Buying a buy to let

GDB2222

leeroypenmut wrote: »

I know what you mean but this is what i think, This house is £20-30,000 cheaper than house on same terrace - I think house prices will drop more but the more they drop the more people start looking to buy, with the increased interest in the houses sellers are less likely to drop, I offered £10,000 under asking & got it for £8,000 under asking, So when the prices drop i should be ok!!! I think!!! I hope!!!!

If prices drop more then i sit tight and ride it out, I am not so worried about making money from rent just the investment for the long term future.

I probably got it all wrong?

Yes, I think you got it all wrong.

First, if it were as massively under-priced as you seem to think, it would be an easy decision. Just buy it and stick it straight back on the market, then pocket your profit. I suggest checking actual sale prices at www.nethouseprices.com

Second, if you speak to any long-term BTL'er, they all expect to make money from the rent after paying all their expenses, including notional interest on their deposit. Being a landlord is a right PITA, and you need to get paid for it as well as getting a return on the money you have invested.

Third, you surely don't want to be subsidising the rent at the same time as seeing prices drop? If it's really under-priced see my first point above. If it's not under-priced, you'll be subsidising the rent in order to make a capital loss.

Fourth, it's very unlikely to be significantly under-priced, but of course I haven't seen it.

Fifth, everybody here has warned you against this, including quite a lot of people who have years of BTL experience. I have been a BTL investor since early 90's, so say 15 years experience of BTL here. Before that, I assisted my parents for many years in letting out a couple of flats above their surgery.

GDB2222

PasturesNew wrote: »

2] Monthly Rent x 1.25 = the monthly mortgage (or more, but never less)

That's not right, surely? Do you mean: Monthly Rent = the monthly mortgage x 1.25 ?

motch

leeroypenmut wrote: »

[1] £10,000 overpriced
[2] well within that scope £250 spare about

[1] only £10,000 overpriced? I thought the price of the property they would agree on is £97,000 ?

650 (your maximum rent possible) x 100 =£65,000 so it's £32,000 overpriced based on pasturesNew formula

I think you're including your £25,000 of real cash you own into the equation..

Conrad

Ok, I've offered on some properties this week for B2L, but nothing is really stacking up.

HOUSES - I want to HMO (put a quality tenant in each room on 6 m contracts), but time youve knowcked the place about, decorated and so on the entry cost is still too high even with 30% price drops.

FLATS - Im homing in on new build (yessssss) in prosperous town centre, with a typical 35 - 45% lower price than those achived 12 months ago.
Again let HMO - two double bedrooms with 2 sharers in each bedroom on ONE 6 month contract.
Rent is around £900 p month, lowest price Ive offered is £140,000 (was £245k I think at peak), but after the service charges the net rent is £800 pm so a gross yield of 6.8% - still nothing to get excited about.

Im offering really low and will just see what turns up, but so far no one has taken a 'really low' offer.

One is brand new conversion above Woolworths in the town centre, NO PARKING. Originally I think he wanted about £180k. Ive offered £120k.

There is over sxupply of flats generally, but town centre located stuff with parking is limited so I think the values could increase once all stock sold.

leeroypenmut

GDB2222 wrote: »

Yes, I think you got it all wrong.

First, if it were as massively under-priced as you seem to think, it would be an easy decision. Just buy it and stick it straight back on the market, then pocket your profit. I suggest checking actual sale prices at www.nethouseprices.com

Second, if you speak to any long-term BTL'er, they all expect to make money from the rent after paying all their expenses, including notional interest on their deposit. Being a landlord is a right PITA, and you need to get paid for it as well as getting a return on the money you have invested.

Third, you surely don't want to be subsidising the rent at the same time as seeing prices drop? If it's really under-priced see my first point above. If it's not under-priced, you'll be subsidising the rent in order to make a capital loss.

Fourth, it's very unlikely to be significantly under-priced, but of course I haven't seen it.

Fifth, everybody here has warned you against this, including quite a lot of people who have years of BTL experience. I have been a BTL investor since early 90's, so say 15 years experience of BTL here. Before that, I assisted my parents for many years in letting out a couple of flats above their surgery.

www.nethouseprices.com price is £134500 and the most recent date is 20 june 2008

GDB2222

leeroypenmut wrote: »

www.nethouseprices.com price is £134500 and the most recent date is 20 june 2008

Then you've got a real bargain. Buy it and flip it. Don't make a good deal bad by trying to turn it into a BTL.

Conrad

Just found another prospect;

2 bed new build flat sold last year £245995, now up for £130,000 but I will look to offer £105,000 and see what happens. Will let for about £750 pm apparantly.

Leeroy - you need to be looking at stuff thats 50% less than at the peak if its newbuild.

leeroypenmut

GDB2222 wrote: »

Then you've got a real bargain. Buy it and flip it. Don't make a good deal bad by trying to turn it into a BTL.

But by the time it all goes through & remarket it, the market would have droped some more & the cost of the extra fees so the profit would not be that good

Its not a new build