Buy to let advice

RaiderHammer

Hi does anyone have any experience or adviice on buy to let mortgages and what it's actually like to rent a property out, the best way to do it etc. Thank you.

Yorkie1

Interest rates are higher on BTL than residential mortgages, you often need a 25% deposit.

There are lots and lots of things to know about being a LL. Join a landlords association like the NLA, and get Tessa Shepperton's book for starters. If you use a letting agent be careful as anyone can set up as one without any qualifications.

Conrad

There is no best way.
I have many B2L clients and they have different methods. One group will only invest in freehold houses, the other only flats (they claim mthere's less hassle with things going wrong / roof / garden etc|).
It's like asking 'whats the best holiday' - we each would have our own idea.

Firstly decide what your main objective is - is it 1) Capital growth or 2) Income yield. Some people are more focused on growth as they plan for example to sell the property nin 10 year in order to start a restaurant.

RaiderHammer

Conrad wrote: »

There is no best way.
I have many B2L clients and they have different methods. One group will only invest in freehold houses, the other only flats (they claim mthere's less hassle with things going wrong / roof / garden etc|).
It's like asking 'whats the best holiday' - we each would have our own idea.

Firstly decide what your main objective is - is it 1) Capital growth or 2) Income yield. Some people are more focused on growth as they plan for example to sell the property nin 10 year in order to start a restaurant.

Bit of both really capital growth and income.

dimbo61

First of all its a BTL loan as you dont get the same protection as a residential mortgage.
In the current market you need a 25% deposit and 2/3% fee to get a LOAN with a higher interest rate.
You need to know what you are doing Landlords legal responsibilities, BTL insurance, TAX etc
Beware if you dont know what you are doing
Lots of BTL landlords have gone bankrupt in the last 2 years

nrsql

You would probably want to consider a rent collect if not a fully managed service for your first attempt which will probably take around 10% of the income.
It can take 4-6 months to remove a tenant who isn't paying rent and you would probably write that amount off. You would need to be able to support that amount. Saying that it's only happened to me once in about 20 years but I consider myself lucky.
You also need to factor in redecoration and repair costs - this should be cheaper for a flat than a house.

Buy to let mortgages tend to be at a higher rate than residential so if possible it's usually better to increase your residential mortagage - you can still claim the rental income against tax and you would be liable either way. It may put your main home more at risk but I doubt it.

Gorgeous_George

Depends on your personal circumstances.

If you have time, good interpersonal skills and an understanding nature, you could manage it yourself. If you are lucky, your 'good' tenants will be no trouble and you will strike up a good LL-tenant relationship. If you are unlucky it could be a disaster. If in doubt, err on the side of caution and pay an agent to manage it for you. The agent will probably make more from your BTL than you will but it is safer.

Personally, I prefer to manage it myself and pass the savings on to my tenant. My tenant gets a 4 bedroom house for the same rent as a 3 bed (or even a 2 bed) and I get a happy tenant. A happy tenant = a happy landlord.

BTL mortgages are more expensive and require a larger deposit - especially in today's financial climate. You would be better off using equity in your residential property if possible.

Be realistic about the returns. It is not unreasonable to make a loss in the early years in anticipation of gains in later years (as rents should rise). I wouldn't be holding out for capital gains though - at least not in real terms.

My advice would be to only buy a house that you would live in yourself and only let to tenants that you would like as neighbours. Everything else I trust to luck.

Be lucky. And don't forget the taxman.

GG