Buy to let ?
 

Anyone on here do this, have been thinking about it for years as we dont have a mortgage on our house and can probably raise a deposit for a modest rental property.

Any tips, what to watch for, is it still worth doing, what are the pitfalls ?

Kind of think it may be a better investment than the ****ty ISAs we have, also have a share scheme coming up at the end of the year and was going to buy a car but I think really that is a crap investment.

I think you may well be right J4CKO. As long as you bear in mind the costs of maintainance of the property etc.

I reckon that old motor bikes are also a good investment. If they are in good condition and it is an interesting model, the value goes up every year.

Les

Yes, trying to explain that to my wife, that putting money in a bank may not be the best solution, ok if you spent it on something fun and desirable then conceivably it may go up in value more than the money in the bank which is actually, at the moment going down in value with every passing month, i.e. if inflation is five percent and your interest is three pecent then it isnt going up, its going down !

At least with stuff like classic cars and bikes at least you have the pleasure out of it, even her ratty old 500 may actually be a better investment than the bank at the moment as even if we lose a grand you cant put a price on things if you have enjoyed them and to be honest money in the bloody Halifax dwindling year on year isnt fun.

If I get a house, say £120,000 I can do work on it, keep an eye on it, houses always over time go up, you take the rental income and hopefully a bit of profit.

Do it Jacko, if you have the money. Do it.

We started by kind of conning the system, the mortgage lender back then was automated and there was no question of whether we were going to buy to let. It was a mortgage offer and we were accepted.

(Doing it this way meant we didn't have to stump up 20-25% deposit)

That got us on the letting "ladder", a couple of years later we came clean with them, been with them ever since. (choices for them were for us to keep paying them the mortgage, or they tell us to get another mortgage and we leave them... but with no defaults since we were with them it was a no brainer for them).

Anyway, that was about 8 years ago. My wife and I are now lucky enough to have four properties, we live in a nice 3 bed semi and rent out the other 3. Get an agent to sort the collections, he should cost around 8-10%, he will also be responsible for getting new tenants in. For the management of them my wife will get the odd call and I will pop round with my drill. :)

You do need to have reserves for stuff like washing machines (you buy the property and ask them to leave the white goods, then a year later they break). I can deal with repairing lights/doors and the like. For plumbing issues we have a guy we've been dealing with for years, you build up a network.

Do it, you won't regret it.

Cheers JPL, will start ont he wife tonight, I mean to convince her as she is super risk averse.

Jacko,

Remember the 3 most importrant things when buying a rental property.

Location, location, location.

Yes it is a good investment , remember though that you will have ongoing costs and you will need to be able to sustain the mortgage payments etc if it is vacant.

Chip

Yep, our properties are flats, 2/3 bed. Near town or near rail line.

We also have a good friend in the Estate Agency business, bang down on the asking price and get the best rental income you can.

Remember to have it professionaly checked in and out, so the tenants can't say "The three foot wide coffee stain on that cream carpet was there when we moved in". If the tenants muck up the property it all comes out of their deposit, fortunately we've only had to do this once.

(They signed the contract, they know what they can/cannot do).

It is a business. You are there to make money, not to accept their failings.

If you are lucky enough to get a flat with a separate garage (in a row of garages), let out the garage separately.

If you're going to do it I'd avoid university towns. From next year student fees going up to £9000/year at 2/3 uni's so it'll reduce the number of students quite significantly, and hence the demand for rental property in big university towns like Leeds and Nottingham etc. I live in quite a studenty area of Leeds and quite a lot of rental properties have got for sale signs up - I think some shrewd landlords are getting out before the tennants dry up.

There are some other good areas you can invest too - I've been pretty impressed with Zopa - the returns are good and it's easy, and managed investment funds have seen some excellent returns recently, although this may not continue over the next year.

Also NS&I Index Linked bonds are still available - these are currently returning about 6% tax free, and with inflation forcast to stay high for a while yet these look fantastic.

Do you want a yield or a bricks and mortar pension ? You have to choose the area you buy in but also the type of property in that area. There are loads of new build flats all over the country but many of the developements are full of Buy to lets so rents can end up being considerably lower than you first expect. You also have to consider wether you want a family to rent a house or you want a house you can rent per room. If you rent per room you will need HIMO permission from the council in some areas and a proper fire alarm etc. If you have spare cash I would say go for it but yeild may be non existant.

One of our flats cost £200K, the actual rental income isn't that good, it turns a profit but it's not a lot.

But it's now worth £260K, I'd say that's a decent yield.

