Jamie your channel is a god send can’t search for this info without being bombared with qet rich quick seminar’s and video’s that do nothing but try get you to sign up for some bullshit course what a legend keep going my guy
Hi, enjoying your videos. I thought I would flag up the obvious mistake. Cash in after refinancing would be £17500 (not £12500), you did write returned cash as £22.5k but then took £27.5k off the sunk costs! ROCE would then be 10%. Not bad but I think small time investors are better off in the stock market, the risk to reward is still better.
Yes I was checking down the list to see who else spotted that , easy mistake when you write as neatly as Jamie ! I corrected it in my notes. Still works for me. Love the content.
Thank you for this very detailed description of how property and finances works. I want to enter into property business and I found your video very helpful.
the roce in that example is more like 10% actually, as the cash was miscalculated. but thanks for the video. it really makes me think that with btl there is only 1 strategy and its the long run
Hello, Jamie. It sounds amazing. Do you think we also need to budget the letting agent fee for looking for tenants, building insurance and the rental income tax, etc?
Jamie, there are british Iron and steel frame constructions and victorian 19th century constructions. Should we be away from them to benifit in long run ? Could you shed light in these areas ?
Hi Jamie Just wanted to point out that you didn't mention taxes. It also might be worth mentioning management fees if you don't want to manage the property. Assuming taxes is 19% after mortgage because you're using a limited company ( [7,800-4,875] x 19%= 555,75) and management fees is 10% of the rent (780), you''ll get an ROI of 3.3%, which in my opinion is not attractive
Thank you so much for this information and all your videos really ❤️🤗🤗🤗 i need to ask the irrelevant question though 😅 what is the name of the screen/writing board you are using, please? 🙏🏻 thank you again so much ❤️❤️❤️🤗
Hey Jamie! Love your videos and the approach that you take to education. I am using them to inform myself on property, and the best way to go about involving myself in them. I've signed up to your Deal Sourcing/Packing summit coming up on 03/09, and have enquired as to your EPTA. Quick question, how viable do you believe BTL to be these days? I know that's an incredibly vague question, and you must get bombarded with similar ones on a daily basis. My reasoning is this: Following on with the calculation example you gave on the video, with a slight correction to the cash employed: £17,500 as opposed to £12,500 as stated in the video (mistakes happen c: ) And going on to account for the current hike in interest rates (possibly as high as 4% announced by the Bank of England yesterday). Taking your advice, and being conservative with my figures, I increased the 5% mortgage cost to 7%. Along with all the other costs in place, this example actually makes a loss of £195 annually. Of course, this is a hypothetical example, and there must be certain properties out there that are still capable of making decent returns while factoring in conservative estimates for costs. Just wanted to get your take on it, I suppose. THANKS!
Hi Jamie I was just wondering why you used 12,500 as the money put it into the investment when working out the ROCE, I thought that figure was the cash that you take out of the deal
Hi Jamie, New to this - great vid. I was under the impression that once you have put your 25% down on a BTL mortgage - done a 10k refurb - got the banks back in for reval - if they up the value from 100 to 130k - they would still want to keep 25% of that value so that they continue to have a 25% deposit? so i guess in this case - youve borrowed 75k they then say ok its worth 30k more - so 25% of this new value of 130k is 32.5k so we will keep that (bank keeps its as the 25% deposit) - and then we will give you the 30K (determind by the new value). I have this so wrong dont i! - can anyone simplify this for me if possible. Thank you - great content
@@JamieYork yeah I’m kind of confused by this so when you refurb a property and have a reval the banks give you cash if you wanted to keep the dep at 25%?
The banks don't 'keep' the 25% deposit, it is just in the value of the house so if they had to repossess it there is plenty more value than the debt on it so they can get the debt back. You are in effect telling the bank you want to buy it from yourself so they value it at £130k and are willing to lend you 75% of that and you stump up the rest. So you now get to borrow £97,500 (leaving £32,500 equity in the house as it is worth £130k - that's the 25% deposit) and you 'pay off' the orginal £75k mortgage and some of the other orignal costs with what's left (£22,500, I think Jamie accidently had it down as £27,500) leaving you with a bigger mortgage but more cash to invest in another property. You now only have £17,500 tied up in this property as cash (original deposit, refurb and other costs = £40k - £22.5K extra borrowing = £17.5K) and therefore now need less extra cash for your next property purchase. I hope that makes sense!
Hi Jamie, thx for sharing this practical knowledge on property investment. But ur calculation seems to miss some expenses like the stamp duty tax, lender's fee, mortgage broker fee, legal fee. After including these fee the return would decrease a little bit. But anyway, you did a great job for newbee
Maturity Gohil. The administration costs of the ltd co have to be taken into account to see if the net profit or returns from the property are still feasible. Plus mortgage interest rates are higher for ltd co’s than personal applicants.
Hi. If you keep a property for life, how will you get a mortgage on it after the initial mortgage term? Say you go through 2 lots of 25 year mortgages, that puts you in your 70s. Will the bank lend to you for another 25 years at 70 years old?
