Anyone in the Buy to Let Market?
Anyone in the Buy to Let Market?
I am looking into buy to let for the first time. Just a thought at the monent to see if it is viable
I live in London, however finding property prices really expensive and wanted to keep away from taking out a mortgage and keep risk to a minimal with a high annual return. Also if the house is unoccupied i did not want to shell out of my pocket.
So my thinking is to buy for example a £50k or less property up north out right - this will give me a higher annual return then buying in London. Over time have several of these.
Based it on £5400 yearly income, looking at rental markets for the area.
Does anyone have any suggestions on area's to consider?
Can someone let me know what other costs \ factors i need to consider?
Maintenance, insurances etc?
Also if i were to leave this property with an estate agent to manage, what kind of fees etc would i be looking at?
Thanks
I live in London, however finding property prices really expensive and wanted to keep away from taking out a mortgage and keep risk to a minimal with a high annual return. Also if the house is unoccupied i did not want to shell out of my pocket.
So my thinking is to buy for example a £50k or less property up north out right - this will give me a higher annual return then buying in London. Over time have several of these.
Based it on £5400 yearly income, looking at rental markets for the area.
Does anyone have any suggestions on area's to consider?
Can someone let me know what other costs \ factors i need to consider?
Maintenance, insurances etc?
Also if i were to leave this property with an estate agent to manage, what kind of fees etc would i be looking at?
Thanks
If you're buying outright then you'll save a couple of grand in mortgage fees. I bought a house in Gloucester, nice tidy 2 bed place but needed a mortgage to help so I had to take out a 'buy-to-let' mortgage. I leave my property in the hands of an estate agents and they take a 10% cut from the monthly rental income that I get. As I work full time, I simply do not want the hassle of having to do everything myself. I.e if there's a problem with the heating or something needs fixing, instead of me arranging somebody to go over there midday and sorting keys which would be a real pain as my tenants also work full time, the agents sort it hassle free and it gets done and dusted. The agents will also arrange all the yearly gas and electric safety checks as well which has to be done (obviously you have to pay for the maintenance etc but you don't have to worry about anything).
My agents include 6 month landlord rent cover if the tenants fail to pay, but it's very unlikely you will get a troublesome tenant if using a reputable estate agent that inspect/vet potential tenants. They also don't consider people on benefits as it is not worth the risk and the chances are they won't look after the place compared to a young married couple working full time and with a kid.
Landlord insurance is cheap, mine is about £10 a month through Simply Landlords.
Market value of an average 2 bed house in Gloucester is about 120k-130k. Flats and maisonettes can be had for cheaper.
I still make a smalll profit each year even with the agents cut, little maintenance jobs that sometimes needs doing and tax. It is more than paying for itself which is what you need to happen and at the end of my mortgage (16 years left) I'll have it outright.
Sorry TDW
My agents include 6 month landlord rent cover if the tenants fail to pay, but it's very unlikely you will get a troublesome tenant if using a reputable estate agent that inspect/vet potential tenants. They also don't consider people on benefits as it is not worth the risk and the chances are they won't look after the place compared to a young married couple working full time and with a kid.
Landlord insurance is cheap, mine is about £10 a month through Simply Landlords.
Market value of an average 2 bed house in Gloucester is about 120k-130k. Flats and maisonettes can be had for cheaper.
I still make a smalll profit each year even with the agents cut, little maintenance jobs that sometimes needs doing and tax. It is more than paying for itself which is what you need to happen and at the end of my mortgage (16 years left) I'll have it outright.
Sorry TDW
Last edited by LSherratt; Sep 8, 2015 at 10:49 PM.
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Manage agents vary from 6-12% of monthly rent + vat
£50k, you will very lucky or it will be a wreck and need alot of money throwing at it to sort. £100k more realistic.
Costs yearly
Building insurance
Rent loss insurance
Landlord safety check
Management fees which will have move in cost for references credit checks advertising etc.
General repairs, depending on initial condition of property and fittings.
If you clear 5% net of all costs per year you are doing Ok. 3.5% is not unusual. Depends if you want to get into the bottom of the market, DHSS social drop out tenants. You can make money but have more hassle with lost rent and arrears. Don't get smokers, pets are ok (get extra pet bond and insist agent fumigates and cleans all carpets professional ly every time you get new tenant) If you're far away from property find a good agent and ensure you get proper references so rent legal Insurance applies.
£50k, you will very lucky or it will be a wreck and need alot of money throwing at it to sort. £100k more realistic.
Costs yearly
Building insurance
Rent loss insurance
Landlord safety check
Management fees which will have move in cost for references credit checks advertising etc.
General repairs, depending on initial condition of property and fittings.
If you clear 5% net of all costs per year you are doing Ok. 3.5% is not unusual. Depends if you want to get into the bottom of the market, DHSS social drop out tenants. You can make money but have more hassle with lost rent and arrears. Don't get smokers, pets are ok (get extra pet bond and insist agent fumigates and cleans all carpets professional ly every time you get new tenant) If you're far away from property find a good agent and ensure you get proper references so rent legal Insurance applies.
