The good & bad of Buy to Let

Forever Living Business Owner

Is buy to let all its cracked up to be ?

I attended a course 8 years ago a Woman’s property investment seminar.

We decided We were going to expand our property portfolio as a diversification to our investments.

In 2014 we had managed to purchase
2 commercial properties, & 7 houses.

We thought we would share the advantages and disadvantages of buy to let .

The properties we purchased in 2008, two of these the market was fairly high when we bought, the benefit with these, they were top properties attracting very attractive tenants and as a result, these properties have been rented 100 per cent since 2008.

Two properties were mid range properties have seen tenants come & go with not much disruption .

The commercial property housed our office & we opened a restaurant on the ground floor.
When we sold our restaurant the new owner acquired the whole building the yield on this was approximately 7%.

We also bought 3 properties from auction companies, these properties have been more work and have certainly been the drain on the portfolio, bad tenants, damage to property, tenant moonlighting.

With the new laws on Landlords and Social Behaviour think twice before buying your property.

http://scotland.shelter.org.uk/get_advice/advice_topics/neighbourhood_issues/antisocial_behaviour/private_landlords_and_antisocial_behaviour/how_private_landlords_should_deal_with_antisocial_behaviour

You may be aiming for a yield of 8 per cent, if you have 3 properties draining your portfolio this will lower your yield substantially.

Look into the taxation on the properties, rental income is taxable as schedule A income, know what the Capital gains tax position is and what you require to keep in the event of a sale.

Buy to let mortgages are also changing, the with the loan to value being reduced substantially, which means you need to find a deposit of 40 per cent.

Buy to let is a great investment make sure you use them well research the area and that your property will be rented out as each month you don’t have a tenant also reduces the yield on your portfolio.

New developments in Cities are showing a guaranteed yield for 2 years of 6% with interest rates being so low, this could be a good alternative investment. Speak to your IFA or Mortgage Adviser.

 

Head Office Address – Forever Living Products, Longbridge Manor, Warwick, CV34 6RB.

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