They likely refinance as you hand it down through generations, especially if you are purchasing in a ltd company They lend on the investment at that stage, not as you as an individual
Thank you for the great videos. Can you please comment on whther the orientation of the property might affect a BTL investment? How important is a south-facing property to tenants in Leeds? Would it affect the capital gain? Thanks.
how can i raise money to invest. i have a mortgage with 50 000 equity, That would be my deposit on another buy to let, How do I get a second mortgage. Also what do you think about a bridging loan to flip houses?
Refinance the current mortgage and pull some capital out? Be careful though you want to leave some equity on the property. You could look at raising capital from investors by giving them a sweet deal on their money. We use bridging loans sometimes! Knowing what is best to do in every situation is key
Hi,there is an error in the calculation of the cash out. When you remortgage the bank will ask for an additional deposit of 25% of the borrowing, so rather than reducing your cash out it will increase it. You only take into account the additional borrowing assuming you don't need to add deposit but your cash out will increase from £40k to £42.5k (25% of £130k + £10k of refurbishment) which changes quite substantially your return on capital (4% rather than 14%).
Morning Giles, can you tell me what minute you’re talking about on the video please. When you refinance you don’t put in more money, you only take money out.
Hey @@JamieYork Sorry my mistake, you're right you don't need to put more money when you remortgage. However, when you deduct the additional lending from the cash you initially invested (minute 8/9), I don't think you can consider that the 22.5k remaining on the new loan after you repay the first loan is your cash as it's part of the new loan that you will have to repay at some point. So I would say the capital you have put in the investment is still the 40k you have invested initially.
Yep it looks to me also that the 22500 used is simply part of the remortgage and should be classified as debt at 5% rather than capital employed. Happy to be told otherwise though!
Nice content. It would be great see some more content on BTL for flats. You make a good point about additional costs( especially if there is an elevator) but are there upsides like low buy in, high short term yields, etc that might make them attractive to new investors?
Thanks, Jamie, it is a great video! When BTL mortgage reaches its expiry date (let's say after 25 ys) and you don't want to sell the property, how are you dealing with the capital of the mortgage?
Hi Jamie, great videos. Could you do a video on interest only mortgages vs repayment and why most choose the former? Me personally am choosing to repay the mortgages so when I retire I don't have to worry about banks having a hold over you. This does mean I will end up with less property but owning all of it. Would be interesting to talk about what would happen if interest rates rise etc.
Why would you say leaving equity in a property is most advisable when considering refinancing? If you’ve got for example 50k equity that you’d get when you refinance, that’s the mortgage paid off and extra cash to use for the next property. Then just find the next one at hopefully BMV then just keep snowballing with rental cash flow etc, am I wrong?
Great question, you're not wrong at all. It's all about finding that right balance between leveraging, but NOT over leveraging, to protect the downside
Thanks! Would be great to work together! Head over to www.aspireeducation.co.uk/joinaspireeducation and fill in your details, and a member of my team will be in touch! 😊
As a property newbie watching your video was so informative. Honestly, you nearly lost me at that net figure. I was wondering why I'd put myself through all of that for less than £1800 Net p.a.Yes I stayed to the end and got the very sound reasoning but damn, that number was depressing on its own. 🙂 Long view is definitely required and that's why videos like these are so important to learn from. Also smiled at the magically appreciating number...how human of you!
But that net figure isnt real net because you need to pay tax on that at around 40% for most people starting out! Thats the stumbling block for us at the moment, we've got money to work with but once you factor in Mortgage, Management Fees, Tax, etc it's such a small amount of Net Profit that it's pointless being busy fools!
This is quality video with valuable information, I’m new to this. So can you get a mortgage for a buy to let, and then refinance again. Or does the first initial purchase have to be investor or bridging loan.
Is it usually necessary to refurbish a property? Especially if you are buying your first property to let with limited spare money to perform the refurb :)
Hi Jamie, thanks for the great video. Just wanted to ask what options are available if you aren't getting consistent rental income i.e people keep leaving? I imagine long term this would make buy to let quite stressful especially if you can't afford the mortgage yourself.
I'd be looking at the attractiveness of the property and what demographic I'm attracting. If you're not happy with what you see then I'd be maybe looking at getting rid or changing something to attract the right sort of tenant
Hi Jamie, Thanks for your awesome content, What if for some reason i cannot take out a mortgage, should i buy my first BTL all out cash, which I have saved up...or wait should I wait and build my credit rating ect. Until i am able to take out a mortgage? I believe once owning a property for twelve month, it will be a lot easier to find a lender, based on that I will than buy it on a LTD?
It's definitely easier once you own a BTL property, and you might as well make the money work hard for you. Alternatively you could joint venture the money with someone that's mortgagable and both benefit in the mean time :)
jamie, great content. quick question. would you ever consider paying chunks off mortgage at the end of term or penalty free during term. i understand the cashflow side of things but surely if you have the money available why would you not want to reduce the monthly mortgage costs and increase equity at same time? is there a video you have on this already?
@@JamieYork so put as little of your money into the investment as possible? supposing you aren't working and cant get a mortgage, would you raise it against another property you own?
Great video Jamie - its good to see some detail on the metrics that go into assessing the return profile on letting. I am a UK based property investor as well, and having a sense of these really makes better decisions which over the long term add up. Btw the chalk pen looks so cool to work with!
