Buying with the intention to rent?

blizeH

Hey guys, I'm considering buying a house and renting it out, but I'm not sure whether or not it'll be the right thing to do. Here's a few things that are probably important to know whether it's worth me deciding to bother or not ;o

- I'm 21 years old, I want to buy a house asap, then rent it out until I'm ready to move in. Thought it may be a good idea to get onto the property ladder because the house prices are slowly running away from my savings!

- I've got around £40,000 for a deposit, with a potential extra £10k-£20k if needed.

- I earn a 'whopping' £13k a year since I'm an IT technician at a school, no idea if that'll greatly hinder my chances of getting a mortgage, but just thought that if I told the mortgage lender that I'm going to rent out for the next 7 years and that by that time I should have a higher income etc...

- I'm generally a pretty thrifty person, although I do occasionally impulse buy and if there's something I want I almost always have to have it. I'd still like to think I could be putting £5k~ per year of my annual income into savings, or maybe paying it off the mortage as an extra if that's at all possible?

- I'm looking at spending £145,000~ on a two bed semi in the village I currently live in with my parents.

... think that's about it. Just wondering if it's worth going ahead with, or whether I should hold out and keep saving whatever I can and buying at a later date! Cheers

SteveCat

Go for it now mate, your deposit seems sorted and if your plan is carried out you really need to look at a BTL straight away. You should be able to pick up a decent BTL at 85% LTV and if thats the way you're going its pointless buying a property with a resi mortgage as you will have to change it anyway as soon as you let. Don't worry about your income either, many BTL mortgages are done on the rental income you recieve and most will self certificate. Hope that helps!

RHemmings

You earn 13K a year, are 21, but have up to £60,000 available to you? Where did you get that from? Your parents again?

The bottom line is that buying a property like this is a good idea if you can get tenants to cover the mortgage and property prices keep going up at a significant rate. If you can't get tenants to cover the mortgage and/or house prices stagnate or go down, then it's a bad idea. Therefore the question is what you believe the future of house prices is.

realwildone

ha ha ha ha

Do you write jokes for the school? Is this a playground prank?

Please

blizeH

Well, the £40,000 is my own, but then my parents have said they'll put some towards it too, I've no idea how much it'll be but assume it'll be somewhere between £10k-£20k, so yeah, potentially £60,000 for a deposit.

Many thanks for the advice guys, I'm seriously considering going for it, although as you mentioned, if the house prices fall for whatever reason then I'm going to be absolutely devastated! @ realwildone - what?

blizeH

Sorry to bump this, but does anyone else have any advice or opinions regarding this please? It's obviously the biggest decision I've ever made so any input as to whether I'm doing the right thing or not would be fantastic, cheers.

BrightonLad

Hi,

Definately go for it, I did exactly the same thing four years ago. I live in the South (as my name suggests!) and could not afford to get on the property ladder down here. I had £3K saved, and I borrowed £5k for a deposit. Bought a house for £50k up north, with a mortgage of 42K and never looked back!

I remortgaged to £63k after 8 months (the house prices rose a lot in the first year) and bought a second house up there using the £20k from the first house as deposit, and another BTL for £60k.

I have had no problem renting either pro[erty out, and have since spent £16k on improvements on the first house (i remortgaged the second house to 80k to pay for it), and it now gets me £950 pcm before expenses and tax! the second gets me £585 pcm.

First house now worth £130k and second £125k and total mortgage for both is 140k - monthly payments are 900, yet income before expenses is £1535 a month.

Just going through a remortgage of the first house again (and only for 19years this time!) , which will give me £30k to put down for my next one.

Just remember to do the math, i dont believe we can expect that there will be the same house price growth as there has been over the past few years, and you must take into account all expenses - general maintenacnce, getting the property up to the HMO standards if necessary, income tax, management fees if applicable etc.

I dont physical make much cash monthly but on paper it is a winner for me.

Good luck!

Out of interest where are you looking to buy?

mattyh

I'm no help i'm afraid, though i'd love to know your secret if you can save 40 grand on a 13 grand salary by the age of 21.

Inheritance? Lottery? Bank robbery?

blizeH

Sounds excellent BrightonLad, you're doing amazingly with that then by the sounds of it! Are you planning on selling them all and just buying one large house at some point, or just carry on as you are for now? fwiw I'm looking to buy in an area called the Forest of Dean.

mattyh, just a combination of things really, I've been working in an office part time alongside education since I was 16 which has really helped, I got involved in 'casino bagging' etc too which has helped me save quite a bit, I've been given some money from my family but that's mostly gone on my last two cars, so yeah, like I said, it's just a combination of things, the fact I haven't drink since not long after my eighteenth birthday has probably helped a lot too

clutton_2

may i point you to https://www.singingpig.co.uk - the best property forum website in the uk. you will not get the same good deals now as 4 years ago, it is a very very different marketplace. Read SP from front to back, start networking, (there is a meetings forum) and meet others. Research research research before you buy good luck

BrightonLad

Forest of Dean - Lovely area, i stayed in a cottage in Blakeney 2 years ago with friends!

I dont plan on selling them (yet anyway!), which is why i have done a lot of work on them, so that they last.