Buy to let a good move?

http://www.guardian.co.uk/commentisfree/story/0,,1780885,00.html

with BTL the minimun deposit is 15% .
The interest rate for a BTL is usually a bit higher .
The rent should cover the mortgage ,this is where you need to be realistic .
Where are you buying ,who are you renting to .
You will need insurance .The amount off insurance you pay will depent on the type of tenant . Tenant ,profession person = lower premiun .Tenant ,DHSS = higher premium . Where would you buy ,how would you get a tenant what is the market like now . Dont forget any tax on profits and CGT if you sell .Can you afford the rent for a few months if you dont have a tenant .I wuold say most BTL's are done on interest only .If the figures add up then buy .

Investing in the stockmarket is likely to produce better returns than BTL in the immediate future IMHO, as net yields after expenses in letting property are often lower than cash/dividends and capital growth is pretty subdued ( though this may vary in different parts of the country).

You do of course have the benefit of gearing at low risk with a BTL.On the other hand your money is locked up - the investment is illiquid.And if you already own a home, a disproportionate amount of your assets will be tied up in one sector.A further downside of BTLs is the tenant/agent/voids/repairs hassle factor - some people don't mind this, other find it worrying or annoying.

It's similar with the volatility of share prices - some people hate this, others don't mind.Another thing to consider is that your pension will be invested in the stock market, so if you have a lot in that, you may already be covered.The aim is to get a balance - property,cash, equities.

As you seem now to be in a good position to start serious investing, I would look at doing some research into buying shares before making a decision.Here's a strategy that might suit you.It's a comparatively easy to understand way of getting into share investing and less risky than trackers.

Commercial property funds are indeed an asset class to consider - different from residential, usually with higher and more stable returns, and no hassle factor.

It's worth mentioning that REITS are likely to be more volatile than the steady commercial property funds invested in bricks and mortar we are used to, because they are listed shares which can easily be bought and sold.Just as funds invested in property company shares are more volatile than funds invested in real properties. Be sure to check you've got the right type of fund in this sector.

Examples - note chart for recent volatility:

Fund invested in property company shares

Fund invested directly in actual buildings

If you can find the right property at the right price and suitable tenants, BTL still works.

It's not as easy as it once was but the basics of income vs costs and risk assessment still hold. My rule is:
a. Find a house and divide the cost by 150.
b. If the rent is less than this figure, walk away

I'm sure that there are many places where BTL will still work.

If BTL doesn't work then house-buying wouldn't work. All depends on the crash - will it happen - how severe will it be - which areas will be worst/least affected - etc.

For the OP. Do your sums with a number of assumptions and your question will answer itself. Then find a property that meets the assumptions (price, rental income, market). Just don't factor in any unjustified house price inflation and make sure it's a long term commitment. If you can manage the BTL yourself, you'll save a lot in letting agent fees.

It may not be a huge earner but the experience could set you in a good position should the market collapse and BTL become more attractive in the future.

I don't think you'd lose a fortune over 10 years. I'd prefer bricks and mortar to a few shares in over-valued companies.

Best wishes

GG