One mortgage free property or multiple BTL's?

new_home_owner_3

if your looking at 25 years investment house prices will definatley be higher than what they are now, if it was me i would try one and see how you get on, im a first time landlord well i started renting 18 months ago and touch wood its all gone well.

Im in it for the long term and even with drops house prices will generally double over 10 years.

house prices have fell but to be honest its been minimal and as long as the rent you charge covers the mortgage and bit more then with time it will surely pay off.

new_home_owner_3

diable wrote: »

If you have the cash then rents are going up in certain parts of the UK.

rents have gone up by us but i will not put the rent up on my teneants until my mortgage rate goes up as we are happy with what we are making, maybe in three years when i have to remortgage i may have to increase the rent.

B_Blank

Now is probably the worst time in history to become a BTL landlord.

1, CGT going up
2, IR going up
3, House prices going down - due to unemployment and IR going up
4, Rent going down due to housing benefit changes
5, Tenant rights will strengthen gradually over time

brit1234

Rents have fallen 2 months in a row (LSL) and capital gains are being wiped out in price falls.

Now is not the time to invest in buy to let, this may change in a few years.

B_Blank

brit1234 wrote: »

Rents have fallen 2 months in a row (LSL) and capital gains are being wiped out in price falls.

Now is not the time to invest in buy to let, this may change in a few years.

Short term results are not important. The long term fundamentals look terrible for house prices.

msjl13

I have been a landlord for a few years now but all my properties are debt free. I have only now started looking at BTL as an option for the long term.

To diable- I have a 3 bed terraced property lined up at £150,000 and I can achieve 850pcm so a yield of 6.8% is not too shabby. In the 5 years of being a landlord I have never had a property empty for more than a couple of weeks so I guess I have been quite lucky.

You can google stories about BTL and come up with an argument for each side. Thanks for the balanced responses. Food for thought.

Flashmanchop

You mention that you’re an existing landlord later on in your post, so you are already savvy I would hope with the regulation et al. Being an existing landlord I also assume that you are also reasonably expedient at dealing with mortgages/agents/debt management etc, and are possibly not as risk averse as some other posters!

Clearly BTL is not for everyone, as some will always think that 3.3% from an ISA is a great investment. I am not disagreeing with this, if your not comfortable at dealing with risk. Its almost a personal SWOT analysis.

A lot of people would disagree with what I will post, but this is my personal opinion.

As an investor, with £150,000 CASH you are in a brilliant position. You could, as you state buy a property outright, and receive £x rent a month, and a return on your £150,000 investment, but, with me being in the business I am I would concentrate on buying at the right price. The old adage “Buy at the right price, and sell at the right price” (or rent at the right price..)

I am not sure where you are based, so my figures may not be appropriate at all, but are based on my personal experiences and knowledge.

The area where I generally operate, buying to let, and buying to sell, with that cash available I would consider creating a portfolio, with mortgages, in an area where rents are going up, and are strong. House prices are relatively stable, and for the scare mongers out amongst you, any crash should be cancelled out buy Buying at the right Price!

Assuming a constant cost to you of 30% deposit (70%LTV on a BTL, assumed NatWest Mortgage @ 4.99% for arguments sake) and costs of c. £3,000 or less per property purchase I would think about:-

Assumed average purchase price (2 bed end terraces) £28,500 (based on my last 8 purchases within a Hull Postcode)
Your cash injection of 30% for each purchase (£8,550.00)
Amount to Mortgage £19,950 each property £19,950

Based on mortgage above, including £1,499 fee added to the loan, results in a monthly mortgage cost of c. £175.20

Assuming you have c. £3,000 costs per purchase (solicitors, small amount of remedial works (carpets, lick of paint, small contingency) by my reckoning with £150,000 cash you could have costs of £11,550 per purchase.

As a maximum, over a buying period of a year, using the £150,000 cash only you could look to increase your portfolio to 13 average properties, based on the above data only.

Each of the above properties is renting from £325/Month (£75/wk) to £395/Month (£91.15/wk) ~ average £360.00/month

Assuming the above, you would have taken on a yearly mortgage debt of £27,331.20 for all 13 properties, and a potential yearly rental income (assuming 2 Months empty) anywhere between £42,250 and £46,800 gross. A potential theoretical gain of £14,919a year.

Costs wise, even if you paid for a Homeserve plan @ £27.99 a month would see costs of c. £4,366.44, but that’s often why multiple landlords have the use of a very useful builder to hand.

Landlords insurance could cost c. £2,000 a year.

Agents:- well, if you work and feel it is too hard to manage, pay an agent, but from my experience some are worse then tenants at paying, and are less reliable. Pay to use one to sign a tenant up, using an AST, and get the tenant to set up a s/o or the LHA to be paid to you direct.

Yes this is a risk.

Right, wait for the scare mongers and BTL scare mongers to roll up and give me a kicking!!!