Last edited by andy97; Sep 8, 2015 at 02:03 PM.
Thanks guys, some things for my list.
I noted some houses in Dudley are cheap 2-3 beds for 50k, also somewhere near Manchester for even cheaper.
other option was to buy from auction, spnd little money doing it up then rent out..
my figures were something like this:
House Cost: £50k
Monthly Rent: £500
Years Rent: £6k
Return: 12%
£1k allocated to repairs and other costs (estimated)
brings the return down to 10% this goes down with other bits mentioned and i need to look into.
If the numbers are done with a 20k house (up north) with a £350 per month rent, returns are allot higher.
An example, i have seen cheaper
http://www.rightmove.co.uk/property-...-50698894.html
I noted some houses in Dudley are cheap 2-3 beds for 50k, also somewhere near Manchester for even cheaper.
other option was to buy from auction, spnd little money doing it up then rent out..
my figures were something like this:
House Cost: £50k
Monthly Rent: £500
Years Rent: £6k
Return: 12%
£1k allocated to repairs and other costs (estimated)
brings the return down to 10% this goes down with other bits mentioned and i need to look into.
If the numbers are done with a 20k house (up north) with a £350 per month rent, returns are allot higher.
An example, i have seen cheaper
http://www.rightmove.co.uk/property-...-50698894.html
Last edited by SamUK; Sep 8, 2015 at 02:12 PM.
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From: Api 500+bhp MD321T @91dB Probably SN's longest owner of an Impreza Turbo
Ignoring house price
Rent £500 gross
Less management(10%) £50+VAT rent £440
Buildings insurance (£15/month) rent £425
Rent loss insurance (£15/month) rent £410
Repairs ( budget 2 months costs, £~£100) rent £310
References costs (£100 per new tenants, once a year) rent £300 per month
Return now down to 7.2%
DONT FOR GET income tax payable on the net rent. Some costs offset. See accountant, oh forgot accountant fees.
See how 5% looks alot more realistic. This is based on £50k house. Welcome to renting
Rent £500 gross
Less management(10%) £50+VAT rent £440
Buildings insurance (£15/month) rent £425
Rent loss insurance (£15/month) rent £410
Repairs ( budget 2 months costs, £~£100) rent £310
References costs (£100 per new tenants, once a year) rent £300 per month
Return now down to 7.2%
DONT FOR GET income tax payable on the net rent. Some costs offset. See accountant, oh forgot accountant fees.
See how 5% looks alot more realistic. This is based on £50k house. Welcome to renting
If you factor in a 10% monthy "drip" commission. You can't wipe out another £600. That's more than a months rent.
Inventories can be costly to, but vital in the event of a dispute.
Insurance.
Boiler/utility cover.
Unoccupied periods.
A whole host of other little bits and pieces that really add up, I'd expect you to be yielding half of your estimate.
Inventories can be costly to, but vital in the event of a dispute.
Insurance.
Boiler/utility cover.
Unoccupied periods.
A whole host of other little bits and pieces that really add up, I'd expect you to be yielding half of your estimate.
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Crikey, houses are cheap up North!
You don't necessarily need an accountant. You can file a self assessment tax return online. Just save all your receipts and invoices etc which you can then offset against your profit at the end of each taxible year. Even if you have to make a trip to your house, you can offset the petrol cost... A 5-6% yield is still good but you'll be very lucky to get to 10%.
You don't necessarily need an accountant. You can file a self assessment tax return online. Just save all your receipts and invoices etc which you can then offset against your profit at the end of each taxible year. Even if you have to make a trip to your house, you can offset the petrol cost... A 5-6% yield is still good but you'll be very lucky to get to 10%.
Last edited by LSherratt; Sep 8, 2015 at 03:43 PM.
Question is will you get £500pcm for a £50k house?
Rentals are driven by the desireability of the area, as are house prices. To also put that in perspective, a £50k house can be bought repayment mortgagewise for £270pcm (or less) for 100%, so what is the point of spending nearly twice what you might pay to someone to rent when you can buy? OK, there's things like credit rating etc but you will find that the rental rate is around or just above what it would cost someone on a mortgage with a 10-15% deposit (in my experience).
I would watch loads of Homes Under The Hammer to get a good idea. Its definitely a long-term project. Mine and my partner's are our (not unreasonable) pension once they're paid off.
Rentals are driven by the desireability of the area, as are house prices. To also put that in perspective, a £50k house can be bought repayment mortgagewise for £270pcm (or less) for 100%, so what is the point of spending nearly twice what you might pay to someone to rent when you can buy? OK, there's things like credit rating etc but you will find that the rental rate is around or just above what it would cost someone on a mortgage with a 10-15% deposit (in my experience).
I would watch loads of Homes Under The Hammer to get a good idea. Its definitely a long-term project. Mine and my partner's are our (not unreasonable) pension once they're paid off.
