First time landlord - BTL questions

ziof3ster

Hi all,

my first post on the community so go easy :-)

I've done an offer on a flat (1 bed) central London. The place is in need of modernization (even someone very old is living there at the moment).

I know that for BTL the rent assesment report is quite important.

In that area, an average monthy rent for a 1bed is not less that 1200£.
In this condition, I dont think he can get this. Anyone knows hot the surveyor find build this reports?

Is very important because the most attractive mortgage for me is with RBS but, for the money I'm borrowing my rent should be at least 1050 pcm (risky in this case for the flat conditions).

I know the Mortgage Works have some more competitive rates so will be safer borrow from them, but the Arrangment Fees at 3.5% are crazy!!

Another question:
what is the formula for the arrangment fees to be included in the mortgage?

If I buy for 200000 and borrow 150000, let say the arrangment fee is 5000

I can pay these 5000 upfront (noway) or add to the mortgage, in wich way?

Thanks a lot!
ciao!
Gio

BitterAndTwisted

I think the most important question to answer before you even think about mortgages is what kind of tenancy this old person has. If it's a protected tenancy you will never, ever get anything approaching market rent for the property until the tenant dies.

ILW

ziof3ster wrote: »

Hi all,

my first post on the community so go easy :-)

I've done an offer on a flat (1 bed) central London. The place is in need of modernization (even someone very old is living there at the moment).

I know that for BTL the rent assesment report is quite important.

In that area, an average monthy rent for a 1bed is not less that 1200£.
In this condition, I dont think he can get this. Anyone knows hot the surveyor find build this reports?

Is very important because the most attractive mortgage for me is with RBS but, for the money I'm borrowing my rent should be at least 1050 pcm (risky in this case for the flat conditions).

I know the Mortgage Works have some more competitive rates so will be safer borrow from them, but the Arrangment Fees at 3.5% are crazy!!

Another question:
what is the formula for the arrangment fees to be included in the mortgage?

If I buy for 200000 and borrow 150000, let say the arrangment fee is 5000

I can pay these 5000 upfront (noway) or add to the mortgage, in wich way?

Thanks a lot!
ciao!
Gio

So you have £50k for a deposit, bat cannot come up with £5k for the arrangement fees. Does not make sense.

googler

BitterAndTwisted wrote: »

I think the most important question to answer before you even think about mortgages is what kind of tenancy this old person has. If it's a protected tenancy you will never, ever get anything approaching market rent for the property until the tenant dies.

Does this elderly person own it, rather than rent it?

ziof3ster

ILW wrote: »

So you have £50k for a deposit, bat cannot come up with £5k for the arrangement fees. Does not make sense.

trying to save the 5k and invest them in the property.

ziof3ster

googler wrote: »

Does this elderly person own it, rather than rent it?

The old man is selling it. Never updated anyting last 20 years he lived there.

ziof3ster

BitterAndTwisted wrote: »

I think the most important question to answer before you even think about mortgages is what kind of tenancy this old person has. If it's a protected tenancy you will never, ever get anything approaching market rent for the property until the tenant dies.

The actual owner (old man) is selling it, so no protected tenancy. The flat is already empty.

BitterAndTwisted

If you're not in a bidding-war with an experienced property developer I think you should be asking yourself why. Have you invited a letting-agent to view the property and give you an estimated monthly rent for the property in its current condition?

G_M

I assume you plan to spend money modernising before you rent it out?

Have you budgeted this?

You should base your proposed rent on the post-modernisation market rent.

ziof3ster

BitterAndTwisted wrote: »

If you're not in a bidding-war with an experienced property developer I think you should be asking yourself why. Have you invited a letting-agent to view the property and give you an estimated monthly rent for the property in its current condition?

well, I believe there are some potentials in some places that no everyone is able (or can afford, or wants) to catch...

I've done an offer to the property, but is not mine so the only agency allowed (correct me if I'm wrong) is the one that is selling it? So ask them on the potential could be a bit unrealisting (they wanna sell of course).

ziof3ster

G_M wrote: »

I assume you plan to spend money modernising before you rent it out?

Have you budgeted this?

You should base your proposed rent on the post-modernisation market rent.

Hi,

thanks for you answer.

Yes it has been budgeted.

Well in the first instance I was thinking to propose the rent post modernization, but it seems the lenders base them rent assessment on the time the survey is done (so pre-modernization). In this case all changes because the rent could be well below the market rates affecting the final word on the mortgage approval (this is why my concerns).