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buy to let. a good idea?
Comments
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A paper gain is just that, I have made no gain until I realise it and even then I will have worked to maintain a property etc, etc, etc and paid all the taxes, certainly not free money
If you go into it with a business head on, buy at the right time and in the right area, then it's free money.
Like any other business, if you do it wrong then you can lose an awful lot of money.0 -
Another thing, other than interest, what other costs are associated with buying a property?0
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The amount of simple questions your asking , you would be better off sticking 20k in a savings account and forgetting about it for a yearNever, under any circumstances, take a sleeping pill and a laxative on the same night.0
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Dan dan... I want to research and learn. We all start from somewhere0
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In case of any use to you OP, here's my own B2L model;
+ I buy with maximum income yield as my first priority
+ In my case this means flats that produce 8-10% gross yield
+ I prefer studio flats - I find them less hassle than larger properties. Fairly simple in terms of decoration and there's less to go wrong in a small self contained space
+ Seem easy to let as you own the first wrung on the affordability ladder options
+ Don't me a numpty and buy say in a massive block where you will have competition from other landlords seeking a tenant
+ I aim for a 70 or 75% int only mortgage, fixed for 5 years. This model means I can rapidly save further deposits.
+ I do mortgages to age 75 or 85.
+ Long term I will sell flats (over long term values will have risen) to repay any outstanding capital. This then leaves me a debt free portfolio. Might even keep some mortgages in place
+ A core point I keep in mind is mortgage payments remain broadly static (my fixes are at about 5% anyway so I'm used to a payment higher than current discounted base rates).
Rents however rise over time. 20 years from now the rents will be proportionally higher than the mortgage cost.
+ I do not mind renting to housing benefit tenants if they seem like decent eggs.
+ Rent voids should be a rarity. I've yet to have one.
Avoid chaotic, ermm rough people.
Avoid a tenant whos harder than you are.
Avoid people just coming out of a marriage - all sorts of trouble on both sides. Some will be ok - use your common sense.
+ I do a 1 or 2 day deep clean myself - no cleaner does it as well as I do. Even wash the boiler tank, the light bulbs, the hidden sockets, the curtain rails, every last detail.
THEN, decorate. Then clean again.
If you hand over a truly deep cleansed place I find you attract better people and they take care of it.
+ Do not do interim inspections - these will stress you.
Trust people and let them live - you find they stay longer if you do this as they feel more in control.
Most stress is self inflicted. I don't know what my tenants get up to, I don't want to know. I'm not a controlling type. Some LL's we deal with drive themselves nuts, all completely unnecessary. Just enjoy the rent.
+ Have a slush fund in case of rent voids.
+ Expect some hassle at some point - don't be disappointed and surprised
+ Find your own tenants or use an agent to find on. MANAGE IT YOURSELF as this increases profits.
For your first one be guided by a letting agent as they find you a tenant - be generous, don't be tight or they wont share their information with you which you can use in future when finding own tenants.
+ All a healthy budget to fix up the place when you buy it. MANY people underestimate costs.
+ Look after your tenants but male yourself hard to get hold of. This stops them wasting your time and treating you like a second parent. Often I find if you ignore calls they sort out the issue and you never hear again. ALL PART OF GIVEN N TAKE - I don't hassle them and inspect their place, they don't hassle me.
+ Don't become a miser - a few LL's we deal with end up slaves to every last penny, real miserable misers always fretting about their tenants. Ok I might loose 0.5% of my profit compared to these people but I'm 100% happier.0 -
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A paper gain is just that, I have made no gain until I realise it and even then I will have worked to maintain a property etc, etc, etc and paid all the taxes, certainly not free money
Mine produce a healthy monthly profit which grows with each purchase. Eventually enough so I can retire.
Too many people just buy and let a place without doing the rental yield comparisons. Their whole outlook seems to be based around capital gain but if they realise a nice gain they will incur tax anyway.0 -
Mine produce a healthy monthly profit which grows with each purchase. Eventually enough so I can retire.
Too many people just buy and let a place without doing the rental yield comparisons. Their whole outlook seems to be based around capital gain but if they realise a nice gain they will incur tax anyway.
I think this view comes from most people on here (who are LL) being accidental LLS, who still think about homes rather than property.
All that said, for the average man in the street, there isn't a better way to make money than in property.0 -
In case of any use to you OP, here's my own B2L model;
+ I buy with maximum income yield as my first priority
+ In my case this means flats that produce 8-10% gross yield
+ I prefer studio flats - I find them less hassle than larger properties. Fairly simple in terms of decoration and there's less to go wrong in a small self contained space
+ Seem easy to let as you own the first wrung on the affordability ladder options
+ Don't me a numpty and buy say in a massive block where you will have competition from other landlords seeking a tenant
+ I aim for a 70 or 75% int only mortgage, fixed for 5 years. This model means I can rapidly save further deposits.
+ I do mortgages to age 75 or 85.
+ Long term I will sell flats (over long term values will have risen) to repay any outstanding capital. This then leaves me a debt free portfolio. Might even keep some mortgages in place
+ A core point I keep in mind is mortgage payments remain broadly static (my fixes are at about 5% anyway so I'm used to a payment higher than current discounted base rates).
Rents however rise over time. 20 years from now the rents will be proportionally higher than the mortgage cost.
+ I do not mind renting to housing benefit tenants if they seem like decent eggs.
+ Rent voids should be a rarity. I've yet to have one.
Avoid chaotic, ermm rough people.
Avoid a tenant whos harder than you are.
Avoid people just coming out of a marriage - all sorts of trouble on both sides. Some will be ok - use your common sense.
+ I do a 1 or 2 day deep clean myself - no cleaner does it as well as I do. Even wash the boiler tank, the light bulbs, the hidden sockets, the curtain rails, every last detail.
THEN, decorate. Then clean again.
If you hand over a truly deep cleansed place I find you attract better people and they take care of it.
+ Do not do interim inspections - these will stress you.
Trust people and let them live - you find they stay longer if you do this as they feel more in control.
Most stress is self inflicted. I don't know what my tenants get up to, I don't want to know. I'm not a controlling type. Some LL's we deal with drive themselves nuts, all completely unnecessary. Just enjoy the rent.
+ Have a slush fund in case of rent voids.
+ Expect some hassle at some point - don't be disappointed and surprised
+ Find your own tenants or use an agent to find on. MANAGE IT YOURSELF as this increases profits.
For your first one be guided by a letting agent as they find you a tenant - be generous, don't be tight or they wont share their information with you which you can use in future when finding own tenants.
+ All a healthy budget to fix up the place when you buy it. MANY people underestimate costs.
+ Look after your tenants but male yourself hard to get hold of. This stops them wasting your time and treating you like a second parent. Often I find if you ignore calls they sort out the issue and you never hear again. ALL PART OF GIVEN N TAKE - I don't hassle them and inspect their place, they don't hassle me.
+ Don't become a miser - a few LL's we deal with end up slaves to every last penny, real miserable misers always fretting about their tenants. Ok I might loose 0.5% of my profit compared to these people but I'm 100% happier.
Excellent advice!
Thanks for taking the time to write this. I'm sure many readers (considering BTL anyway) will benefit. 0
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