We are fortunate to have London properties bought a few years ago. We were quite particular in what we were looking for (for maintenance and rental purposes) and although we have had agencies involved in getting our tenants, also vet them ourselves. As a result we have been lucky in that all our tenants are the ones we first rented the property to and we strive to continue to have a good and proactive relationship with them. Our properties are local to us, so that we can keep an eye on them and pop around to sort out any issues that crop up from time to time, so for the extra little bit of hassle, save ourselves that 10% or so.
Careful choice of property and tenant, together with fostering a good relationship plays dividends.
Careful choice of property and tenant, together with fostering a good relationship plays dividends.
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From: K
My very personal opinion is that letting agents do fvk all - happy to take a fee, and that's about it
And as with most investments the "money" is made on the initial purchase price (whether property stock/shares or cars)
Otherwise it is too much of a gamble
And as with most investments the "money" is made on the initial purchase price (whether property stock/shares or cars)
Otherwise it is too much of a gamble
I've had a fantastic experience with my letting agents. They are on the ball with everything and are always helpful in advising etc. I wouldn't do it any other way. I guess you get the good ones and the bad ones as with everything.
If you're buying outright then you'll save a couple of grand in mortgage fees. I bought a house in Gloucester, nice tidy 2 bed place but needed a mortgage to help so I had to take out a 'buy-to-let' mortgage. I leave my property in the hands of an estate agents and they take a 10% cut from the monthly rental income that I get. As I work full time, I simply do not want the hassle of having to do everything myself. I.e if there's a problem with the heating or something needs fixing, instead of me arranging somebody to go over there midday and sorting keys which would be a real pain as my tenants also work full time, the agents sort it hassle free and it gets done and dusted. The agents will also arrange all the yearly gas and electric safety checks as well which has to be done (obviously you have to pay for the maintenance etc but you don't have to worry about anything).
My agents include 6 month landlord rent cover if the tenants fail to pay, but it's very unlikely you will get a troublesome tenant if using a reputable estate agent that inspect/vet potential tenants. They also don't consider people on benefits as it is not worth the risk and the chances are they won't look after the place compared to a young married couple working full time and with a kid.
Landlord insurance is cheap, mine is about £10 a month through Simply Landlords.
Market value of an average 2 bed house in Gloucester is about 120k-130k. Flats and maisonettes can be had for cheaper.
I still make a smalll profit each year even with the agents cut, little maintenance jobs that sometimes needs doing and tax. It is more than paying for itself which is what you need to happen and at the end of my mortgage (16 years left) I'll have it outright.
Sorry chocolate o Brian
My agents include 6 month landlord rent cover if the tenants fail to pay, but it's very unlikely you will get a troublesome tenant if using a reputable estate agent that inspect/vet potential tenants. They also don't consider people on benefits as it is not worth the risk and the chances are they won't look after the place compared to a young married couple working full time and with a kid.
Landlord insurance is cheap, mine is about £10 a month through Simply Landlords.
Market value of an average 2 bed house in Gloucester is about 120k-130k. Flats and maisonettes can be had for cheaper.
I still make a smalll profit each year even with the agents cut, little maintenance jobs that sometimes needs doing and tax. It is more than paying for itself which is what you need to happen and at the end of my mortgage (16 years left) I'll have it outright.
Sorry chocolate o Brian
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From: K
not that I have used them - I have had a few colleagues who have had terrible experience
both had non paying tenants - both from agencies,
and one had trouble getting his deposit back!!!
the other just could not stand the hassle and sold the property (I strongly advised against it tbh)
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From: Api 500+bhp MD321T @91dB Probably SN's longest owner of an Impreza Turbo
yes, maybe I am a bit jaundiced
not that I have used them - I have had a few colleagues who have had terrible experience
both had non paying tenants - both from agencies,
and one had trouble getting his deposit back!!!
the other just could not stand the hassle and sold the property (I strongly advised against it tbh)
not that I have used them - I have had a few colleagues who have had terrible experience
both had non paying tenants - both from agencies,
and one had trouble getting his deposit back!!!
the other just could not stand the hassle and sold the property (I strongly advised against it tbh)
I doubt you will get £500 a month for a £50k house.
A house for that money will only be in the crappest areas of Manchester,and i would suggest something like £400 a month at the absolute tops..And probably be DSS scummers..
We get £600pm for a £120k house in Derbyshire,its the going rate...Neither expensive or cheap,we let a letting agent sort all the details out for 10%PA...
A house for that money will only be in the crappest areas of Manchester,and i would suggest something like £400 a month at the absolute tops..And probably be DSS scummers..
We get £600pm for a £120k house in Derbyshire,its the going rate...Neither expensive or cheap,we let a letting agent sort all the details out for 10%PA...
Last edited by fatscoobfella1; Sep 9, 2015 at 07:40 PM.
Have a read of this. There are new tax regulations on the horizon for landlords!
http://www.telegraph.co.uk/finance/p...150pc-tax.html
http://www.telegraph.co.uk/finance/p...150pc-tax.html
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