Hi Jamie ' brilliant video. Need a bit of advice my son's got a house with £150'000 equity in his property. Wants a 3 bed house instead of a 2 bed which he's got which he's got at the moment . He got annual salary of 27k net . Average property prices around our area are 350k your advice would greatly appreciated.
fantastic video. Really appreciate your work. Could you also work out ROCE as a percent of your initial outlay? so for example... monthly income of 1100 on an initial outlay (deposit, admin fees etc) of 53000 would give a ROCE of 2.08% ... or would you work this out based on net income (so minus ground rent, mortgage etc)... so 1100-450 to give NET income of 650 = a ROCE of 1.23% Thanks again, hugely inpirational
Not sure you’ll see this message as the video is a year old but… Why do you put 25% in to start, could you not use a 10% deposit on a home owner mortgage then after refurb switch to a buy to let mortgage at 25% deposit so you don’t need so much cash?
I see all the messages and try to reply to as many people as possible! 😊 grey question. With buy to let, you have to put in 25% deposit with almost all of the mortgages
Very useful vid mate, subbed! So ROCE is a very interesting indicator, what about cash on cash return? I look for about minimum 20% cash on cash return as a good indicator.
This is a great video Jamie, thanks!! Quick question, do you wait until the end of the mortgage deal to refinance to avoid early repayment charges or is this a consideration when choosing the buy to let mortgage offer? Cheers!
Some BTL mortgages won't allow you to refinance/remortgage within 2 years. Definitely important to establish that before agreeing to one. I would look into bridging loans to counter that particular issue. What they do is give you a loan on the PP + refurb costs. Once you've refurbed, they will then give you another LTV on the new value of the property. So, essentially, they see you the whole way through the process. Makes things a bit smoother. Helps that you're dealing with the same lenders in my opinion. Now, of course, just like anything else when investing, it comes down to numbers so see which one works out cheaper but also factor in how much time will be spent on each scenario. Hope this helps.
Love this! You mention you'll keep the properties until death (stay with me)- you assigned 5% for mortgage cost, I assume this is an interest only mortgage. Do you ever change it over to a repayment mortgage? If so, when do you think is an appropriate time? Will your children inherit the debt despite you owning it for 40+ years if its interest only forever?
Thanks Fred! Not really no, most BTL mortgages are on interest only mortgages. The reason for this is that capital growth takes effect and a constant refinances comes in. The ultimate aim for me is to have around 1,000 units at around 50% loan to value! Yes the kids will inherit the debt, and of course the asset value! Or maybe I'll give it away! 😉
@@JamieYork wait sir... if you are giving away why do you bother to work so hard in getting them in the first place 🥇 I will leave to my children for sure🧸
Hi Jamie, Excellent video! I was just wondering whether you feel the refurb is a must when buying a BTL? Do you find that it is harder to get such a good ROCE and therefore majorly affects the profitability without it? Thanks!
Hi. Do you go for a fix mortgage or variable? Which is easier to refinance I’m in the process of buying my first BTL and going to do some refurbishment to it to increase the value. Thanks.
Great video. However this video is showing return on equity (ROE) not ROCE. Capital employed for ROCE is total assets minus current liabilities, therefore includes all long term debts/mortgages. And of course equity = assets minus liabilities which is what this video's return is based on
Hi Jamie, great video as always. I am a FTB living in South London. As a FTB I have found a two bed flat (4 flats, Georgian conversion) this is coming with share of freehold and is located close to major railways station. eventually I would like to switch this to a BTL mortgage and refinance to purchase another property. This will likely be outside of London ie. Leeds or Notts Do you see this a poor strategy? and would you still stay away from this purchase even if it comes with a share of freehold. The property itself is a decent flat, however the excellent location + SFH makes this feel like a worthing first purchase and would be ideal for a future rental. cheers Jamie
Might take a while before you can refinance to pull a signficant amount out, as it sounds like you aren't doing a BRR, so there's no real added value day 1
Hi amazing videos so far just get my self to move to the next level. I am a 40% tax payer from a 9to5 job with two existing properties, both with over 50% equity in them. Can I invest more into property with little effort … understanding that it is a get rich slow strategy can I remortgage current properties to buy more; relying solely on capital growth. Thus remortgage 2 now, buy 2 more; wait 5 years… remortgage 4 buy 4 more and repeat 3 times??
Hey Jamie great video On terms of location For someone that lives in London,do you think is still BTL market worth considering or best going further out of London? Many Thanks
Sorry my numbers are not adding up , also I don’t get why we are deducting 27500 to 40000 . I know 40k is what you have spend initially so my question is What is the 27500 figure?
