Buy to let - some beginner questions and advice needed

DarrenRS

Ok thanks. People say do lots of reading up on the subject but to me BTL seems more a case of learning by doing.

However I am leaning more towards the option of buying somewhere to live and then renting room out in it under governments rent a room scheme, instead of doing BTL.

googler

DarrenRS wrote: »

Ok thanks. People say do lots of reading up on the subject but to me BTL seems more a case of learning by doing.

Yeah, sure.

Rent it out first, then 2 years later learn about tenant's rights.
Rent it out first, and around year 5, discover what your tax liabilities for year 1 REALLY were.
Buy first, make business plan later.

Can't fail really, can it?

ads2312

Darren
Sound like you're in the same boat as me ! I'm going to be out of work in July and am planning to do something similar. I'm looking at renovation first and then hope to go into BTL later once I've got a bit of money behind me. Not sure where in the country you are (guessing north with the properties you've posted on here).
There are properties in the south that are similar prices (you need to look hard!) which may get you a better return. I'm looking on the South Coast (Brighton, Hove both expensive) and (Hastings and St Leonards on sea, both cheap). The difference in prices is amazing but Brighton etc is a desirable area where as the others are a bit rougher. Plenty of people live there though !
Hope it works out for you ! from what I've learn on here it isn't as easy as I first thought.

googler

DarrenRS wrote: »

Does anyone actually have anything GOOD to say about buy-to-let, because so far I have heard only negative views about it from people here.

It does make me wonder why I even bothered to post up questions about it in the first place.

If you only posted the question to get the answers you want to hear.....

We thought you posted to get the views of the forum, whatever they might be....

Annisele

DarrenRS wrote: »

Does anyone actually have anything GOOD to say about buy-to-let, because so far I have heard only negative views about it from people here.

The good thing is that you can make money. That's it. And presumably you already know that, so there's no point telling you.

There are a lot of bad things that you might not know about, so most people reckon it's more helpful to you to say "xyz might go wrong" than to say "yeah, it's wonderful, I'm rich".

holly_hobby

Well of course we can all say (what I think you want to hear) that it will all be great, you'll be a fantastic success, you'll earn enough money not to have to work again .. etc... etc... etc...etc ...

After all, no one providing comment on here will suffer ANY financial consequence of it all going wrong ... only YOU will have to bear that cost and heartache.

I for one, would hate for you to fall foul of wishfull thinking and assumptions .... but you're the master of your own ship, others can only guide I'm afraid ...

Hope this helps

Holly

Werdnal

Darren, you seem to have missed the point and taken the advice here wrongly. BTL can work - I have been a successful LL for 11 years now BUT, I have bought my own property and paid off my own mortgage, and bought my BTL outright. I have a good job and my partner works too - so we do not rely on the rent for our only income - to me that would be a very scary prospect! I have been lucky to only have one bad paying tenant, who damaged the property and refused to leave when given notice in the whole 11 years of letting. It has been a nice additional income for me and worked well.

The point you have missed is you CANNOT rely on it for your only income. It can cost you money as well as make it, and as for learning as you go along, then you are very badly mistaken here. Tenants tend to know their rights, what they can and cannot get away with and how you should treat them - do not think you can just buy it, get tenants in and learn along the way. You need to dot every i and cross every t to make sure you are fully legit, otherwise tenants will walk all over you!

Worst case scernario can be a criminal record, fines or even a prison sentence if you get it wrong! Being unemployed could be the least of your worries!

If you are still naive enough to think its not without its pitfalls and take onboard the genuine and experienced advice you have been given, then we expect to see you back here in a few months, relating a sorry tale of woe about how its all gone wrong, your tenants have royally !!!!!! on you, or you have lost money, or had your property trashed, or cannot get tenants out and having to resort to court (and associated cost), to evict them - or any combination of these. Then there is the possibiliy of you being sued for failing in your repairing obligations as a LL, because you cannot afford it, and your tenants have got EHO in to assess what you haven't done to maintain it! Its not just gloom and scaremongering - it happens, but often only to those who have not learned how to do it , or do not have the financial resources to do it properly either!

Like any business - yes letting a property is a business even if you don't think so - you must re-invest in the "business" to keep it going. You seem to suggest that the income you will gain in rent will be yours to live on and spend as you choose - another very wrong and misguided idea! I only let a one bed flat, but maintain a contingency of £1000 in a separate account just incase there are any unforeseen expenses, and to cover insurance and other annual costs (some years even this is not enough, some years I have a little left over). If you are planning to buy a house, I would suggest this "fund" should be even higher - so thats atleast 3 months of your annual rent put aside already. Then allow for rental voids/losses - generally suggested at 2 months per year, so thats 5 months down on "income" already. Do you get it now - Its not regular income is it?

Good luck as you seem very set on this track, you obviously know better than many long term experience LLs here!

Mrs_Z

I fully second Werdnal. BTL can be good, but not in the circumstances that you paint. I would never recommend a BTL as a first property nor something that you'll rely for your sole income. Property is for the long term, you need to take a 10-15 year bet on it.

In essence, there's nothing wrong having a BTL dream, but I don't think the time is right for you just now. I don't know your age, but I'm assuming you are younger rather than older. Therefore, I'll give you an other piece of advice, take it or leave it, if I was in your shoes, I'd learn a trade - be it electrian, plumber, gas man, carpeter, etc - that way you will incraese your chances of finding work; in essence you could work for yourself AND be able to do repairs in your eventual BTL properties....