Buying in London

HI :)

Long time reader and applying some learnings in my own little real estate world through experience. I am still a student and will go back to Uni this Oct. and currently working FT while investing in properties.

Can I ask for your opinion? What do you think?

I am thinking to buy a property In UK and wonder do you think if it is achievable in my certain condition. I think I could but I wonder if it is realistic or if I am way too over my head.

Properties Cashflow +-
1. Studio Flat Overseas: currently let and CF @ +£240 per month
2. 2 bedroom loft: Currently on construction negative CF@ -£275
3. 2 bedroom loft: Currently on construction negative CF@ -£275

Can pull out Cash: Re financing
Property 1: + £200 monthly rent CF; + £14,000 refinance.
(I am on the process of refinancing the 1st property and can get: +£14,000
and get the tenant to pay £200 my repayments on my new mortgage.
property is fully paid btw)

Property 2 & 3. off plan. but will finish this August 2011, can be delay.
-CF: - £870 (- £550 bank finance + -£320 student loan (used for DP) )
Pull out (Refinance Total contract price): + £13,000
£ need for Turnover total approx: - £ 8,500

Total turn over need: £8500
£ 2500: need for turn over
£ 6000: need to cover for 1 year incase can't get rent (worst case scenario) as the 2 bedroom loft x 2 is in country side: will run as: Condominium - hotel, takes time to take off.

Current debt: £320 student loan repayment use for DP, monthly salary can cover
---

SUMMARY:
Need DP london property: 30k to 40k @ 200k worth property with 20% discount goal

Money can raise for UK DP:
£14,000 (property 1)
£13,000 (Property 2)
---
£27,000 total

Minus:
£8500: property 2&3 expenses
£1500: personal expenses ( tuition fee + holiday) this oct. 2011
-----
£ 17,000: left
£ 23,000 (need to raise)

The rest can borrow. or Mum can provide share to buy a property to rent.
OR Can borrow personal loan @ 300k monthly repay.

---
Research:

Im doing my due diligence, know the area I wanted to buy in London, research through 100 + properties and down to 10 to view and buy 1 hopefully before mid year. I also researched the demand in the area, did some advertising to test if people are looking for that area to rent, contacted estate agents and I think Im ready for viewings.

Although I am still looking at 2 more areas just incase I got stuck up at current area incase offers cant go through or cant have discount I need.

------

Plan:
1. Buy before end of year. Cash flow target £350 - £400/ month, use to repay my student loan so that can take off my salary if mum join me for deposit.

OR

Buy end of year. Cash flow target £400/ month, use to repay loan for the ther part of DP. Salary to repay student loan.

2. Make sure I have 20% goal discount on London property I will buy so I can pull out equity after 6 months to buy another property to cover my student loan.

3. Buy another every after 6 months. if I have more cash why not buy more?

---

Good plan? pls let me know what you think. I am just a bit nervous as I am coming back to university this October 2011 and may lower my salary to cover my loans but I will still work as a part time while studying.

If property 2 & 3 kicks off and rent, then I could breath a bit. thats why I minus £8500 to my refinance money just to cover 1 year, as property 2&3 are condotel 2 bed loft and still are right now ongoing construction until aug.. 2011. can be delayed though.

Property 1 is already £240 cashflow but this will cover my new finance to pull out £14k to use partly for down, tenant to repay@ £200/ month, still + CF @ £40. may need to get £ to pay my property manager from my financing. but thats year 2012 when my tenant will finish contract so it shouldnt be a problem for now, otherwise I have some savings.

Thanks!!!:)
 
hi madfox,

are you aware that this is an australian forum and that any advice we may give may only be suitable to the australian market. if that is cool, then we will do our best!
 
I am aware that this is an australian forum, i think it is more of a question of is it realistic enough or not? Capable or not
Rather than looking at which country it is? I would be greatful of any feedback! :)
 
I am aware that this is an australian forum, i think it is more of a question of is it realistic enough or not? Capable or not
Rather than looking at which country it is? I would be greatful of any feedback! :)

we need to understand where YOUR head is at to determine whether it's a good deal or realistic for you.

do you want to invest for growth (! :rolleyes:) or cashflow?

do you want to be exposed to potential upswings or not interested in growth at all?

are you trying to target a specific demographic?

Graemsay (spelling?) is from the UK - try and PM him for some more local heads up, otherwise i'm sure the brains trust will do their best.
 
There was a discussion about buying in the UK generally last year around November. http://www.somersoft.com/forums/showthread.php?t=67181

Prices in London are starting to ease now as well. Check out the England and Wales land registry for actual data http://www.landregistry.gov.uk/

An investor/landlord forum that is for UK investors can be found here : http://www.landlordzone.co.uk/forums/forum.php

You will need a 40% deposit for any UK purchase as a non-resident landlord. Your rent will need to be at least 125% of your mortgage repayments.

Check out the following sites for more information :

www.zoopla.co.uk - this site provides property for sale and land registry sold data

www.propertysnake.co.uk - this site lists property for sale and tracks the time on market and changes in listing price
 
we need to understand where YOUR head is at to determine whether it's a good deal or realistic for you.

do you want to invest for growth (! :rolleyes:) or cashflow?

do you want to be exposed to potential upswings or not interested in growth at all?

are you trying to target a specific demographic?

Graemsay (spelling?) is from the UK - try and PM him for some more local heads up, otherwise i'm sure the brains trust will do their best.

Hi,

I am interested in Cashflow, positively geared to cover my mortgage and to cover my current loans. Also looking at buying a discounted property , below market value, so that after 6 months I could refinance and pull the money again and to buy another one, target is 2 per year.

