As a property landlord, this kind of project doesn’t appeal, too much time spent for little reward especially if some unexpected costs arise. My method was always turn key buy to let, usually three beds giving more chance of a tenant staying long term as the house is big enough for their needs for longer, minimises gaps between tenants leaving and new tenants arriving as even a tenant finder service is getting expensive now, £750 plus vat usually the minimum. Add that to the loss in rent between contracts and it will hurt the figures further. No buy to let is worth it unless you have a starting gross profit of approx £350 per month minimum (rent less mortgage cost initially) in my opinion. This just seems like others will benefit from the deal, fees, finance, refurb work etc leaving you as a busy fool.
Really interesting perspective Mark, and I can completely understand your point of view. If capital was not a concern, and there was lots of it, then I’d recommend most people do go down that route. But for a lot of people capital is finite and people are trying to be resourceful when it comes to building a portfolio. In this case, the the BRR strategy is used but inevitably comes with a lot more risk - the refurb itself, and the back end where there’s less profit margin in the first 2-5 years of ownership.
Thanks for your content Justin! What would you say is a reasonable amount of money to leave in a deal, and what is too much that makes it not a worthwhile project?
There tends to be a few reasons - most commonly because run down properties aren’t always mortgageable. Alternatively I use them because they are quicker forms of finance, meaning you can purchase quicker. They are also easier to exit from, where as mortgages can come with higher arrangement and exit fees!
Yes to both. Getting a bank loan, I normally get a personal loan against my own name - then lend the money to the company as a director's loan. The company then pays me back, I in turn pay back the bank. If you try and get a business loan there are a ton of hoops to jump through and typically a personal guarantee is required, but a personal loan can be same day. Also, what's the point of doing a business loan with a higher interest rate, if you have to personally guarantee it anyway?
Yes it absolutely is! Particularly in a turnkey buy-to-let property, as these are likely to have more potential for maintenance in year 1. With BRR if the refurb was done right, hopefully there won't be as much need for it. For this video, I decided not to include it as I was trying to keep the example simple.
Excellent content Justin!👍 I’m considering selling my personal property (releasing 160k) to do the brr strategy and build up a portfolio. I could make £385 profit per month after leaving 12k in each property in my area. Do you think now is a good time in the market to do this? Many thanks
I'm not financial advisor but gambling on your own house is bit too much for me. I'm going opposite way, overpaying morgate and then start saving for next property. If I were you, I'd calculate how much money you would save by overpaying morgate. Probably isn't most efficient and fastest way but safest at least. You'll need a strong budget to back up your own mistakes at investing or pay Justin to mentor you.
@@irokezkezikq8102 it wouldn’t really be a gamble as I would hold the buy to lets for 20 + years, after 5 years of building up a portfolio I would then buy my own property to live in. I plan on renting while I’m using the equity to build a portfolio. I am probably more of a risk taker than a play it safe type of person but I don’t really see this as much of a risk, bearing in mind I have no kids to worry about at the moment.
ROI is one thing, but capital growth is where you make as much again. Using your 125k value, even if growth was only 5%, you would be getting 6k on 11k investment.
Afraid I don't anymore, I get too many requests which I am very grateful for, but don't have the time to fulfil. I have a great team in place - if you would like help sourcing a property, or with mentorship, please visit my website.
I respectfully disagree. Timing the market is one of biggest mistakes I see people making. I will continue buying during 2024 as I believe buying well valued properties in all markets is the much smarter investing decision over a 10 or 20 year time horizon. Although you are correct in saying this is a much riskier and harder strategy to execute during in a falling market, I would also prefer to purchase properties in a downturn, than purchasing properties at the peak of a market. Basic rules of investing.
![How to invest £50,000 in Property? [Q&A Video]](/img/1.gif)
If I wanted to start this process tomorrow what would you suggest my first few steps were to be.
As a property landlord, this kind of project doesn’t appeal, too much time spent for little reward especially if some unexpected costs arise. My method was always turn key buy to let, usually three beds giving more chance of a tenant staying long term as the house is big enough for their needs for longer, minimises gaps between tenants leaving and new tenants arriving as even a tenant finder service is getting expensive now, £750 plus vat usually the minimum. Add that to the loss in rent between contracts and it will hurt the figures further. No buy to let is worth it unless you have a starting gross profit of approx £350 per month minimum (rent less mortgage cost initially) in my opinion. This just seems like others will benefit from the deal, fees, finance, refurb work etc leaving you as a busy fool.
