looking to buy to let for 1st time ; advice appreciated

Jimmy_31

molit wrote: »

my advice would be to talk to as many people in the face as possible...have a chat to lettng agents, and universities, basially its like any business transaction, work out who your market is, what risk you are willing to accept, how much work you are willing to do etc. Oh and accept you will make mistakes.

Couple of things to say - some peole think BTL landlords are the scourge of the world - ignore them. Secondly, keep receipts

I've now got two rental properties, as the signiture says by aciednt, so can let you know some of the pitfalls, and some of the tricks that you can pull legally. pm me if you want

Final thing, I'd say keep away from the debate house prices board - no offence to people who post on there, but th threads on there to my mind have no place on MSE, a lot of posters use it as an excuse to shout and insult other people, adding fact at the end of statements, as they think that is what debating is...

Yes some people do think that BTL landlords are the scourge of the world and i am definitely one of them, the reason lots of people cant buy a home in the town where they grew up is due to BTL landlords buying up a lot of the property and renting it back to the people who should be allowed to buy a home in their town but cant because of greedy landlords.

I read an article yesterday on the bbc news site regarding the cuts coming to housing benefit and a BTL landlord had been interviewed about it because he owned 35 BTLs, he said the cuts will bankrupt him, he gets no sympathy from me not one little bit. now maybe 35 familys can buy the homes that he will lose and live their lives happily paying a mortgage instead of paying into the BTL landlords pension fund.:T

madeupname1

I have found BTL to be an excellent investment, but I am in it for long term capital growth, rather than montly income. There are tax advantages to pensions, so it is a good idea to try to put some money away in one, but I would definately also consider BTL. The landlordzone forum is a good place to hang around for a while to get a view of the experiences of landlords and tenants and the things that can go wrong. I suppose the biggest risks of BTL are (1) long void periods/non paying tenants and (2) tenant damage. In respect of the first risk, it seems as though you are well place to deal with any voids or non-paying tenants because (a) you have a separate income stream which can cover costs and (b) it doesn't seem as though you will need much of a mortgage to purchase a property. Tenant damage is more difficult. You can mitigate the risks by getting proper references done - an estate agent can organise this for you if you are unsure what you are doing - and taking a decent sized deposit. That said if a tenant was to completely trash the house you are going to lose money. I haven't experienced that and I have been letting for 11 years but you could be unlucky. That said there are risks in any business and BTL isn't any different.

The other thing I have found useful is that I have stuck to areas that I know well and are easy for me to access. It may be possible to make more money by investing in areas further afield but in my view that was a risk I did not want to take.

molit

I think just to add on to that, you have to view it as a business. Like any business, you have to work out where it is best to invest, as madeupname1 says - some of the people who have lost a fortune thought that it was a quick win and easy money - buying offplan in a country you've never visited is always a recipe for disater. Some poeple view owning a house as sufficient experience, it isnt - you need to work out your market etc... Even getting your head around the tax situation, especailly as you are a higher rate tax payer, is very important, as are the legals etc

re my final point in my last post, be prepared for people to verbally abuse you - I now am very careful who I tell I rent out properties to.

bororooney

Much appreciated everyone. I will need to read all your posts a few times for it to stick. I will certainly do all the relevant research before I spend and will hang around this board from now on for some sound if not slightly varied advice. I also take onboard I perhaps should invest partly in a pension, fair point. However I do fancy having a crack at BTL and with my local knowledge of the area where I'm proposing to buy aswell as I'm looking to go for a small terraced house bought from savings I'm sure the risks will be kept to a minimum (tenant damage, no tenant etc). I'm certainly in it for the long term and not for a quick buck. I am also totally aware that I have responsibilities as a landlord which I would honour. Long way to go and a lot to take onboard but hopefully I'll get there. Thanks again.

bluesnake

bororooney, I did similar as you want to do, but on about half your salary. I have no regrets. I live in Zone 5, but my property is in zone 1.

Firstly I can not afford to live in the property, although I work walking distance from the property. The income of renting out rooms adequately covers the rental.

For HMOs (room lets) there are council guide lines to room sizes, number of kitchens, bathrooms, wired in fire alarms, amount of people staying there, etc. You do not need these when renting to a single family.

First three rules are Location, Location, Location. Fourth rule buy cheap and do not get emotionally involved. BUY CHEAP!!! Fifth rule know the neighborhood, Sixth, council held leases can be often very beneficial with property price! Try and put as little deposit as possible, as all your pofit is taxeable.