However, I am looking at properties around an area where people can pay an affordable rent compared to central london. Area that is bit cheaper than the central, but close enough to the central area, 30 mins by bus or well connected by underground trains.
 
There was a discussion about buying in the UK generally last year around November. http://www.somersoft.com/forums/showthread.php?t=67181

Prices in London are starting to ease now as well. Check out the England and Wales land registry for actual data http://www.landregistry.gov.uk/

An investor/landlord forum that is for UK investors can be found here : http://www.landlordzone.co.uk/forums/forum.php

You will need a 40% deposit for any UK purchase as a non-resident landlord. Your rent will need to be at least 125% of your mortgage repayments.

Check out the following sites for more information :

www.zoopla.co.uk - this site provides property for sale and land registry sold data

www.propertysnake.co.uk - this site lists property for sale and tracks the time on market and changes in listing price

I will go check out the UKforum and get more info.
However, there's one more similar to propertsnake.co.uk for sale tracks, the Property bee, so if you search property in Uk website like rightmove, if actually show the history of any changes on listing.

Thanks james was really helpful!
 
Graemsay (spelling?) is from the UK - try and PM him for some more local heads up, otherwise i'm sure the brains trust will do their best.

Someone called? :D

I'm currently renting in Southwest London. I'm keeping an eye on local properties for sale, but I'm not looking to buy at the moment, largely because I'm uncertain where my future lies.

The market in the UK in general is a bit weird. Prices peaked in the autumn of 2007, then plummeted by around 20% over the next 18 months, before bouncing in the spring of 2009. It turned again last year, but prices are still up on the lows of 2009.

The London market is different again. As with the rest of the country prices are being supported by record low interest rates, particularly as most Brits are on variable rate mortgages. However there's been a lot of foreign money flow into the top end due to the collapse of the Pound on the FX markets (which explains things like One Hyde Park), combined with the City boys raking it in due to the massive amount of support that the banks have received in the last couple of years.

In terms of risks, with the Bank of England base rate at 0.5% there's only one way that it can go, and rises are expected later this year. The government has embarked on an austerity drive to stop the economy turning into Greece's, and generally (outside of the banking sector) things are tough.

Borrowing remains difficult. A buyer will frequently need a 20% deposit, and the banks will only offer their best deals to those who can put down 40%. Mortgage approvals have fallen from 130,000 a month in 2006 to between 40,000 and 50,000. The consensus amongst commentators is that 80,000 to 90,000 are needed for a stable market.

And yet prices aren't seeming to fall.

What seems to be happening is that properties are being listed on Rightmove at somewhat above what they would have fetched in 2007, and not moving. The thing is that sites like Zoopla, Nethouseprices or Mouseprice mean you can see when someone bought a place in 2008, and now wants another £100K or so for it.

That's brought a certain amount of transparency into the market, and it's reckoned that sales prices are something like 20% to 25% below asking prices on average. :eek:

I'm not seeing anything that's particularly good value at the moment, and there seems to be in a Mexican standoff between buyers and sellers.

I'm one of those nasty doom and gloomers, so my inclination would be to hold off buying in the short term. I'm not seeing any bargains, and there are still some downside risks (particularly interest rates rising) and clouds on the economic horizon.

The only upside that I can see if prices remain fairly flat is that you might benefit from a strengthening Pound as the UK economy picks up. I reckon it's probably 20 - 30% down on where it could be in a couple of years time.
 
Hi Graemsay,

What if then I have the down despite of this?
I am living in the SW London currently likewise but still living with parents and save £ to buy my first Uk property.

With your experience in London, is it possible to get a atleast 20% discount on SW london properties?

I am currently looking at battersea/Kingston/Wimbledon. Battersea I think particularly Clapham have got good demand in terms of people looking for rent (Cheaper part of London but well connected but not actually in central London, where rent are more affordable compared to central and easily accessible) and so If I have the down now why will not I buy? Ive seen some fixed inetrest rates at 5.99% in 2 yrs with 15% down.

And run through the numbers in some properties in battersea and they actually stack up for positive cashflow. Although my ultimum target is to get atleast 20% discount so if anything goes wrong I can always sell?
 
When I mentioned a 20% discount, I was meaning that's the possible gap between asking and market prices. The best thing to do would be to track your target areas in Rightmove and Zoopla and see what properties actually fetch.

It's very easy to say you're going to get a 20% discount to market, but unless you find an angle (e.g. forced sale, problem property, etc.) then I think that it's going to be difficult in practice.

In terms of experience of the London market, you probably know as much as me. I'm keeping half an eye on things in case I decide to buy a home, but I'm not really seeing a huge number of bargains, though I'm also looking a bit further west than you (Richmond, Twickenham, Kingston).

My inclination is still to hold off a bit longer. There aren't really any upward pressures on house prices, and I think that a bit of patience might be rewarded with values falling. Of course, I could be proven completely wrong. :)

A two year fix at 5.99% seems expensive. Interest rates are unlikely to rise before the end of this year (so that's six months), and then only slowly. I'd be inclined to risk it for a cheaper tracker.

Lastly, I'd stay well away from new-build, two bedroom apartments. There was a massive oversupply of these thrown up in the housing boom, and they've suffered heavily in the crash.
 
if then i decided to buy, tracker mortgage is ofcourse way cheaper and indeed a risk, but interest rates though go slowly. 5.99% is 2 yrs fixed, rather should I be safe now and be consistent on 5.99% in two years or take a risk of having a tracker then fix or see how market goes - either way..

However, What do you think about ex housing blocks?
 
Back
Top