A Question About Making Money From The Property Ladder?
There are 2 ways to make money from property:
1) A property is purchased, put on rent and if the monthly rent is greater than the mortgage, a profit is being made.
2) A proprty is purchased, completely renovated and refurbished and is after sold. If the price that the property is sold for is far greater than the money that was spent into the property, then a profit have been made.
Which methods produces the greatest profits?
Answers: As the other guy said; too many variables.
There is money to be have either way, but it depends on price, locations, condition of the property, your marketing technique or your agents, fees, mortgages etc etc.
For example, you buy a house at lb100,000 near no mortgage. You rent it out for lb400 per month. This is a return annually of around 5%. You could get that rate in a appropriate building society, let alone an investment bond, or ISA etc etc.
That isn't the end of the picture though as you're also purchase capital value. If you hold on to that rent over a period of ten years, you're making your 5% but if the house has also doubled contained by value, you're making a capital gain of lb100,000 too (of which you'll foot 40% tax).
So, through renting you could achieve both 1) and 2) - but it's a longer term strategy and could cost you abundantly of money.
Take into effect void periods (No tenant) and repairs costs, you'll be lucky to make 3% to be honest. But, that capital meaning it what makes people longing to invest in property.
Depends what you mean by 'profits', and how you judge the extraction of money into your pocket.
Both can put quite a lot of money surrounded by your pocket (provided you know what you are doing). Too many people hold jumped onto the property bandwagon recently lacking understanding how to really make money from it and are immediately losing out.
Serious investors and developers are still making quite a good living out of both methods - beside even more opportunity for the astute buyer now we are in 'sale time'. But you do involve to crunch the numbers and hnt out the deals.
David Nicoll
Property tax specialist
To answer your sound out, firstly are you in to make a prompt profit or are you serious about making real money for the rest of your enthusiasm and paying very little tax, or no duty at all.
Property in the UK as an example. When buying, (and its a buyers open market at this moment in time in the UK) let say for lb100,000, you should be able to negotiate 15/20% discount for starters, even though it have a market value of lb100K, since property is not moving vastly fast, and some people are willing to sell, especially if the cannot make the mortgage repayments, you in a minute find a tenant, and in some cases the prevuos owners would be only to lively to take the tenancy.
And hear is the crunch as long as you never get rid of the property
you will be able to remortgage the property every 2/3 years
take the equity increase out surrounded by cash tax free. If you assume that property have doubled in the UK every 7/!0 years, you will never have to verbs. Now duplicate this with 2 Property or 3, even 5 times you can make a living out of it. Should you want to fashion a fortune, I think you have the formula staring you within the Face.
I hope this helps.
I agree with certarux. Many populace will see the falling market as a time to buy. Also many populace will unfortunately be forced to sell their properties because they are inept to meet their commitments. They will be looking to rent accommodation.
Also, this is an island. Therefore, land/space is fixed. There is a demand for housing because of the large numbers of general public wanting to come here.
I would therefore think this is a buying opportunity to convert a property to rent. It can be sold at a after that date once prices recover and start to rise again - as they surely will.
It all depends on your costs. If you enjoy high interest payments on your mortgage, you may be better off selling, butchery the debt, and starting again with a smaller property/loan.
Personally, if it was a moment ago the one property, I'd sell if it would produce a good profit, once you are mortgage-free, start baggy on to the properties for a long-term income. Too many variables to answer that.
Matybe if you can give some specific data you would get an answer.
Rental, logically it is like someone looking after YOUR property for free and even buying it for you surrounded by the long term! the second one. but i wouldnt bother doing it now. prices are set to drop.
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1) A property is purchased, put on rent and if the monthly rent is greater than the mortgage, a profit is being made.
2) A proprty is purchased, completely renovated and refurbished and is after sold. If the price that the property is sold for is far greater than the money that was spent into the property, then a profit have been made.
Which methods produces the greatest profits?
Answers: As the other guy said; too many variables.
There is money to be have either way, but it depends on price, locations, condition of the property, your marketing technique or your agents, fees, mortgages etc etc.
For example, you buy a house at lb100,000 near no mortgage. You rent it out for lb400 per month. This is a return annually of around 5%. You could get that rate in a appropriate building society, let alone an investment bond, or ISA etc etc.
That isn't the end of the picture though as you're also purchase capital value. If you hold on to that rent over a period of ten years, you're making your 5% but if the house has also doubled contained by value, you're making a capital gain of lb100,000 too (of which you'll foot 40% tax).
So, through renting you could achieve both 1) and 2) - but it's a longer term strategy and could cost you abundantly of money.
Take into effect void periods (No tenant) and repairs costs, you'll be lucky to make 3% to be honest. But, that capital meaning it what makes people longing to invest in property.
Depends what you mean by 'profits', and how you judge the extraction of money into your pocket.
Both can put quite a lot of money surrounded by your pocket (provided you know what you are doing). Too many people hold jumped onto the property bandwagon recently lacking understanding how to really make money from it and are immediately losing out.
Serious investors and developers are still making quite a good living out of both methods - beside even more opportunity for the astute buyer now we are in 'sale time'. But you do involve to crunch the numbers and hnt out the deals.
David Nicoll
Property tax specialist
To answer your sound out, firstly are you in to make a prompt profit or are you serious about making real money for the rest of your enthusiasm and paying very little tax, or no duty at all.
Property in the UK as an example. When buying, (and its a buyers open market at this moment in time in the UK) let say for lb100,000, you should be able to negotiate 15/20% discount for starters, even though it have a market value of lb100K, since property is not moving vastly fast, and some people are willing to sell, especially if the cannot make the mortgage repayments, you in a minute find a tenant, and in some cases the prevuos owners would be only to lively to take the tenancy.
And hear is the crunch as long as you never get rid of the property
you will be able to remortgage the property every 2/3 years
take the equity increase out surrounded by cash tax free. If you assume that property have doubled in the UK every 7/!0 years, you will never have to verbs. Now duplicate this with 2 Property or 3, even 5 times you can make a living out of it. Should you want to fashion a fortune, I think you have the formula staring you within the Face.
I hope this helps.
I agree with certarux. Many populace will see the falling market as a time to buy. Also many populace will unfortunately be forced to sell their properties because they are inept to meet their commitments. They will be looking to rent accommodation.
Also, this is an island. Therefore, land/space is fixed. There is a demand for housing because of the large numbers of general public wanting to come here.
I would therefore think this is a buying opportunity to convert a property to rent. It can be sold at a after that date once prices recover and start to rise again - as they surely will.
It all depends on your costs. If you enjoy high interest payments on your mortgage, you may be better off selling, butchery the debt, and starting again with a smaller property/loan.
Personally, if it was a moment ago the one property, I'd sell if it would produce a good profit, once you are mortgage-free, start baggy on to the properties for a long-term income. Too many variables to answer that.
Matybe if you can give some specific data you would get an answer.
Rental, logically it is like someone looking after YOUR property for free and even buying it for you surrounded by the long term! the second one. but i wouldnt bother doing it now. prices are set to drop.