Really interesting perspective Mark, and I can completely understand your point of view. If capital was not a concern, and there was lots of it, then I’d recommend most people do go down that route. But for a lot of people capital is finite and people are trying to be resourceful when it comes to building a portfolio. In this case, the the BRR strategy is used but inevitably comes with a lot more risk - the refurb itself, and the back end where there’s less profit margin in the first 2-5 years of ownership.
Best BRR video on RUclips, great job, Justin.
Glad you enjoyed it! Appreciate you watching
Thanks for your content Justin!
What would you say is a reasonable amount of money to leave in a deal, and what is too much that makes it not a worthwhile project?
Hi Justin, can i ask why you initially use a bridging loan rather than a mortgage? The costs of a bridging loan are heavy?
There tends to be a few reasons - most commonly because run down properties aren’t always mortgageable.
Alternatively I use them because they are quicker forms of finance, meaning you can purchase quicker. They are also easier to exit from, where as mortgages can come with higher arrangement and exit fees!
Great informative video thanks
Is it possible to use a bridging loan for the refurbishment cost? Alternatively, can we also get a bank loan for the refurbishment cost?
Yes to both. Getting a bank loan, I normally get a personal loan against my own name - then lend the money to the company as a director's loan. The company then pays me back, I in turn pay back the bank. If you try and get a business loan there are a ton of hoops to jump through and typically a personal guarantee is required, but a personal loan can be same day. Also, what's the point of doing a business loan with a higher interest rate, if you have to personally guarantee it anyway?
How do you calculate ROI when u made profit on the house?
When calculating the monthly profit is it not worthwhile to calculate in a maintenance cost to cover anything that needs fixing?
Yes it absolutely is! Particularly in a turnkey buy-to-let property, as these are likely to have more potential for maintenance in year 1. With BRR if the refurb was done right, hopefully there won't be as much need for it. For this video, I decided not to include it as I was trying to keep the example simple.
Excellent content Justin!👍
I’m considering selling my personal property (releasing 160k) to do the brr strategy and build up a portfolio. I could make £385 profit per month after leaving 12k in each property in my area. Do you think now is a good time in the market to do this?
Many thanks
I'm not financial advisor but gambling on your own house is bit too much for me.
I'm going opposite way, overpaying morgate and then start saving for next property.
If I were you, I'd calculate how much money you would save by overpaying morgate. Probably isn't most efficient and fastest way but safest at least.
You'll need a strong budget to back up your own mistakes at investing or pay Justin to mentor you.
@@irokezkezikq8102 it wouldn’t really be a gamble as I would hold the buy to lets for 20 + years, after 5 years of building up a portfolio I would then buy my own property to live in. I plan on renting while I’m using the equity to build a portfolio.
I am probably more of a risk taker than a play it safe type of person but I don’t really see this as much of a risk, bearing in mind I have no kids to worry about at the moment.
Just maintenence cost. Sudden leaks, or applicance repair/purchase, sudden boiler issues.
Gas certificate etc.
At the end left with nothing.
Yep that is the main risk with property. Hence why it’s so important to cashflow / profit
Great video!
Thanks Jack 🔥🔥
ROI is one thing, but capital growth is where you make as much again. Using your 125k value, even if growth was only 5%, you would be getting 6k on 11k investment.
Agreed, but there’s not point holding properties if they don’t product cashflow and a decent ROI. Best properties combine all those factors for sure 👌
Hi Justin, how can I arrange meeting with you just 5-10min
Afraid I don't anymore, I get too many requests which I am very grateful for, but don't have the time to fulfil. I have a great team in place - if you would like help sourcing a property, or with mentorship, please visit my website.
Help me please, how is £93,750 - £105,000 = £11,300?
My thoughts aswell.
I’m interested in this kind of business
👏 👏
Not to do in a falling market which will happen in 2024
I respectfully disagree. Timing the market is one of biggest mistakes I see people making. I will continue buying during 2024 as I believe buying well valued properties in all markets is the much smarter investing decision over a 10 or 20 year time horizon. Although you are correct in saying this is a much riskier and harder strategy to execute during in a falling market, I would also prefer to purchase properties in a downturn, than purchasing properties at the peak of a market. Basic rules of investing.