Hi everyone, I'm pretty new on this site but wanted to ask a question on a possible NMD deal.

I've been offered a property that's worth £300,000 for £240,000. My plan would be to use it as a holiday let due to it's location and although I understand the yield isn't that great I think it's a great investment.

My question is if I did a NMD deal do you think the figures stack up? If you have knowledge in this area and could give me a few quick sums so that it makes sense that would be helpful.

I guess I should get over and say hello in the newbie section also.

Thanks for any comments you guys have for me.

Tone

To make this a NMD you would need to borrow minmum of £240k so even at 100% mortgage coverage & 4.99% interest you would need the rent to be £1000/m.

__________________
Looking for Below Market Value leads for TS & DL postcodes.
http://sellhouse-quickly.org/Blog/

http://business-from-home.org/blog

Get links to your site on autopilot

I think you'll already realise that as a holiday let you'll be looking at a far higher percentage of void periods, so you'd need to work out the rental maths based on that figure.

just to add a few real world figures in....
at MV of £300k, assuming you want to take the max back out, i.e 85% of MV = £255k, less PP of £240k = £15k less fees to put into the piggy bank which could maybe be used to subsidised the rental for a while if you're expecting high capital growth.

With a loan of £255k at 5.5% the monthly figure would be about £1170 which entails getting a rental of about £1420 per month x 12 months, i.e. assuming no voids and at 120% rental coverage. So if the property is empty 6 months of the year you still need to be pulling in £1420 x 12. This does leave a nice £250 x 12 surplus to cover expenses etc.

You may of course get 100% rental coverage but it leaves things a lot tighter.

May be better viewed as a BTS cut and run job at slightly below MV for a quick sale and pocket the dosh?

Some of the more experienced forum heads probably have a more accurate model for you!

You also need to know that if you are looking to let as a true holiday let, M Ex wont lend.

There is another thread re holiday lets somewhere!

Rgds

Pete

Thanks for your quick responses. It certainly gives me lots to think about. I think the rental will stand up but you never know.

TMB instant Remortgage at 90% = around 26K cash out.
Mortgage at around 6% is £1350 or thereabouts.
The 26K would pay the mortgage for around 20 Months.

or 90% Advantage 5.19 would be mortgage of £1168 more than 20 months to sort things out.

Either way it depends on you adversity to risk.

After 20 months, it's a no tie product anyhow sell, flip or decide.

Hi guys, you're certainly given me loads to think about and this forum has some great people with great knowledge.

I actually close the deal today so am going ahead with the purchase and I'm happy to say the sellers are going to rent back from me for a minimum of 6 months so they can search for their new home. This gives me time to decide what to do with the property.

Hi Tone

From my limited experience I thought maximum LTV is 70% for a holiday let which of course excludes many NMD deals, and as Pete says no loans with M Xpress = no closed bridging available, so even further restrictions on the money front!

So can you share how you have financed this deal to enlighten me?

Many thanks and good luck

Sally

Hope you dont forget to tell the mortgage company its a holiday let