All Forum Posts by: Paul M.

I am looking at buying a mixed use commercial property, it has a restaurant on the ground floor and four flats above. It is in a great location and currently earning £43k per annum. £15k restaurant on a 15 year lease with rent reviews. The flats are earning £28k and are mixture of 2 and 3 bedroom flats and they are asking £500k. If I use short term auction finance at 90% LTV, buy it for £500k with £50k down for example. Would I then be able to go to a larger commercial mortgage provider and refinance at 700K and here is the question. Could I use £175k from the 700k to use as a deposit or will I have to raise 175K before the commercial mortgage provider would give me the 700k? Ideally if they gave me 700k, I could then use the 175k as deposit leaving me with a 525k mortgage which should be interest only over 10 years at about £1000 per month. Which means that would leave me with 25k profit as well as my original 50k back and £2500 cashflow per month. If not I would have to try and raise the 175k as another loan first?

Release equity from the house through a refinance then buy two other properties where the rent covers the cost increase in the remortgage cash flow wise and leaves him with additional money to live off. You then own three houses appreciating instead of one and your father has some cash flow. 

Could also try a 5 year lease option if he is willing to move out of the house and the house could rent for a higher value than your father would be happy to rent another property with. The house is leased to a property management company for a monthly amount higher than the mortgage payment and they manage the tenants and repairs. Your father then moves in to a smaller flat with the money and has some money left over for living expense cash flow wise. Just have to see if the numbers work, you can google search "lease option for property". 

Speak to a mortgage broker, if you supply 1 year worth of income, there should be lenders that will consider it.

In the UK when buying a property to rent out, the mortgage is different, it is a "buy to let" mortgage. When the mortgage is buy to let the banks do not care what your income is, they only care whether the income from the property will cover the rent and that you have 20% deposit. Surely they have the same sorts of mortgages in the US.

Sorry if that is unhelpful being this is a US centric site.

Has anyone heard of rent to SA or rent to rent strategies before? I know an English property developer who is on youtube called Samuel Leeds. He has popularised these terms. 

Rent to SA is basically rent to service accommodation. You take a property rent it out with the agreement that you are turning it in to a service accommodation to be let on Airbnb. Rent to rent is the same except you basically rent a property and then turn it in to a multiple tenant property or HMO. What Samuel does is basically take over the property and maintenance for the period. Sometimes even paying 1 year up front. Then sub let it and deal with the property for the period like he owns it. For rent to SA he has to buy furniture as most rental properties in the UK are let out as empty, except white goods. So there is some up front cost. 

He has stories of people earning £10k per month profit on a handful of rent to SA properties. I am eager to do this. He even makes it easier by using a management company that specialises in service accommodation. 

@Michael Kiley I have heard of this strategy of paying off the mortgage sooner with a credit card. Laura Pitko on youtube goes over this in her video https://www.youtube.com/watch?v=4GonTct2WMk

What I don't understand is how is that any better than simply saving up $10000 and then over paying the mortgage once a year. I thought at least that way the credit card interest can be avoided. Any ideas how the credit card method has any advantage over simply saving up and over paying once per year? I do understand the concept of having income paid directly in to the credit card. I am just not seeing how it is of any benefit over saving up?

Real estate is a long term investment. As per the book the 3 +1 plan, he recommends waiting a number of years between purchases for your casual investor. After 10-15 years selling off your worse performing rental properties and using the appreciation to pay off your best performing rental properties is a great strategy if your goal is high cash flow to retire early. This is certainly my goal as a casual property investor. I hear stories of people that do 100 properties in 2 years. Where i live properties start at 200k. I am not quite sure I could ever raise the capital to do 100 properties in 2 years even if i was lucky and I can tell you I am far from lucky. 

minimum requirement for a buy to let 20%. 20% of 200k = 40k. * 100 is 4 million. If you can raise 4 million in 2 years, then my hats off to you. 

If you own a property and it is a legal primary residence, as far as I am aware, you only need to declare it as a rental property when you get a new mortgage whilst it is being rented out. You travelling abroad is irrelevant i think. Legality wise, if you are renting it out you should be on a buy to let mortgage. Whether you are in the country or not. 

As far as I am aware it is only mortgage fraud if you misstate your income or circumstances during the mortgage application. If your circumstances change after the mortgage application has gone through, you are under no obligation to apply for a new mortgage. 

I am not a lawyer or a professional property person, so please seek legal advice if you want to be certain. 

The problem with that in any country is that one has to get the government involved from the start, which increases over heads to ridiculous extent. Next thing you know you need to cater for every possible outcome at huge costs. Like every investment if the numbers work, taking in to account the ridiculous costs added on by government, then it could be viable. Especially with the high costs of real estate within already existing high population areas. 

Depends what you are doing and the market. If you want to maximise a refinance replacing windows could help with that, whether you would get your money back is debatable. If you live in a cold climate region and you windows are old replacing windows adds significant rental value and your tenants will pay extra for decent double glazed modern windows and good heating. 

The house I bought was 110 years old with windows that were easily 50 years old. I spent £10000 on replacing the windows including a nice new front door and double glazed french doors. It changed the property completely. Hopefully that translates to better refi and higher rents. 

I would add one thing, windows sales men are some of the most aggressive there are. So shop around and be very careful with giving out deposits because they often have strict 7 day cancellation periods where one can lose their deposit. 

In many ways I think I would rather pick animals are permitted or not permitted. Going some where in the middle is only asking for more work and hassle. Animals will certainly cause damage on to property, but the market might require that facility. I know in my market no animals is the norm. Doesn't always stop tenants from keeping animals though and if the annual inspect sees them they will be asked to leave.