£400 a month to invest - should I get a BTL?

dannyboycey

To answer your original question "should I get a BTL?", I would say yeah... if you want to make a monthly deficit because your rental income doesn't cover the monthly payments and you want to lose every penny you own when the market inevitably crashes. Sounds like a great plan for p****ng money away to me.

Sorry to sound harsh but I can't believe amateur BTL'ers are STILL entering the market despite it reaching tipping point!!

Doozergirl

pinkshoes wrote: »

er.... no. why on earth would that be a good reason to have a BTL?!?! I personally wouldn't bother with a BTL because it's not worth the hassle, and not really a good ROI at the moment.

Oh good. It just seems that you were generalising big time and dismissing other people's opinions based on a presumption that they had unrealistic expectations.

Some of the bears may not have the gentlest way with words but they have a valid point to make that we should all be aware of, especially the OP if they think that BTL is a sure thing.

[Deleted User]

A BTL is a very bad investment especially for a small time player like me or you, maybe reconsider if the market crashes. I did a full financial appraisal on doing a BTL and its a bad idea as i have been spending time looking at ways to invest and this is not one of them!!! I have a masters degree in maths by the way

Stick 250 quid/month in a 6% ISA and 150 quid in a some sort of trust isa, im with hargreaves landsdown as martin recommends, pick some random funds either whole of index trackers or UK commercial property for fairly steady long term performance. Or if you want to be super safe, put the 150 quid in a regular saver.

Melissa177

misterman wrote: »

Hi
This is my first post on here, so go easy on me! Wife and I have £400 every month left over after all bills, fuel, food, leisure spending etc. We are seriously considering a buy to let, using the money to top up the interest on the BTL mortgage and also save each month to cover times when the property isn't let. We have seen a few houses at around 100k, we can put down 10k from savings and get a BTL mortgage on 90k for approx £450 per month. The property would let for £425, so from our spare £400 would be used to pay letting agent fees (approx £50), top up the mortgage (£25) and insure the house (approx £15 month). The rest will be saved to cover times when the house isnt let. We'd then rely on house price increases over the next 5 - 10 years to make this worthwhile. To us this sounds like a feasible and 'relatively' low risk plan - but we have no experience of BTLs and would really welcome any input. Our alternative plan is to spend the 10k on our existing home, primarily to add value, and look at other options for the £400 / month.
Thanks in advance for any advice
MM

The obvious problem I see with this plan is that most BTL mortgages require a 25% deposit (you might get away with 20K).

If you put 10000K in a 6% savings account, and added 400 a month, every month, for ten years, you would have about 83K in the account at the end, for an initial investment of 57,600 (400 *120 + 10000). Could you make that sort of money in a BTL? Quite possibly, if the market stays like it has for the past ten years. But chances are, it probably won't. And you've had a huge lot of hassle in the meantime. And you've tied up your savings - you have no access to it if a rainy day came.

I would think about that.

lynzpower

Not sure where my other reply went but just to add that you also need to think about the loss of interest over your other costs - I think someone on here termed it "opportunity costs"

that is your loss on the 10 , plus the loss on your other money ( ie topping up the rent, W&T which doesnt seem to be accounted for etc)

Id stack this up over a few years and see how it looks.

mr.broderick

lynzpower wrote: »

I am investing 450 pcm ( about to send the paperwork off today) in a Yorkshire Building Society regular saver.

Its 7.00% pretax and 5.60 after ( as long as you continue to pay in) http://www.ybs.co.uk/savings/interest_rates/regularsaver.jsp

Im sure this isnt the best performing investment- however, it does the job I'll need it to, and it sure seems a hell of a lot less hassle than your current plan, as your figs might not stack up.

In order to determine demand put a "fake" advert on your local loot/ gumtree etc and see how much the phone rings.

If there are many others "snapping them up" are there enough tenants to go round?

Just thinking...The fake advert advice may not be the best at the moment, not with the current tax investigations as per a recent other thread...

pinkshoes

Doozergirl wrote: »

Oh good. It just seems that you were generalising big time and dismissing other people's opinions based on a presumption that they had unrealistic expectations.

Some of the bears may not have the gentlest way with words but they have a valid point to make that we should all be aware of, especially the OP if they think that BTL is a sure thing.

no noooooooo, wasn't generalising!! I just forget that sarcasm can often be overlooked and mistaken on forums!! I was born sarcastic and an optimist!! I was also debating for and against BTL i.e. if private renting housing is in demand in the area, and the extra money was more than enough to meet the interest on the mortgage, and one was intending to keep the property for a long period of time, then a BLT isn't such a bad idea.

A BTL isn't about making money for alot of people, it's about a very longterm investment to make up for the lousy state pensions you get in this country!

misterman

phlash wrote: »

" Let's get a BTL, or do our house up a bit to add value, or we can buy abroad and do it up.....we'll make LOADSA MONEEEEYYYY!!!! There's no other way to make money is there? "

I'm under no illusion that any of the above will make me a fortune. I'm merely exploring options and seeking advice. I'm not the type who watches the property progs on TV and thinks, hey that looks easy, lets give it a go and make some easy money. we bought our first house 6 years ago for 30k using a 3k deposit we'd saved up, and we're now in our 4th house, valued at today's prices at 300k with a 110k mortgage. So I have a good idea of how to 'do our house up a bit' and I've worked very hard over the past few years. Also, my wife is in the travel industry and spends a lot of time abroad, therefore a feasible option for us is to explore the overseas market.

Thanks everyone for all the advice, it seems pretty conclusive and I will be looking at options other than a BTL. Although part of me is still tempted to get one as a 15 - 20 year investment!
Cheers

franklee

Doozergirl wrote: »

Do you really want to buy an investment when it was really expensive, and you'd have to subsidise your tenants rent?

Speaking as a tenant that doesn't sound at all bad. Not all landlords deserve the rotten press, some of them are kindly souls who do indeed subsidise their tenant's rent. *waves to landlord* :A

poppy10_2

misterman wrote: »

We'd rely on house price increases over the next 5 - 10 years to make this worthwhile.

misterman wrote: »

To us this sounds like a feasible and 'relatively' low risk plan

misterman wrote: »

We have no experience of BTL

Do you see the problem here???