Buy to Let??

Karen_is_confused!

Hi,
I would love to enter this market but am unsure if the figures add up! Help please!!
I have equity in my home i can release to give me a £20,000 deposit on an apartment in a new complex that is on the market for £125,000. I can get a furnished monthly rental of £675. I am unsure of the exact repayment amount on the £105,000 but imagine it to be about £500 so will it be enough to cover the deposit amount? Is this a good option?
I hope to make money on the property ina few years when I sell it on but is it enough for the risk involved?
This is all interest only so if it doesn't appreciate in value i may have to hang onto it for a long while!
So much to consider my brain hurts!
Any advice very gratefully recieved.
Karen.

Gorgeous_George

I suspect a troll but apologise if my Troll Detector is playing up!



GG

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It no longer adds up forget it. This country is in the state its in due to this type of speculation.

Your about three - four years to late.

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Gorgeous_George wrote:

I suspect a troll but apologise if my Troll Detector is playing up!



GG

Maybe not its probably a serious question....unfortunately

Gorgeous_George

Ad wrote:

This country is in the state its in due to this type of speculation.

I disagree.

This country doesn't have enough houses to satisfy demand for a number of reasons. Remove BTL from the equation and the problem remains supply vs demand.



GG

mystic_trev

There's never been a better time to Invest in BTL. All those posh new apartments been thrown up, just about everywhere. I read in the paper (at the weekend) that these newbuild apartments have droped by 0.9% over the past three years, whereas property (in general) has gone up nearly 40% Surely it's about time these apartments played catch up! Where's my wallet....









....where's my straitjacket!

Karen_is_confused!

First, What the hell is a troll!!!!! ( and no i'm not one)!!

Could the slightly grumpy people extrapolate on the "no you must be mad" vibes I am picking up on please!

If I had a time machine I would try this a few years ago but funds have only allowed it for now. Do you all feel that the boat has sailed on house value appreciation or is it maybe just the apartment bit and a house would be better?

Sorry for being so ignorant but your brains seem good for the picking!

Karen

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Gorgeous_George wrote:

I disagree.

This country doesn't have enough houses to satisfy demand for a number of reasons. Remove BTL from the equation and the problem remains supply vs demand.



GG

If there was a shortage of accommodation in this country then why haven’t rents increased?

My rent hasn’t changed for over three years. The housing market is in this state due to unprecedented speculation caused by artificially low interest rates and terrible lending practices.

I would agree in part that in certain areas there maybe a shortage of adequate housing but this is a small part of the problem.

Its already been widely recorded that property speculators are holding back property and not renting them out in hope of future price increases.

The shortage of housing and immigration are both a smoke screen.

Karen_is_confused!

Did I say grumpy. What an understatement!!!!

Forget it,
I asked an honest question of people I thought could help. I didn't realise I was in the miserable old man section of the site.

I feel "snuff out the poison in the market" was a bit flaming strong!
Also I want a home for my kids when they leave home and it was not "just some trading chip."

I think if I do decide to take this investment I will gleefully note that i am in some small way contributing to your feeling that "This country is in the state its in due to this type of speculation."

I never thought going on the forum would be like this.
You live & learn.

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Karen_is_confused! wrote:

First, What the hell is a troll!!!!! ( and no i'm not one)!!

Could the slightly grumpy people extrapolate on the "no you must be mad" vibes I am picking up on please!

If I had a time machine I would try this a few years ago but funds have only allowed it for now. Do you all feel that the boat has sailed on house value appreciation or is it maybe just the apartment bit and a house would be better?

Sorry for being so ignorant but your brains seem good for the picking!

Karen

Hi Karen,
I would just be very cautious as interest rates are rising and no matter what you read only one out of 50 economists recently polled expected the January rate rise. I personally believe we are at or near the top of the market and you could be taking a terrible risk. As you say you are already a home owner its seems unthinkable to me to take such a risk.

From what I read you would be borrowing £125000 including £20,000 from your property and expect a rental return of £675 per month. You should expect to have the property empty for at least three months of the year. This may not happen, but you should add this in as a possibility. There will then be gas safety checks and electrical appliance checks as well as any possible maintenance of fire alarms or smoke detectors in the building. The yearly building maintenance costs and ground rent if it’s a lease hold flat as well as buildings insurance.

I’m sure there are probably others that will be able to add more to the list above. I have no idea what possible mortgage rate % would be available. Current interests rates are 5.25% and that for example would be £757.71 per month. An interest only mortgage alone will be £546.87 per month. This wouldn’t be possible in reality as most mortgages are for 25 years and you wouldn’t be able to expect those rates over that period.

It just doesn’t add up and most now entering the market of ‘Buy to let’ use interest only mortgages in the hope of future short-term house price rises to make their gains.

Recent house price rises are unsustainable no matter what anyone tells you. Rising interest rates and house prices don’t go hand in hand.

Good luck.

Karen_is_confused!

thank you for restoring my faith!

sorry