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Buy To Let, Worth The Risk?
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CarUser_2
Posts: 55 Forumite
As im still young im hoping to invest for the future, i have between £14k to £18 to invest and i was think of investing into a Buy to Let Flat. I was wondering if anyone has any advise for me. I know a few who have invested and they have told me the important thing is the location, (Dont think of the flat as your home, think of it as investment). I have also heard that property prices are starting calm down a little and are not rising quickly as before. If anyone invested in these Buy to Let, could you post any advise Thanks.
Also im invested in the UK and dont realy want to invest over seas.
Also im invested in the UK and dont realy want to invest over seas.
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property prices tend to go hand in hand with location, so if the location is as good as you can get, i wouldn't be surprised if prices still rise.
rental income is ideally 130% of mortgage interest, and perhaps it would be wise to have at least 10% deposit, if not 20%.
Don't forget to allow for property perhaps being empty for 1 month in a year.
Do your homework carefully, and if the figures work out, then go for it.
I'll presume you're looking at this as a long-ish term investment?Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0 -
do you own your own home? If not you'll find it difficult to get a BTL mortgage.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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Im 25 right now, so and investment that pays out in 10 to 15 years would be fine. I have been told by my cousin about having to pay the mortgage for the time you dont have tenents. Also i would prefer investing in a new property instead of that has been used, mainly due to the fact it wont need repairs. Also my parents have moved into a new house and they were given free warranties. I have also thought about invested into plots while the building is still in progress (Heard you can save money).0
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If I had some money to invest right now, I'd be looking at something nice and safe like government bonds, just to see how this banking mess pans out.0
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do you own your own home? If not you'll find it difficult to get a BTL mortgage.
At present im renting, i was offered the chance to buy the flat off my landlord but to say to the truth we cant afford it. A while back i asked my cousin what i can do as im renting, he told me the way he manged to get into renting was by geting his parents to go through the process of Buying and renting the flat and him make sure of the finance.
Im salary is around £38k a year which may help me get a mortgage.0 -
CarUser,
The yields on B2Let are poor right now so I would advise against it.
I'm not sure of your priorities but if I was in your shoes I would be saving a little more deposit see how the market goes for the next year or two and look into buying my own property.
If you buy a 2 bed or more you can also rent the 2nd room out.
You can always invest a little later in life when you've settled down yourself.
Don't forget as a general rule you should only invest spare cash. As nothing is guaranteed.0 -
It completely depends on what area you're looking at.
In many parts of Oxfordshire you would need a 20% - 30% deposit so you're covering you're mortgage and allowing for other costs.
Investing in property seems to be a bad thing at the moment but who knows.0 -
I have seen a couple of properties in loactions such as Swansea, Manchester and Birmingham, they were all city appartments priced between £145 to £165k. Im planing on going to some of these workshops on Buy to Let, i know the company organise it and might be bias to other options but its good getting an insight into the property for offer.0
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Im planing on going to some of these workshops on Buy to Let, i know the company organise it and might be bias to other options but its good getting an insight into the property for offer.
Dont let them pressurise you into anything - I know a few have got a bad name, Inside track etc.I have seen a couple of properties in loactions such as Swansea, Manchester and Birmingham, they were all city appartments priced between £145 to £165k
Are these new builds? New build flats will be the first to fall as there are simply too many of them. Leeds, bradford etc are already seeing asking prices down by 15%+.
Lets assume you invest your £18,000 into a £145,000 flat and the prices drop by 15%. Your flat will be worth £21,000 less than it is now and you will be in negative equity - you'll struggle to sell the place as you will owe more than your assetts are worth.
If you are thinking I'm trying to get you away from the idea, then you are right because I am. I actually WANT to see a fall in house prices, as do many.
If you are still thinking about doing it here is my final piece of ammo:
About a year ago, with so much BTL talk, I looked to see what all the fuss was about. Once i realised I'd need to subsidise the rent to cover the mortgage, I honestly couldn't beleive that people were investing. So i left my deposit (for my own house ~£35,000 - im only young too, 23) in the bank. Today Halifax announced that House Price inflation has only been 5.2% over the past year. The money in my bank has earnt me up to 6.25% over that time and I haven't had to make up the difference on the rent to cover the mortgage, kit the house out, fix broken shelves (Being a Landlord carries a lot of responsibilities) worry about my TAX liabilities etc.
If you still want to invest in a BTL property, that is your choice and I wish you the best, but I think this is a really, really bad idea right now. If you do fancy investing some of your money in something other than a bank (As Generali says only invest what you do not immediately need), why not try a currency (Euro or Yen, especially if we see a rate cut in the near future), or Gold. You'll need to do some research, but there is less of a risk.0 -
firsttimetom wrote: »Dont let them pressurise you into anything - I know a few have got a bad name, Inside track etc.
Are these new builds? New build flats will be the first to fall as there are simply too many of them. Leeds, bradford etc are already seeing asking prices down by 15%+.
Lets assume you invest your £18,000 into a £145,000 flat and the prices drop by 15%. Your flat will be worth £21,000 less than it is now and you will be in negative equity - you'll struggle to sell the place as you will owe more than your assetts are worth.
If you are thinking I'm trying to get you away from the idea, then you are right because I am. I actually WANT to see a fall in house prices, as do many.
If you are still thinking about doing it here is my final piece of ammo:
About a year ago, with so much BTL talk, I looked to see what all the fuss was about. Once i realised I'd need to subsidise the rent to cover the mortgage, I honestly couldn't beleive that people were investing. So i left my deposit (for my own house ~£35,000 - im only young too, 23) in the bank. Today Halifax announced that House Price inflation has only been 5.2% over the past year. The money in my bank has earnt me up to 6.25% over that time and I haven't had to make up the difference on the rent to cover the mortgage, kit the house out, fix broken shelves (Being a Landlord carries a lot of responsibilities) worry about my TAX liabilities etc.
If you still want to invest in a BTL property, that is your choice and I wish you the best, but I think this is a really, really bad idea right now. If you do fancy investing some of your money in something other than a bank (As Generali says only invest what you do not immediately need), why not try a currency (Euro or Yen, especially if we see a rate cut in the near future), or Gold. You'll need to do some research, but there is less of a risk.
I'd be very wary of investing in currencies or gold for that matter right now. Currencies are likely to be quite up and down and are very hard to predict. Gold is a purely speculative purchase as it doesn't pay any income.
I'd go for Govt bonds on the basis that firstly it looks like interest rates are on the way down and when interest rates are cut, bond prices generally rise and secondly that the UK govt is very unlikely to default on sterling denominated debt.
If you're interested in investing money, buy a copy of a book called "A Random Walk Down Wall Street". It's excellent and explains a lot about the pitfalls for the unwary.
One of the pitfalls it talks about is failing to diversify, aka putting all your eggs in one basket, which is exactly what you're looking at doing.
My opinion is that BTL is a good investment for the rich and a mediocre one for the rest as the risks are waaay too high.0
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