Very many people have become wealthy through 'buy to let', and many are still in the process of doing the same. While some look on it as a way towards generally a better life style, others use it as a way to build a real pension, that is as proof against inflation and safe as any, and not affected by the roller coaster of the stock market.
Although many are persuaded to go on expensive courses spending anything up to £8,000 on a few days course, the theory of buy to let is extremely simple, and the rules to make it work well known.
This can be repeated as many times as you like, only restricted by how much the properties increase in price and the equity you can make available. As the number of properties increase the cycle speeds up, as you have more properties whose equities can be added together. Some people have got hundreds of houses now, while quite a large number have well over 20 each, very many have 10 or more.
You can maximize the growth rate by
The risks are
Tax is not a problem as you never sell, although there are special arrangements with reduced or in some cases no tax if you sell in under a set number of years. If you were to sell up completely as an individual, after building a large empire over many years, you would incur large capital gains tax bills. If you had the houses all owned by a company, and sold the company, the ownership of the houses does not change, so no capital gains tax or stamp duty is payable and you would be likely to end up with a great deal more. You of course never need to sell, property over time will continue to increase in price and rents will continue to go up, giving you both the chance to raise any sums you want, as well as receive an ever increasing surplus over costs.
The advantages in self build, over going and buying a new estate house is cost, and knowing the quality of the build is high and you will not have problems in the future. Any newer house should require less maintenance and be far easier to keep let all the time than older properties. As the area becomes established, landscaped etc, rents will reflect this increased quality feel.
With a saving of 25% to 60% being made on self build you will see why it is an attractive route for rapid growth and at least some growth is guaranteed independent of generally rising prices in the area, so you know that you will be able to move the cycle forward with a another purchase, even if the property market slows.
It can also allow people to get involved who have less capital and those with the same amount of capital to get a number of builds started at the same time. This is because:-
Although some do build far larger, and more highly specified houses by self build than are available conventionally, this does not need to be the case, and you can, by the same methods and means, build properties of any style, size or for any market.
To get into property owning or to add an individual property you can see, can be achieved by raising just 5% of a far smaller sum, and even this can be recovered as soon as the house is built.
If you are already involved in buy to let much of what we have told you above, you will be well aware of, and many of you will have financial models, created with spreadsheets that will allow you to try out different combinations of purchases, rents etc. If you have not yet become involved in self build, can I suggest you try out within your model the effect of a number of self builds, and I am sure you will be delighted at how this can drastically improve the projections.
There are a few factors that put off 'buy to let' people, but these are only mostly misunderstandings.
You may have been put off by the theoretical work required to make this happen, of course very few self builders ever touch any tools at all. In most cases you will use a project manager who will manage the build for you, so you not only need to have no building experience, but can also allow someone else to do the whole task for you.
You may have heard that there is a shortage of building sites. There is no shortage of land, but in some areas a shortage of plots with planning consent that matches the requirements of self builders in the area. At any time there are well over 10,000 plots available to everyone and some others that we have options on, so are only available to our members.
You may have realized to make this happen and get the most savings, you need to be involved with a group and perhaps just don't know enough like minded people who would like to become involved. Through the club of course you have your requirement specified and get invited to join projects, so this is not a problem.
You may have felt that most self builders are developing homes for their own occupation, so would not welcome a buy to let person. This may be the case within self formed groups, who may have a small number of vacancies and be looking for like minded people, while within the club our approach is different, we meet people needs, not form social groups, as well as people who want to live in homes, we will have people who are developing a house to eventually retire to, buy to let people and a wide range of others.
You may have thought that self build would just take far too long, but the actual time it takes to build a modern house need not be long, after all the ones that go up at shows such as the ideal home exhibition, are built in days and some buildings are largely factory pre constructed, so the build on site is accomplished very quickly. Getting planning approval for your design, getting in quotes can take a few weeks, this is nothing compared with the delays involved when buying a house in a chain, and you may find that if you compare the time from beginning to look, to completed and occupied it is not that far different from finding a house, buying it, refurbishing it... as you might think.
What about capital tied up you may ask, well in most cases you are involving less of your own cash than you would put up as a deposit and this is split, so that the land and build costs are payable separately, although both qualifies for mortgages and secured loans.
It could be a detached property, semi, terraced property, holiday accommodation, could include some commercial space, shops or offices and by selecting the size, area it is located in and a few other factors you have a considerable choice over the budget. Perhaps you could afford one detached, two semis, or 4 apartments and this may give you the chance to either choose the level you start at, or to get a larger number of units faster.
If you look at the article for those who do perhaps feel that they cannot afford to buy a home of their own, under the section on not qualifying for a mortgage, and you will see we look at many other options and amongst these are involving an investor or involving a person who acts as in effect a guarantor, at no real risk due to the discount available through self build. In this case a person who owns equity in property, and who has the ability to help to raise a mortgage, can get a financial reward or share in the future equity increase of the property, without any capital investment at all. As well as people looking for a starter home, this can also be those who have loads of cash for a deposit, but whose salary just don't qualify them on their own to get as large a house, as they would like to build now. Perhaps this is as near as you can get to a license to legally print your own money. Within a club all sorts of arrangements can be talked about, and in some cases members who have compatible interests may find that they have common ground to come to their own understanding. Within our work books on funding a build, looking at the types of arrangements that might appeal to people, but we are not financial advisors so don't broker deals.
Getting into build to let is exactly the same as any other members of this club, the only real difference is in the personal specification we work out with you. It is likely that the quality of finish and size of property will be more like a conventional commercially produced house, than the above specification favored by people developing homes for their own occupation. As each member has an individual specification worked out with them there are no problems in involving them, and from a time perspective they can often become involved faster than other members as their specification is often more flexible, they are not so concerned about the location and may be able to change their specification slightly, if a particularly good deal comes up.
It is considerably easier within the club than going it alone for a number of reasons, not least because of the clubs ability to not only find good sites but also proactively creates them.
This website should show a Self Build Homes Club title at the top and content bar down the left. If you have reached this page by some means that has not displayed it properly, for example from a search engine, please click here to load the website properly and show the UK home page and options. If this does not work click here to get to a site map.
Form-mail - a general purpose form, questions, feedback, and other contacts. It is quick to complete and covers most requirements. Pops up in a new window, close the window after use, to get back here.
Self Build Homes Club is an international club
and trading title of Self
Build Homes Club llc. Local services
to serve members are commissioned for the club by New
Atlantis International Services Corporation.
All major commissioned companies involved, have New Atlantis trust status.