Hi Jamie! I would like to ask a silly question 🙂 for the refinance do you need to give a deposit? After how long can you refinance and how many times?? Many thanks Jamie! You are doing a great job! Take care 🙏🙂
Great video, I feel you’re not trying to sell me something like other property youtubers! I’m looking to get into property investing so trying to learn as much as possible, I just have two questions I hope you could answer: firstly, is there a reason why tax isn’t taken into account on the ROCE calc? Additional or higher rate tax at 40/45% would reduce the 14% return to a more modest 7.7/8.4% ROCE (not including section 24 which would reduce this further) which is roughly the same as my dividend portfolio in my tax free ISA which requires much less effort. I appreciate you could go the Ltd company route but then there seems to be less mortgages available and it still isn’t in your hand personally Secondly, I like the idea of your exit strategy being death, however how do you intend to pay the capital down on the mortgages (as I assume interest only)? Is it just remortgage forever? Is this viable into old age when banks would be less likely to lend on long term mortgages? Thanks in advance for any reply it’s genuinely much appreciated
Thanks Henry! I do sell courses as well but there’s a time for that and I don’t like pushing. If people want it then they will ask. If not then I want to give as much value as I can for free. I never take account of tax as everyone has their own tax strategy, same as every other investment type. Eg higher tax payer vs lower vs ltd will be drastically different. There’s also loads of loop holes dependant on your structures. Section 24 doesn’t affect company purchases which is why most set up a ltd now to purchase in. There’s a wide array of mortgages available now as it’s the standard thing nowadays. Also, I wouldn’t get obsessed with ownership, as long as I have control of the asset and benefit from its uplift! Interest only mortgages and yes I’ll typically pay down some over time but only to 50% equity. The benefit of it being in a company is that age doesn’t affect it much as long as you have a proper succession plan in place.
Why is this content free?! 😆 thanks for taking the time to make these videos Jamie, I really appreciate it 👏🏼🙏
If you think this is good content then you should see my paid education ;)
Jamie your channel is a god send can’t search for this info without being bombared with qet rich quick seminar’s and video’s that do nothing but try get you to sign up for some bullshit course what a legend keep going my guy
I best stay quite about my courses then....haha
Basically.
Buy something people need.
Look after it.
Manage the money.
Don't get greedy.
Nailed it Alex!
Hi, enjoying your videos. I thought I would flag up the obvious mistake. Cash in after refinancing would be £17500 (not £12500), you did write returned cash as £22.5k but then took £27.5k off the sunk costs! ROCE would then be 10%. Not bad but I think small time investors are better off in the stock market, the risk to reward is still better.
You are correct
Yes I was checking down the list to see who else spotted that , easy mistake when you write as neatly as Jamie ! I corrected it in my notes. Still works for me. Love the content.
This has been helpful as I'm about to come into some money and will be starting my portfolio.
Great news! Let me know if you need any help finding those properties
Thank you for this very detailed description of how property and finances works. I want to enter into property business and I found your video very helpful.
Glad it was helpful!
great video mate, loving the channel.. time to save up the 25% for my first buy to let !
Go for it!
the roce in that example is more like 10% actually, as the cash was miscalculated. but thanks for the video. it really makes me think that with btl there is only 1 strategy and its the long run
Yeah I screwed up a number half way through. Oops! 🙊
Hello, Jamie. It sounds amazing. Do you think we also need to budget the letting agent fee for looking for tenants, building insurance and the rental income tax, etc?
Do a video about Shared Ownership house? what are your thoughts in buying one as a first buyer? Love the videos, good stuff..
Great suggestion!
Is there a spreadsheet for this? It is a 15 step calculation if not?
Great video.....very informative....I'm hooked now just need to work out where the 25% deposit comes from for my first property
You can do it! Hustle, start a side business, get a pay rise, get a second job! You've got this!
It's refreshing to hear some honest advice & not to be bombarded with training videos
Thanks ;)
One of the most useful videos I have watched on property investment 👍 thank you
Glad it was helpful! We've got loads more to come!
9:28 shouldn't that be - 22500 ?
Yes I believe I made a slight mistake! My bad! :)
Just discovered and love your videos - thanks for sharing
Thanks for watching!
bro thanks for taking the time to make and upload all your vids,✨ your very helpful 🌟 God✨bless you and thank you 🙏🏽
Glad you like them! There is more to come!
Final figure is more than that because of compound interest ? Not sure I’m a bit hungover
🤣🤣
Jamie, there are british Iron and steel frame constructions and victorian 19th century constructions. Should we be away from them to benifit in long run ?
Could you shed light in these areas ?
Speak to a broker about it all mate, if you can get lending easy enough, then others can and it wouldn't stop me buying at all :)
Hi Jamie
Just wanted to point out that you didn't mention taxes. It also might be worth mentioning management fees if you don't want to manage the property. Assuming taxes is 19% after mortgage because you're using a limited company ( [7,800-4,875] x 19%= 555,75) and management fees is 10% of the rent (780), you''ll get an ROI of 3.3%, which in my opinion is not attractive
Agreed! it is just to show the theory as the numbers are there to just help people understand :) I am more accurate nowadays
I guess the 15 % is just a guide to include voids , maintenance, Insurance etc or else the video would be too long.
Your videos are amazing man. I'm in the process of buying my first buy to let property in England and this is like a bible
Amen!
Thank you so much for this information and all your videos really ❤️🤗🤗🤗 i need to ask the irrelevant question though 😅 what is the name of the screen/writing board you are using, please? 🙏🏻 thank you again so much ❤️❤️❤️🤗
Samsung Flip!
@@JamieYork thank you so much ❤️
Hey Jamie!
Love your videos and the approach that you take to education.
