BTL effects on own mortgage

jackieblue

Thanks for the level of detail. So am I right that in addition to your yield of 8%, by putting £25k (max) into the property you increase its value by £55k (min) ?

What town is the property. Would it have 6 bedrooms or do students share (not near a uni and didn't go to one, so not sure of their habits !). Do students take a lot of managing (ie replacing tenants all the time), do you use a managing agent, do they tend to pay rent over the summer break or leave and find something new when they come back. It might be worth me looking at Reading because of the uni, but I'd be worried as students do seem to have long holidays. Do you use a particular lender as so many I've looked at seem to insist on ASTs and individual lets ?

So many questions I know but you do seem willing to share your knowledge. It seems to me that like PoorDave I need to look beyond my own "comfortable" little town to where the BTL market flourishes. Anyway thanks again for any info you can offer.

Lizzy

Students really don't like to share.
Sexist I know but I only rent to girls (have had to evict boys so never again and I have a son, wouldn't rent him a room either)
They pay me for the whole 12 months (no half rent in summer like some landlords offer) this causes no problem as the properties are of a high standard.
Where my houses are the students usually stay the first year in the university rooms then move to the private sector. So I usually take in a group of 2nd year friends, that is the important bit friends. 2nd years usually stay for 2 years then leave uni. I never mix, If a 4th year wants to stay she will have to find friends to take the other rooms or she will have to leave because if I put strangers in it rarely works. A whole house on offer is snapped up because they want to be together.

Perhaps contact reading uni and see if there is a need for private sector housing.
We could all be snookered as universities buy loads of properties themselves and they will always fill their rooms first. Everything is a risk.

You need to use a broker to find you a student mortgage. I know Mortgage Express do them but I don't know if you can approach them directly. Anyway as a first timer I would use a broker.

UK_Landlord_2

Students really don't like to share

i am afraid i would have to disagree with that point as i rent approxiamtely 250-300 student proeprties per year. admitadely the trend is towards 2 bedrooms but 4,5,6+ is still popular. *** sorry i think i misread what you meant, you are right students don't share bedrooms. oops on me sorry!

do you use a managing agent, do they tend to pay rent over the summer break

yes we rent for the full 12 months but this varies in other cities. i am the managing agent.

Thanks for the level of detail. So am I right that in addition to your yield of 8%, by putting £25k (max) into the property you increase its value by £55k (min) ?

your welcome, glad to help. i think a lot of landlords keep quiet about what they do and it can be hard to find this information and it did take me years to work it all out. but there is a lot more to letting than just knowing the maths! and yes your right, even after the remortgage we have a yield of just shy of 8%. these sort of deals are getting rarer, but they can be found if you look hard enough.

money borrowed from bm solutions, sourced through my excellent broker

jackieblue

UKLandlord & Lizzie,
Thanks very much to both of you. No wonder you're both up through the night ! I'm not quite the newbie you might think as I did get into BTL 15 months ago, but I probably did it in the most inefficient way possible - repayment mortgage, fixed rate. It actually costs me £3k per annum. I know it doesn't have to and I could change the mortgage type but I'm hoping this is a better way of saving my £3k than putting it in an ISA. I was lucky as I bought with a sitting tenant who stayed - even though I found the place really tatty he has no complaints. It'll need work when he goes.

I've just made an offer on a place that might just (and I mean just) cover its costs if all goes well. Even though I've spent money on a valuation I am thinking twice about whether it's the best kind of property given all your comments.

Your comment - there is a lot more to letting than just knowing the maths! - I think that's a really good point. I sit for hours doing sums but don't spend enough time doing research I think.

Anyway you really have given me food for thought/action and I appreciate it.

UK_Landlord_2

I'm hoping this is a better way of saving my £3k than putting it in an ISA

shame on you ;-)

you mention the 3k per annum but i bet it still does better than a savings account!! by a long way

good luck with future investments, all the best JP

Lizzy

I agree its 3k well spent, better than any savings plan and nothing that cant be changed in the future.

wow Uk-Landlord 250+ properties. Im only on my 4th.............in 4 years. Eeek I have a lot to learn. Like how to manage them all. No stress ill remember your name ha ha poor you.

Lizzy

morph

Hi Guys
I'm interested in getting into BTL with my son. I just wondered if you set up a small business to run your BTL's or just do it as an individual? Sorry, not the technical language I know but I'm hoping you'll get what I mean.

Nenen

Hi
thanks for a brilliant thread with SO much good info and advice from Lizzie and Landlord! :beer:

We are currently looking to move to Cambridge (I work there but live 30 miles away) and are also interested in getting into BTL. However, 2 probs and some questions which i would really appreciate advice on...

1) Do you really need to be able to do your own renovations and repairs etc?We are useless at DIY etc and any repairs, renovations etc we would have to pay commercial rates to professionals. Would it still be realistic to get into BTL?

2) As we have no savings to speak of we would have to mortgage our prospective house to the hilt to give us the 15% capital we'd need for BTL. We have about 80K in collatoral in our current house so could up our mortgage considerably during our move. Would that be really stupid???

3) Anyone have any knowledge of BTL in Cambridge? It has 2 universities so loads of students but the universities do own a lot of properties themselves and it is also very expensive to buy in Cambridge!

4) I guess with 250+ properties this is a full time job!!! but could we realistically think about maintaining very demanding full time jobs with one (or possibly in the future two/three) BTL properties? How much time realistically does it average to deal with BTL to students?

Sorry for all the questions... It's just that as people who have always worked in salaried caring professions (we love our jobs but have little hope of making much money from them) we're rather naive about all this stuff and looking for a way to be able to make a bit of extra money per year plus give us a better retirement in 17 years!

UK_Landlord_2

Hi Guys,

got to say, i don't own 250 properties, i have been renting and managing for clients for 7 years and have done over 1,000 lets to students but personally i too am on property 5 & 6.

yes it is full time i have an agency with 5 staff! so i suppose it's 5 full time jobs!

to answer some of the above, yes be carefull getting into too much debt, you need to still feel some security, things might change...

popular university towns may already have high student property prices so check the returns out carefully.

renting 1 or even 3 is not a full time job but expect to be on call at all hours it may be worth finding a good managing agent until the portfolio is up to a part time job?

you don't need to do all the work yourself, i get profesionals into do everything but i have good contacts so get reasonbly priced work done, i project manage myself. i also have a very good handyman for all the odds and sods.

hope that helps

good luck with it.

PoorDave

Agreed with the above - thanks for turning my orginal slightly vague question into a good thread with some useful info in it.

Some numbers for us to go and crunch i think!