07 GMT
Had a mug of tea in the end ! But, if I had indulged, it would have been a Macallan.
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Post by Deleted on Oct 24, 2020 22:00:11 GMT
PG tips or Yorkshire (hahahahaha as if anyone west of the Pennines drinks Yerkshir) tea ? I'm not familiar with Speyside, my preferred poison these days is from the islands, Bunnahabhain or Bruichlaiddich.
As an aside I had a look this week at Aston Martin DB7 I6 and V12 models. Very nice looking cars BUT...no faster than a fast hatchback in 2020. I know a Mercedes A45 is not going to match 'let's take the Aston' nevertheless quick, an Aston, is not. If you want an Aston then nothing else will do obviously.
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Post by dixinormus on Oct 24, 2020 22:29:16 GMT
Unless you’ve got the advanced DIY skills, or at least rampant enthusiasm, then I’d steer clear of buying doer-uppers and watching all your free time and cash evaporate! Life’s too short etc. we built a new house for ourselves a couple of years ago, and I won’t be doing it again..!
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Post by Deleted on Oct 24, 2020 22:33:52 GMT
Agree, I think dooer uppers are a 30s and 40s thing not something to be tackled in your *ahem* advancing years unless you've got a young, whipper snapper, dooer for whippsnappering.
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Post by Humph on Oct 25, 2020 7:23:53 GMT
Fair point, but I'm not exactly on a Zimmer frame quite yet, and I do have access to a whippersnapper.
As for skills, I wouldn't say we were any kind of experts, but we are amateurishly competent I suppose. We once bought a derelict old grain mill in Scotland and turned it into a house ourselves. We knew nothing when we started, but learned a fair bit along the way.
I dunno, just toying with ideas really.
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EspadaIII
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Post by EspadaIII on Oct 25, 2020 7:25:03 GMT
We drink Yorkshire Tea in Manchester......
Irrespective of who owns the house and how little tax they pay you will be liable for CGT at (I think) 28% of the gain less annual CGT allowance which is about £12,000.
So if the house was put into Mrs Humphs name at a value of £80,000 and it sells for £150,000 the raw gain is £70,000. Assuming some permitted deductions for costs, the taxable gain is £60,000, less the £12,0000 = £48,000. Tax on this is about £13,000.
The better way is to 'gear up', i.e. remortgage the house and use the released capital to buy a second property. The rents from both properties will pay the mortgage and hopefully give you something spare.
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Post by Humph on Oct 25, 2020 8:08:53 GMT
Oh ok, thanks, that sounds like worth exploring Esp. Nearly finished the inside, couple more days should see it right. Needs new carpets / blinds / curtains next and then I've got to tackle the outside. Slabs to re-lay etc.
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EspadaIII
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Post by EspadaIII on Oct 25, 2020 10:53:24 GMT
Humph - you've got my details. If you need advice just email/call. People do make good livings out of this if you concentrate on it, make sure the houses are renovated to a good standard and you choose your tenants wisely.
Avoid areas where every house in the street is owned by an investor; i.e. terraces in most Lancashire former mill towns.
Develop a relationship with a good letting agent in your chosen area. If you have the time and energy to self-manage then continue to do so, but otherwise concentrate on high-level stuff like getting the best mortgage deal and choosing the next property to buy. The laws on letting property are becoming more and more onerous on the landlords (in some respects quite rightly) so a letting agent can steer you in the right direction to ensure that you have all the paperwork in place. Failure to do that means you cannot evict a dodgy tenant.
As an example you will need...
EPC (last ten years but must be E or better) Landlords Gas Safety Certificate (annual) Electrical Installation and Condition Report (every five years but if anything is wrong it must be put right in 28 days - this includes a full rewire if needed) Protected Deposit
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Post by Humph on Oct 25, 2020 11:18:13 GMT
Thanks Esp, I may well pick your brain further on this. We've been using a letting agent on the current house for years, and, as you say, it does take some of the pain away, with the downside that it eats into the profit. After those costs, general maintenance costs and tax it washes it's face, but it's not much of an income generator. Better return than putting it in the bank of course. Have to say, every tenant we've had seems to have lower standards of household cleanliness than what we would regard as normal. Hire car syndrome maybe.
A friend of ours who used to have a few BTLs has been messing about with holiday let static caravans in North Wales for a few years. Great return under normal circs but tragic this year of course.
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