I was interested in getting one BTL in Nottingham, phone up the student letting place and found they were building accommodation for 7000 students near the campus - I ran away.

My friend buys in scotland. She 4 years ago she bought some one bedroom houses for £45000 and the dhss money coming in more than covers this. The capital growth is little, but the return is good.

Now there are good and bad everywhere, both tenants and landlords. There are people whom can not just work with money, and there are those who can.

I have had 5 landlords-rented rooms in my youth, and since I am looking for a new job with which I may have to move elsewhere, will probably (begrudgingly ) have a few more too.

Make sure your area has enough people wanting to rent, and covers the mortgage!

If you want to know i this is the best time to buy or hold off, well ask me again in 10 years and I will give you a good answer. Any one that can predict the future would not need employment. It is a risk and if the interest goes one day to 12% can you afford it?

Generally speaking, many countries hosting the Olympics go through a more positive economy that year, but there is often a down swing the year later. Will this effect us - ask me again in 10 years

If your salary is in the 40% tax bracket, I would definitely put that into a pension fund. Perhaps you should see an IFA?

dopester

Jimmy_31 wrote: »

I read an article yesterday on the bbc news site regarding the cuts coming to housing benefit and a BTL landlord had been interviewed about it because he owned 35 BTLs, he said the cuts will bankrupt him, he gets no sympathy from me not one little bit. now maybe 35 familys can buy the homes that he will lose and live their lives happily paying a mortgage instead of paying into the BTL landlords pension fund.:T

Urggh I read the same article and have bitten my tongue about it.

http://www.bbc.co.uk/news/uk-12937116

He most likely got into "the game" years ago. If he'd stopped at four or five BTLs he'd have been set for life, most likely, with housing benefit having paid off the mortgages over the years. Instead he had to leverage himself for 35 and his empire highly prone to come crashing down. Greed much? Feel sorry for him?

missile

Jimmy_31 wrote: »

Yes some people do think that BTL landlords are the scourge of the world and i am definitely one of them, the reason lots of people cant buy a home in the town where they grew up is due to BTL landlords buying up a lot of the property and renting it back to the people who should be allowed to buy a home in their town but cant because of greedy landlords.

I read an article yesterday on the bbc news site regarding the cuts coming to housing benefit and a BTL landlord had been interviewed about it because he owned 35 BTLs, he said the cuts will bankrupt him, he gets no sympathy from me not one little bit. now maybe 35 familys can buy the homes that he will lose and live their lives happily paying a mortgage instead of paying into the BTL landlords pension fund.:T

So you want LLs to go broke and their tenants on the street?

Those on housing benefit would struggle to qualify for a mortgage and the "lucky" few would end up deeper in debt contributing to banker's bonus.
The rich always feed on the poor :EasterBun

bristol_pilot

How can someone taking home £50k+ AFTER TAX have so little savings and no pension? For a start, you should look into getting into a pension so you can get 40% tax relief on contributions - up to 25% can come back out as tax-free cash when you retire. In a pension you spread your risk, unlike investing in a single BTL property where if it all goes wrong you will take a big hit. The future in BTL is going to be for the big operators who can spread risk by buying 100+ properties. I'd be looking at a pension first if I were you.

Orpheo

missile wrote: »

So you want LLs to go broke and their tenants on the street? Etc, etc.

Ah, the obligatory, "you're evil!" implication. Alternatively the landlords who go broke will be forced to sell their houses at lower, perhaps, more affordable prices. They might even sell their houses to new, solvent, landlords who will continue to rent out the properties, quite possibly with cheaper rents.

bluesnake

dopester wrote: »

Urggh I read the same article and have bitten my tongue about it.


He most likely got into "the game" years ago. If he'd stopped at four or five BTLs he'd have been set for life, most likely, with housing benefit having paid off the mortgages over the years. Instead he had to leverage himself for 35 and his empire highly prone to come crashing down. Greed much? Feel sorry for him?

Others have done it in better times, like Fergus and Judith Wilson.

There will always be very poor people. Some are unfortunate and some are unlucky and I empathize with these people. However, there is an group that falls into categories that: won't save; bought into the deadly consumer society; can't be bothered to work; need to be entertained; need the latest and greatest car, iphone, etc and are broke. I am not wealthy and earn less than the UK average salary. I'd be a mug to feel any sympathy when my friend earns £45000, can not make ends meet and always broke (broke-meaning borrowing cash from 72 year old parents and bank, rather than having little). One has to make ones coat according to the size of the cloth!