I am using them to inform myself on property, and the best way to go about involving myself in them.
I've signed up to your Deal Sourcing/Packing summit coming up on 03/09, and have enquired as to your EPTA.
Quick question, how viable do you believe BTL to be these days? I know that's an incredibly vague question, and you must get bombarded with similar ones on a daily basis.
My reasoning is this:
Following on with the calculation example you gave on the video, with a slight correction to the cash employed:
£17,500 as opposed to £12,500 as stated in the video (mistakes happen c: )
And going on to account for the current hike in interest rates (possibly as high as 4% announced by the Bank of England yesterday). Taking your advice, and being conservative with my figures, I increased the 5% mortgage cost to 7%.
Along with all the other costs in place, this example actually makes a loss of £195 annually.
Of course, this is a hypothetical example, and there must be certain properties out there that are still capable of making decent returns while factoring in conservative estimates for costs.
Just wanted to get your take on it, I suppose.
THANKS!
Cheers, thanks for watching! Glad the video helped you!
Very good explanation Jamie !
Glad it helped! Thanks for watching!
I love watching your videos where you explain the complex stuff but stumble on the basic maths. 😁
Haha, I know. I’m such a clutz at times 😂
Jamie...thank you very much for this content. I’ve learned so much from you already.
I dont understand how you got to the cash left in calculation or what cash left in means- please explain
Thank you
hi what do you think of putting properties on air bnb
Hi Jamie I was just wondering why you used 12,500 as the money put it into the investment when working out the ROCE, I thought that figure was the cash that you take out of the deal
it should be 40k-22.5k=17.5k, not 27.5k. Hence the return will be 10% approx not 14%
Yep! My mistake!
Very important point , thank you for sharing
So initially you get a mortgage and then how long after that do you get remortgage at the new value and get some money out?
Hi Jamie, New to this - great vid. I was under the impression that once you have put your 25% down on a BTL mortgage - done a 10k refurb - got the banks back in for reval - if they up the value from 100 to 130k - they would still want to keep 25% of that value so that they continue to have a 25% deposit? so i guess in this case - youve borrowed 75k they then say ok its worth 30k more - so 25% of this new value of 130k is 32.5k so we will keep that (bank keeps its as the 25% deposit) - and then we will give you the 30K (determind by the new value). I have this so wrong dont i! - can anyone simplify this for me if possible. Thank you - great content
Hey, yes if you've had a mortgage then getting a reportage you'll need to keep 25% equity in the property.
@@JamieYork yeah I’m kind of confused by this so when you refurb a property and have a reval the banks give you cash if you wanted to keep the dep at 25%?
The banks don't 'keep' the 25% deposit, it is just in the value of the house so if they had to repossess it there is plenty more value than the debt on it so they can get the debt back. You are in effect telling the bank you want to buy it from yourself so they value it at £130k and are willing to lend you 75% of that and you stump up the rest. So you now get to borrow £97,500 (leaving £32,500 equity in the house as it is worth £130k - that's the 25% deposit) and you 'pay off' the orginal £75k mortgage and some of the other orignal costs with what's left (£22,500, I think Jamie accidently had it down as £27,500) leaving you with a bigger mortgage but more cash to invest in another property. You now only have £17,500 tied up in this property as cash (original deposit, refurb and other costs = £40k - £22.5K extra borrowing = £17.5K) and therefore now need less extra cash for your next property purchase. I hope that makes sense!
Thank you James. Good investment.
Who's James? ;)
What are your thoughts on off plan investments with 7% net yield per annum with strong capital growth prospects?
I will never buy off plan. EVER. 😊
What about investing in Student Units fully furnished ?
Thanks very informative and some serious maths there! Only thing is doesn’t refinancing mean you will break your mortgage terms and conditions?
You just pay off the current mortgage with another mortgage
Hi Jamie, thx for sharing this practical knowledge on property investment. But ur calculation seems to miss some expenses like the stamp duty tax, lender's fee, mortgage broker fee, legal fee. After including these fee the return would decrease a little bit. But anyway, you did a great job for newbee
I remember this video from a while back I did mess up the numbers a bit. Thanks for the feedback :)
Hi, should I buy but to let under LTD company or personal. My income in over 40K.Which option would save me on tax and intrest ?
I can't give you financial advise on that Mayuri. HOWEVER, I can give my opinion for what I would do..... LTD :)
Maturity Gohil. The administration costs of the ltd co have to be taken into account to see if the net profit or returns from the property are still feasible. Plus mortgage interest rates are higher for ltd co’s than personal applicants.
Hi. If you keep a property for life, how will you get a mortgage on it after the initial mortgage term? Say you go through 2 lots of 25 year mortgages, that puts you in your 70s. Will the bank lend to you for another 25 years at 70 years old?
They likely refinance as you hand it down through generations, especially if you are purchasing in a ltd company
They lend on the investment at that stage, not as you as an individual
Thank you for the great videos. Can you please comment on whther the orientation of the property might affect a BTL investment? How important is a south-facing property to tenants in Leeds? Would it affect the capital gain?
Thanks.
Great video, you have gained a subscriber!