Don't get scared Jacko! :-)

Also, for long term, don't forget about capital gains tax.

Just started doing this

Looked at the market (SE London) and bought a 2 bed flat. Criteria to me were good areas, near stations, good block, reasonable sized rooms etc... Essentially somewhere I would like to live myself. Spent a while finding the right place and now I'm in the process of painting through-out/re-carpeting and sorting out the white goods. I'm going to manage it as I live locally & can do most things but local estate agents are going to source tenants (as I want them to do all the credit checking/vetting etc) although I get to decide whether or not I want them as tenants in the end.

For me this is a long-term investment and once paid off will provide me with a pension as its going to produce more of a return than any of my pension policies. Aim is to get 2 or 3 properties. My partner has 1 as well with the same aim.

Was just reading a report at the weekend there, that Landlords are reporting more and more Tennant's are in arrear's.

This is expected to increase once Government cuts to Benefits starts to take effect. Plus with the rising cost of food/fuel, people have a lot less money.

Been thinking of renting my flat and buying somewhere else, but this report is making me think twice. Probably just sell it.

And the world was meant to end a few weeks ago etc etc. I wouldn't base my investment strategy on some report of unknown credibility and potentially dubious stats shabbily reported in some rag.

Not saying for a minute that btl is some sort of road to riches btw

May I ask whether the rent will cover the mortgage (capital repayment) and if so which part of London?

Thanks and congrats on your purchase

BTL is usually interest only as it is simpler for tax purposes.

Thanks, I'm aware that's how many people do it however I was curious as to whether Puff had done otherwise. What I was actually interested in was whether Puff had found property in London where the yield was adequate to cover the cost of a repayment mortgage. In many many parts of London this is very difficult to do.

Some good tips already on here .
Most important one though is to buy at the right price .!!!
Buy one that is tatty but sound, and a quick make over will give you a good start .
I use a Letting agency as I got sick of playing hide and seek with some past tenants !!
Good Luck .

We were looking at an 800sq foot one bed flat (Asking Price $90K) in Florida - For long term let.

Rental income: $800 - $1000
Agent Fee @ 10%: $80
Ad Valorum Tax: $180
Mortgage Interest: $350
Mortgage Capital repayment: $200
Monthly Maintainance Fee: $300
Home Owners Assoc: $50

So between -$360 and -$160 a month :(

I think we'll pass.

100% spot on

If you buy right, it will mask any mistakes you make initially

it also allows you to rent at slightly below the average, which means you get to be v choosy over the tenants etc etc

Well planted the seed last night, will progress with it tonight, softly softly.

Makes sense and potentially, as she isn't working full time if we got a "Unique fixer upper opportunity" she could do some work on it, also as she isnt working we would then get to use her tax allowance for anything we make off it.

Kind of thinking near where J4ckos mate lives as its a nice area and excellent for the airport and they are putting the Metrolink in so its great for getting to Manchester.

we've 7 rental properties.
values from £50k to £100k

the £50k STUDIO flats bring in a £380pcm rent
£100k one bed flat £400pcm
£100k 2bed 'new build' semi £455pcm


do the maths on the better return for your money.


Tips.... buy FREEHOLD!! not leasehold.
or you're paying a service charge each year.


We look at the 'first run on the ladder' type of property... as they always seem to rent out ok. Its just the type of person you can be dealing with.
Saying that.. 'problem' tenant can be renting £1m properties... you never can say who you'll have a problem with.

Rent covers mortgage @ current rates & it is a repayment as the rental income will eventually be the pension. I've just spent a couple of weekends painting it neutral colours/carpets/odds n sods, have had 6 viewings and people moving in next weekend, 2 yrs, full asking. Property is in Lewisham but not Grove Park where there is plenty of property but rents are lower.

We don't use a letting agent other than for a tenant finding service. Otherwise you'll end up paying them around 12% of a months rent + VAT for basically sweet FA.

And make sure you lodge the bond with the DPS.

Chip

Whats that mean Chip ?

http://www.depositprotection.com/

It safeguards deposits for tenants from ruthless & despicable landlords = good thing :)

Thanks Puff :thumb:

http://www.moneyweek.com/investments...as-spain-12303

Opinion here from Moneyweek who are of course as bearish as it gets on property, but interesting.

I've never used a letting agent.

Personally I find an ad in the local paper brings in enquiries and you can vet them yourself. Remeber, there are no guarantees with letting agents. If the tenent doesn't pay/smashes the place up they'll just say "the references checked out" and you can do that yourself.

Have a look on landlordzone for more info and what documents you need to provide/certificates you need to have etc.

5t.