buy to let - how do you choose?

nat38

GDB2222 wrote: »

As a generality, a place you would buy to live in yourself is not likely to be a good BTL proposition.

mmm I had a feeling this might be the case....:(

nat38

Annisele wrote: »

You also need to think about what you think the housing market is going to do in the next couple of years. My own personal view (and I'm not an economist) is that prices are either going to stay where they are or fall - so I think that, once all costs are taken into account, you'd be looking at a capital loss over the next couple of years.

Presumably the reason for the second property is that it's some distance from your home - which could be a pain if you later want to let it out.

Could your husband rent a flat for the next couple of years? Could he get a room in a shared house (possibly on a Monday to Friday basis)? Could he stay in a hotel three nights a week? (Personally I'd hate that, but overall - depending on area - it might work out the cheapest option if you can get a hotel to quote you a good rate).

Thanks Annisele

Yes, we're in Newcastle now and the 2nd property would be in Edinburgh.

The hotel/shared house won't work, as I will be on maternity leave during some of 2012 and want to have the option open to be there as well. We did think about renting but as we are also just now getting some money from a sale abroad we thought it might be a good re-investment (and would save us the rent money).
Depending on which flat we went for it could be almost paid for outright. Which brings me to the original question...how to decide...!!

googler

You may also want to consider housing around the rail corridors into Edinburgh, rather than Edinburgh itself.

Merely going out as far as a 20 min rail commute gets you much more for your money than the centre of the city.

You also need to consider the different buying and selling system in Scotland when buying - typically, you'll need a Scottish solcitor to make offers on your behalf and otherwise act for you with regard to a purchase.

Thrugelmir

nat38 wrote: »

Depending on which flat we went for it could be almost paid for outright. Which brings me to the original question...how to decide...!!

An investment property may well not be somewhere you would want to live. If you intend living in the property your judgement may be clouded.

Potential gross rental income (yield) should be a major consideration. As relying on capital appreciation in the short/medium term may disappoint.

Speak to some EA's in the locality you wish to live for some guidance.

junglejim2

" Gross yield 10% is good starting point."

Is this a realistic return?

Thrugelmir

junglejim2 wrote: »

" Gross yield 10% is good starting point."

Is this a realistic return?

Historically was a good base point. As property does cost money in the longer term to maintain (25 year time frame).

Also as income is taxable. So before any expenses only gives a 8% net return at basic rate tax or 6% for higher rate tax payers.

googler

Some idea of buying budget might help.

nat38

googler wrote: »

Some idea of buying budget might help.

max 115k

looking at 1bed flats for 85-100k
and also a 2bed one for 125k

ww would be paying cash as we have 60k from a sale abroad + the rest in extra borrowings from our current mortgage (at only 2.4%)

hellokitty08

Have a word with a couple of lettings agents, see what they say. My boss is always happy to have a chat with potential investors about what might suit them best.

googler

nat38 wrote: »

max 115k

looking at 1bed flats for 85-100k
and also a 2bed one for 125k

£125k could get you a 2-bed 2-storey house, as opposed to a flat, in the A1/rail corridor to the East of the city - a short commute in, and well-placed for travel down South.