Awesome, thank you!
how can i raise money to invest. i have a mortgage with 50 000 equity, That would be my deposit on another buy to let, How do I get a second mortgage. Also what do you think about a bridging loan to flip houses?
Refinance the current mortgage and pull some capital out? Be careful though you want to leave some equity on the property.
You could look at raising capital from investors by giving them a sweet deal on their money.
We use bridging loans sometimes! Knowing what is best to do in every situation is key
Excellent video - very informative !!
Thanks!
Can you purchase the property on a mortgage and then refinance when refurb done or is best to buy cash and then get a mortgage?
Yes you can do but you'll have to wait 6 months from when it is registered with land reg
Hi,there is an error in the calculation of the cash out. When you remortgage the bank will ask for an additional deposit of 25% of the borrowing, so rather than reducing your cash out it will increase it. You only take into account the additional borrowing assuming you don't need to add deposit but your cash out will increase from £40k to £42.5k (25% of £130k + £10k of refurbishment) which changes quite substantially your return on capital (4% rather than 14%).
Morning Giles, can you tell me what minute you’re talking about on the video please. When you refinance you don’t put in more money, you only take money out.
Hey @@JamieYork Sorry my mistake, you're right you don't need to put more money when you remortgage. However, when you deduct the additional lending from the cash you initially invested (minute 8/9), I don't think you can consider that the 22.5k remaining on the new loan after you repay the first loan is your cash as it's part of the new loan that you will have to repay at some point. So I would say the capital you have put in the investment is still the 40k you have invested initially.
Yep it looks to me also that the 22500 used is simply part of the remortgage and should be classified as debt at 5% rather than capital employed. Happy to be told otherwise though!
What about stamp duty
Yep that still applies in most cases
Nice content. It would be great see some more content on BTL for flats. You make a good point about additional costs( especially if there is an elevator) but are there upsides like low buy in, high short term yields, etc that might make them attractive to new investors?
Thanks, Jamie, it is a great video! When BTL mortgage reaches its expiry date (let's say after 25 ys) and you don't want to sell the property, how are you dealing with the capital of the mortgage?
Refinance the property again!
Thanks Jamie!
Awesome video Jamie 👍
Would be amazing if everybody calculated it the same way🎉
Glad you think so!
Hi Jamie, great videos. Could you do a video on interest only mortgages vs repayment and why most choose the former? Me personally am choosing to repay the mortgages so when I retire I don't have to worry about banks having a hold over you. This does mean I will end up with less property but owning all of it. Would be interesting to talk about what would happen if interest rates rise etc.
Check my latest videos!
Why would you say leaving equity in a property is most advisable when considering refinancing? If you’ve got for example 50k equity that you’d get when you refinance, that’s the mortgage paid off and extra cash to use for the next property. Then just find the next one at hopefully BMV then just keep snowballing with rental cash flow etc, am I wrong?
Great question, you're not wrong at all. It's all about finding that right balance between leveraging, but NOT over leveraging, to protect the downside
What is the paid education you are offering? I am interested
Thanks! Would be great to work together! Head over to www.aspireeducation.co.uk/joinaspireeducation and fill in your details, and a member of my team will be in touch! 😊
Great video with great explanations, if the free stuff is this good, just imagine how good the paid stuff is!
Thanks Justin. Really glad it helps bud :)
Hi Jamie, Have you not forgotten the evil Tax both annual profit tax and capital gains? or was the profit tax in your 15%?
Surely capital gains only comes in when/if you sell the properties? Annual tax is a necessary evil. :D
Amazing video, well explained and full of valuable content!
Thanks! Glad you got some value!
do you prefer interest or capital repayment mortgages? for buy to lets?
It's interest only for me, I did a recent video on this, check it out and let me know what you think!
As a property newbie watching your video was so informative. Honestly, you nearly lost me at that net figure. I was wondering why I'd put myself through all of that for less than £1800 Net p.a.Yes I stayed to the end and got the very sound reasoning but damn, that number was depressing on its own. 🙂 Long view is definitely required and that's why videos like these are so important to learn from. Also smiled at the magically appreciating number...how human of you!
Thanks Cheryl
But that net figure isnt real net because you need to pay tax on that at around 40% for most people starting out! Thats the stumbling block for us at the moment, we've got money to work with but once you factor in Mortgage, Management Fees, Tax, etc it's such a small amount of Net Profit that it's pointless being busy fools!
Awesome thank you! Simple and easy to understand 👌👌
Thanks Jamie! Great and very clear!
Very welcome!
This is quality video with valuable information, I’m new to this. So can you get a mortgage for a buy to let, and then refinance again. Or does the first initial purchase have to be investor or bridging loan.
No you can buy a property with a mortgage straight away but if you are a cash buyer then you will usually get a better deal
Is it usually necessary to refurbish a property? Especially if you are buying your first property to let with limited spare money to perform the refurb :)
It's not always necessary if you can get it at a good price and not too concerned about pulling your money out straight away!
@@JamieYork Thank you!
Quick question...
After remortgage the deposit is higher than that original. Wouldn't the bank require a top up?
Yes they would, however if you're adding value then you won't need to as you have built up equity in the property!
