Buying a 'buy-to-let' where to begin?

applebottomjeans

I would like an investment property to rent out hopefully cover the mortgage and sell on in years to come. The problem is I don't really know where to begin!

I have looked at properties but not sure what their rental value would be - on TV they ask agents but surely they're not just going to help me out for nothing?!

Would I be able to raise the deposit on my own property (assuming there is still sufficient equity left)?

Is anybody doing this and willing to share any pearls of wisdom? Thanks in advance.

Werdnal

Look at similar sized properties in the area that are advetised for let. Try things like Rightmove, and see what the competition are charging.

Do you know about the legal obligations and responsibilities of being a LL? There are many posts here about newbies looking to get into BTL. It is complicated and you must do your homework, but a good starting point for your research into what is involved is here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

applebottomjeans

Thank you - am planning to spend 6 mths now doing research so that is exactly what I need!

Werdnal

applebottomjeans wrote: »

Thank you - am planning to spend 6 mths now doing research so that is exactly what I need!

No problem, only too pleased to advise someone who has the sense to look into it all BEFORE getting up to the neck in trouble and coming here begging for help.

As I said, it is a little bit of a minefield to start with, and there are some nightmare posts here. No-one can guarantee you will never have a problem tenant, but having been a LL now for 11 years, I have only had one who has been difficult.

Above all, just make sure you have sufficient funds in reserve incase anything goes wrong. A BTL can quickly drown you if you mortgage yourself to the hilt and don't have a little "rainy day" money for unforeseen problems, voids, repairs etc.

Good luck, and once you have read the link I posted, feel free to come back and ask again if there is anything specific you are unsure of.

jimcrock

Hello. I am in a very similar position to yourself. I bought a property for cash in the summer but would now like to raise £30k from it to use as a deposit for a house valued at £100k to rent.

I have been told I could tell the bank I want to use the money for "home improvements" and then just use it as the deposit for the BTL.

Apparently some banks can be funny if you try to raise the money to use towards a business. Which, becoming a LL you actually are.

I would be very interested to know how you have gotten on.

G_M

jimcrock wrote: »

Hello........I bought a property for cash in the summer but would now like to raise £30k from it to use as a deposit for a house valued at £100k to rent.

I have been told I could tell the bank I want to use the money for "home improvements" and then just use it as the deposit for the BTL.

Apparently some banks can be funny if you try to raise the money to use towards a business. Which, becoming a LL you actually are.

I would be very interested to know how you have gotten on.

If you are raising money on a property to rent out you need a BTL mortgage. 'Hiding' your plans would be fraud, and would put you in breach of your mortgage contract. They'll find out via insurance - they might wonder why you have taken out landlords insurance on a property you live in! And if you use normal residential insurance, it will be invalid and you'll lose everything if the tenants burn the place down.

There are other ways they can findout so don't even consider this. Put together a proper business plan for your business.

edit: just re-read your post. So you will raise the money on your own home and the rental property will not have a Charge (mortgage) on it? Somewhat more acceptable. But beware the tax issues. You can offset tax on the rental income with mortgage interest if the mortgage is for the BTL, but not if it is for home improvement!

OP - to find what rent you'll get:
1) check similar properties to let in the area on Rightmove etc
2) same with the local paper
3) ask letting agents - yes they'll help if they have iven a hint that you might use their services. But they might exaggerate to make it sound more attractive. They don't care if you fail to get the predicted rent so long as they get your business.

Toby1990

jimcrock wrote: »

Hello. I am in a very similar position to yourself. I bought a property for cash in the summer but would now like to raise £30k from it to use as a deposit for a house valued at £100k to rent.

I have been told I could tell the bank I want to use the money for "home improvements" and then just use it as the deposit for the BTL.

Apparently some banks can be funny if you try to raise the money to use towards a business. Which, becoming a LL you actually are.

I would be very interested to know how you have gotten on.

Just read my thread TBH.

Kantankrus_Mare

We did exactly what you are thinking about doing this time last year.

We bought husbands parents property for £80,000

We raised the deposit on our own house as we have lots of equity.

We used the services of an idependant mortgage advisor who sorted everything for us for a one off fee.

We rented to a young couple who split up after a few months.

The bloke stayed on and apart from him not looking after the garden as we would have wished has turned out to be a quiet tenant who always pays his rent on time.

We are looking to maybe buy another.

There are plenty of books telling you everything you need to do and all the legalities and I would advise reading up as much as you can.

I have also heard horror stories and know it could quite easily have been a very different experience.