BTL - anyone wanting to do this!

OctaviaB

Hello

Forgive me if this has been asked before, but, we are starting to look at buying something to rent out and don't know where to start.

This is to give us a better return than our future pensions or savings. 'We' are myself and OH, no dependants, no debt, small savings, early fifties, so I don't know if this is even achievable for us. OH is full-time, I only have a zero hours contract which varies month on month, so, we try to save my salary, such as it is, and live on his. Not always successfully as things are so expensive now.

I have read ML's article that buying a property is as much as a gamble as stock's and share's, however, we feel more comfortable buying a small place as we know even less about stocks and shares.

Given the dire predictions on the economy on one hand, and the positive government 'spin' on the other, we haven't seriously researched as I thought house prices might crash...

I would very much appreciate other people's thoughts, there are bound to be those much more experienced/financially astute than we are.

Thanks in advance for any help and advice.

O

Road_Hog

[QUOTE=OctaviaB;63726946
Given the dire predictions on the economy on one hand, and the positive government 'spin' on the other, we haven't seriously researched as I thought house prices might crash...

[/QUOTE]

House prices will continue to rise for the next one or two years, due to government intervention.

Given the wage deflation that is cuurently going on, I expect house prices to stagnate or go down in 2015+.

Buying now is not bad value, especially if you're buying for investment. Don't buy in 2 year's time, buy now whilst the bubble is still rising.

ognum

Road_Hog wrote: »

House prices will continue to rise for the next one or two years, due to government intervention.

Given the wage deflation that is cuurently going on, I expect house prices to stagnate or go down in 2015+.

Buying now is not bad value, especially if you're buying for investment. Don't buy in 2 year's time, buy now whilst the bubble is still rising.

BTL is a buisness, do you want the time and responsibility involved?

Read the sticky post above about the responsibilities of a LL. Can you financially deal with voids or non payers?

No one can tell you what will happen with property, it needs to be a long term plan!

OctaviaB

Hello

Thank you both for your comments. Yes, I have looked at the LL responsibilities, and it is a lot. We want to do things properly 'by the book' so that both ourselves and any potential tenants are safe and protected.

We believe that we wouldn't rent out anywhere that we wouldn't like to live ourselves. Perhaps naive, but, I would want us to be good, responsible LL's. As my OH doesn't like his job, & my own income is erratic, we are hoping it would become our business. Might be able to build on it and have several properties?

As we have paid off our own mortgage, any time a first property would be empty we could pay the mortgage anyway; rent would be a bonus, and I would want to save it against future maintenance/nest egg. The idea being that on our own retirement we could sell it for the capital, or continue to rent it out as an extra income with the mortgage paid off by then.

I don't know how long it could take, but, hoping it could become a feasible business for us both, without the need for additional jobs, although this might be a pipe dream given the tiny size of our savings ....

O

G_M

New Landlords (information for new or prospective landlords)

Letting Agents (Tips for selecting, and tips for sacking them)

OctaviaB

Hello G_M

Thank you. That is really thorough and useful advice.

I will be going through this with OH after Sunday dinner, if he stays awake!

Kind wishes

O

Talc1234

Done it.

Most important thing to consider is yield. If I was doing it now I would make a house of multiple occupation and let out the rooms independently. I.e. university students, young professionals, social housing etc. You want to live local to the place you let and have a hands on approach to managing it. Include bills / council tax in the rent Get a cleaner to clean social areas to keep it nice and people wanting to live there.

Renting a house out to a single family unit maybe less work but will have a lower yield and is more risky.

Some tenants are lovely, some are nightmares. Get the wrong tenant and it will take 9 months to evict them and you could loose £10,000 + in lost revenue and damage. You will still have to pay your mortgage.

Thrugelmir

OctaviaB wrote: »

I have read ML's article that buying a property is as much as a gamble as stock's and share's, however, we feel more comfortable buying a small place as we know even less about stocks and shares.

Not only are you investing your savings. You are taking on debt to fund the purchase if you take the BTL route.

Have you made any pension provision at all?

Road_Hog

ognum wrote: »

BTL is a buisness, do you want the time and responsibility involved?

I've been a LL for over 13 years, I kind of know the game.

It's been very profitable for me.

OctaviaB

Thrugelmir wrote: »

Not only are you investing your savings. You are taking on debt to fund the purchase if you take the BTL route.

Have you made any pension provision at all?

Hello Thrugelmir

Yes, we both have separate pensions we pay into, as well as NI for State Pension, thank you, and ISA's. However given the rate of inflation, stagnant wages, we don't feel we'd have a good income. This is why we are looking at BTL.

It may not even be feasible, I have looked at the current BTL mortgages, checked the mortgage calculator on here, and I don't think we have enough for a deposit yet...

For now I think we need to save more, and review it again further down the line.

Thank you to all for your good advice.:)

O

Yorkie1

You say you have only small savings. You'll usually need 20-25% deposit and the rent to be 125% of the mortgage interest at about 6%.

If you wipe out your savings then you won't have any buffer for the tenant who trashes the house or simply stops paying and you can't evict for months.