Hi Jamie, thanks for the great video. Just wanted to ask what options are available if you aren't getting consistent rental income i.e people keep leaving? I imagine long term this would make buy to let quite stressful especially if you can't afford the mortgage yourself.
I'd be looking at the attractiveness of the property and what demographic I'm attracting. If you're not happy with what you see then I'd be maybe looking at getting rid or changing something to attract the right sort of tenant
Hi Jamie, Thanks for your awesome content, What if for some reason i cannot take out a mortgage, should i buy my first BTL all out cash, which I have saved up...or wait should I wait and build my credit rating ect. Until i am able to take out a mortgage? I believe once owning a property for twelve month, it will be a lot easier to find a lender, based on that I will than buy it on a LTD?
It's definitely easier once you own a BTL property, and you might as well make the money work hard for you. Alternatively you could joint venture the money with someone that's mortgagable and both benefit in the mean time :)
Great content, mate. Keep up the good work!
Much appreciated!
Why are you taking the difference between the new loan ( 97k one-70k one) and subtracting it from the money you have put in the house??.
jamie, great content.
quick question. would you ever consider paying chunks off mortgage at the end of term or penalty free during term.
i understand the cashflow side of things but surely if you have the money available why would you not want to reduce the monthly mortgage costs and increase equity at same time?
is there a video you have on this already?
Jamie has the best channel. Sent it to loads of friends. Even as an experienced landlord, I learn from his vids. Down to Earth too.
Thanks so much! I really appreciate that ❤️
is it better to be mortgage free (cash buyer)on your first buy 2 let property or to get a mortgage?
Get a mortgage!
@@JamieYork so put as little of your money into the investment as possible? supposing you aren't working and cant get a mortgage, would you raise it against another property you own?
Check out my latest video buddy
Great video Jamie - its good to see some detail on the metrics that go into assessing the return profile on letting. I am a UK based property investor as well, and having a sense of these really makes better decisions which over the long term add up. Btw the chalk pen looks so cool to work with!
Glad it was helpful!
What about bad tenants and repairs ?
Got a video in the works about his topic!
Is 23.4% ROCE. Correct ?? Starting my learning journey here, Please inform me if I’m correct 👍.
Where has the 27,500 come from, I thought it was 22,500.. ??
Yes I made a slight mistake with my numbers on this one :) sorry
Hi Jamie ' brilliant video. Need a bit of advice my son's got a house with £150'000 equity in his property. Wants a 3 bed house instead of a 2 bed which he's got which he's got at the moment . He got annual salary of 27k net . Average property prices around our area are 350k your advice would greatly appreciated.
How can I help you?
fantastic video. Really appreciate your work. Could you also work out ROCE as a percent of your initial outlay? so for example... monthly income of 1100 on an initial outlay (deposit, admin fees etc) of 53000 would give a ROCE of 2.08%
... or would you work this out based on net income (so minus ground rent, mortgage etc)... so 1100-450 to give NET income of 650 = a ROCE of 1.23%
Thanks again, hugely inpirational
Has to be net income but over a year. Not a month
is there any apps or excel sheet you can get to found out this figures faster?
Check out my Lendlord video
Not sure you’ll see this message as the video is a year old but…
Why do you put 25% in to start, could you not use a 10% deposit on a home owner mortgage then after refurb switch to a buy to let mortgage at 25% deposit so you don’t need so much cash?
I see all the messages and try to reply to as many people as possible! 😊 grey question. With buy to let, you have to put in 25% deposit with almost all of the mortgages
Great stuff !!!
Very useful vid mate, subbed! So ROCE is a very interesting indicator, what about cash on cash return? I look for about minimum 20% cash on cash return as a good indicator.
ROCE is what I use for everything!
Hi Jamie, great video, thanks. just one question for me, shall we not include Tax on rent income as a cost?
Very nicely explained
This is a great video Jamie, thanks!! Quick question, do you wait until the end of the mortgage deal to refinance to avoid early repayment charges or is this a consideration when choosing the buy to let mortgage offer? Cheers!
Some BTL mortgages won't allow you to refinance/remortgage within 2 years. Definitely important to establish that before agreeing to one. I would look into bridging loans to counter that particular issue. What they do is give you a loan on the PP + refurb costs. Once you've refurbed, they will then give you another LTV on the new value of the property. So, essentially, they see you the whole way through the process. Makes things a bit smoother. Helps that you're dealing with the same lenders in my opinion. Now, of course, just like anything else when investing, it comes down to numbers so see which one works out cheaper but also factor in how much time will be spent on each scenario. Hope this helps.
Love this! You mention you'll keep the properties until death (stay with me)- you assigned 5% for mortgage cost, I assume this is an interest only mortgage. Do you ever change it over to a repayment mortgage? If so, when do you think is an appropriate time? Will your children inherit the debt despite you owning it for 40+ years if its interest only forever?
Thanks Fred! Not really no, most BTL mortgages are on interest only mortgages. The reason for this is that capital growth takes effect and a constant refinances comes in. The ultimate aim for me is to have around 1,000 units at around 50% loan to value!
Yes the kids will inherit the debt, and of course the asset value! Or maybe I'll give it away! 😉
@@JamieYork ah I didn't think of the constant refinancing! Hope you had a lovely Christmas!
