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Buy To Let - would you pay £150K for a £625 BTL ?

mikeyw
mikeyw Posts: 227 Forumite
in House buying, renting & selling
I've heard all the doom and gloom stories about BTL but long term I still think it's a safe investment. In Harrogate where I live property is very pricey so many people moving into the area are forced to rent and 2 bed terraces will bring in £600 comfortably.

However on a £150k purchase the margins are very tight on £600 - would people go ahead on these figures.

I'm guessing not as the yield is only 5% and the rent doesn't even cover the 90% mortgage. However as rents slowly increase the deficit disappears.

I keep sitting on the sidelines waiting for a pullback but it never happens and prices just keep on rising.

Is it still worthwhile getting involved ? - like most towns there is a new large eastern european workforce looking for somewhere to live !

TIA,
Mike.
«13456

Comments

  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    It's just not worth it especially when you can get 6% on a no risk-investment such as a savings account.

    If there was a decline in prices you could get your fingers burnt bigtime.

    There may be European countries where this could be a viable option for you but I can't comment on that, as it's not an area I know much about.
  • Doozergirl
    Doozergirl Posts: 34,082 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    In a word? No.

    The Governor of the Bank of England has said to expect another one or two interest rate rises to slow the housing market. I still wouldn't have done it before he said that either.
    Everything that is supposed to be in heaven is already here on earth.
  • tr3mor
    tr3mor Posts: 2,325 Forumite
    Yeah, do it! Have fun subsidising your tenants! :D
  • ravenfield
    ravenfield Posts: 151 Forumite
    Depending on how you want to take risk. Some people still think you will never loose if you invest in property depite all the interest rate. It's not like we'll get double digits so no chance of a crash.
  • mystic_trev
    mystic_trev Posts: 5,434 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I'm getting gross yields of just over 3% on my two. Once I've deducted management charges, maintenance and Ground rent it's about 2.40% net. Bit of a no brainner really, particulary as they yielded over 10% gross when I bought them!
  • Pobby
    Pobby Posts: 5,438 Forumite
    Wouldn`t touch it with a barge pole.
  • Eyesparky
    Eyesparky Posts: 689 Forumite
    Not a viable investment as others have pointed out.
    "I hear and I forget. I see and I remember. I do and I understand." — Confucius
  • hornetgirl
    hornetgirl Posts: 6,155 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Mortgage-free Glee!
    No way. Why would you want to pay someone else's rent for them?
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    You're allowing nothing for voids, depreciation, tenants smashing the place up or doing a runner with your rent, interest rate rises or insurance.

    It's not even like you can nick tenants' deposits any more to fill the gap!
  • Col.Mastard
    Col.Mastard Posts: 248 Forumite
    Generali wrote: »
    It's not even like you can nick tenants' deposits any more to fill the gap!

    Yes, but who's really bothering with the TDS? :rolleyes:
This discussion has been closed.
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