@@JamieYork wait sir... if you are giving away why do you bother to work so hard in getting them in the first place 🥇 I will leave to my children for sure🧸
Very nice Jamie, very good idea to start your own TH-cam channel. 👍
Thanks. Hope you like it
Could you do an episode: ''math techniques for every real-estate entrepreneur' please? ;-) @11:58
Hi Jamie, Excellent video! I was just wondering whether you feel the refurb is a must when buying a BTL? Do you find that it is harder to get such a good ROCE and therefore majorly affects the profitability without it? Thanks!
Not at all. I’d LOVE more that don’t need any refurbishment!
Hi. Do you go for a fix mortgage or variable? Which is easier to refinance I’m in the process of buying my first BTL and going to do some refurbishment to it to increase the value. Thanks.
Depends when you're thinking of refinancing, If I know I'm going to refinance in 5 years then I would get a fixed rate (if it's a good rate)
22.5K to be subtracted from initial capital in, not 27.5K. Great video though Jamie
I knew I’d mess up something ;)
@@JamieYork lol.... You are human buddy. 😎
Great video. However this video is showing return on equity (ROE) not ROCE. Capital employed for ROCE is total assets minus current liabilities, therefore includes all long term debts/mortgages. And of course equity = assets minus liabilities which is what this video's return is based on
Really enjoying the content! What's the benefit of the refinance and taking on a larger debt after the refurb?
Hi Jamie, great video as always. I am a FTB living in South London. As a FTB I have found a two bed flat (4 flats, Georgian conversion)
this is coming with share of freehold and is located close to major railways station. eventually I would like to switch this to a BTL mortgage and refinance to purchase another property. This will likely be outside of London ie. Leeds or Notts
Do you see this a poor strategy? and would you still stay away from this purchase even if it comes with a share of freehold. The property itself is a decent flat, however the excellent location + SFH makes this feel like a worthing first purchase and would be ideal for a future rental.
cheers Jamie
Might take a while before you can refinance to pull a signficant amount out, as it sounds like you aren't doing a BRR, so there's no real added value day 1
Hi amazing videos so far just get my self to move to the next level.
I am a 40% tax payer from a 9to5 job with two existing properties, both with over 50% equity in them.
Can I invest more into property with little effort … understanding that it is a get rich slow strategy can I remortgage current properties to buy more; relying solely on capital growth.
Thus remortgage 2 now, buy 2 more; wait 5 years… remortgage 4 buy 4 more and repeat 3 times??
Hey Jamie great video
On terms of location
For someone that lives in London,do you think is still BTL market worth considering or best going further out of London?
Many Thanks
The figures were incorrect 22,500 as opposed to 27500
I know!! I'm very sorry! I'm not quite Good Will Hunting yet
Sorry my numbers are not adding up , also I don’t get why we are deducting 27500 to 40000 . I know 40k is what you have spend initially so my question is What is the 27500 figure?
Hi Jamie, what are your thoughts towards investing toward ex council houses?
If they're in the right area with the right demographic then yes!
Great video but what I don’t get when you refinance do the banks give you the money or is it money for another mortgage ?
You pay off the existing Mortgage with a new mortgage
Hi Jamie! I would like to ask a silly question 🙂 for the refinance do you need to give a deposit? After how long can you refinance and how many times??
Many thanks Jamie! You are doing a great job! Take care 🙏🙂
Great video Jamie
Glad you enjoyed it
Great video, I feel you’re not trying to sell me something like other property youtubers!
I’m looking to get into property investing so trying to learn as much as possible, I just have two questions I hope you could answer: firstly, is there a reason why tax isn’t taken into account on the ROCE calc? Additional or higher rate tax at 40/45% would reduce the 14% return to a more modest 7.7/8.4% ROCE (not including section 24 which would reduce this further) which is roughly the same as my dividend portfolio in my tax free ISA which requires much less effort. I appreciate you could go the Ltd company route but then there seems to be less mortgages available and it still isn’t in your hand personally
Secondly, I like the idea of your exit strategy being death, however how do you intend to pay the capital down on the mortgages (as I assume interest only)? Is it just remortgage forever? Is this viable into old age when banks would be less likely to lend on long term mortgages?
Thanks in advance for any reply it’s genuinely much appreciated
Thanks Henry!
I do sell courses as well but there’s a time for that and I don’t like pushing. If people want it then they will ask. If not then I want to give as much value as I can for free.
I never take account of tax as everyone has their own tax strategy, same as every other investment type. Eg higher tax payer vs lower vs ltd will be drastically different. There’s also loads of loop holes dependant on your structures. Section 24 doesn’t affect company purchases which is why most set up a ltd now to purchase in.
There’s a wide array of mortgages available now as it’s the standard thing nowadays. Also, I wouldn’t get obsessed with ownership, as long as I have control of the asset and benefit from its uplift!
Interest only mortgages and yes I’ll typically pay down some over time but only to 50% equity. The benefit of it being in a company is that age doesn’t affect it much as long as you have a proper succession plan in place.
@@JamieYork great video, very informative. What's the benefit of not paying down over 50% equity on a property?
Is buying a guesthouse/hotel a thing you do?