buying property to rent out to provide pension pot

Thrugelmir

p00hsticks wrote: »

you only need to get the neghbours from hell next door, or

A tenant from hell will suffice in making it a potentially total loss maker.

dannyboybath

dunstonh wrote: »

£60 is almost half the minimum premium most pension providers have. Do you honestly believe that £60 is a sensible amount that could pay you back so much more?


maybe if you get another 5 or 6 properties as well. 1 wont be enough.



You are banking on property prices rising. You also will have capital gains tax to pay.



Its probably outside the remit of many advisers. It is fine for an IFA or a whole of market restricted but a tied agent/multi-tie or mortgage adviser/broker wont be of much help.



What is this commission you speak of?



The last 40 years had a property boom fuelled by easing restrictions and easy money. Do you think the next 40 years will be the same?



Nothing is going to generate enough with £60pm.

If you do not have the budget to be able to afford more than £60pm in to a pension then you do not have the budget to rent out a property without taking on significant risk. What if you had 2 months of no rental income? Who is going to pay for the repairs and maintenance? you are not on £60pm budget.

Thanks for your reply.
I'm even more confused now!
The majority say sell it , so say I did . After paying estate agents etc , I'll come out of it with zero.
So I start my pension with £60 pcm , although your saying that's half the minimum most pension providers want and that nothing is going to generate anything with £60.
So I'm between a rock and a hard place! That's why I thought it better to rent it out ,hoping that prices rise because I would if thought bricks and mortar would rise faster than £60 a month in a pension fund.
Yes I haven't got much surplus each month but ,I would have even less paying a mortgage on a house that's empty waiting for as buyer rather than someone else paying the mortgage !

Dave101t

They reference tenants, full time employed only usually keeps the 'hell' away....usually!
very little income tax as the fees, insurance, etc etc are tax deductible.

greenglide

Dave101t wrote: »

very little income tax as the fees, insurance, etc etc are tax deductible.

Little tax because little profit!!!

You only ever pay tax on the profit!

RupertTheCat

Renting out properties certainly isn't the easy option. My partner has several buy to lets and after 7 years of owning them his losses, as worked out by his accountant, now equal nearly £90,000. You have to have a decent amount put aside for repairs and to allow for void periods which can run to several months if you have to redecorate and do lots of repairs between tenants, and you still have to cover council tax when the property is empty.

And if something goes wrong in the property you need to fix it straight away, you can't wait.

It isn't for the faint hearted.

vectistim

After all the doom and gloom you need to sit down and do the sums, perhaps something like this:

What is the achievable annual rent?
Lop 10% off for voids
Lop 10% off for repairs
Lop 10% off for management

What will the interest only BTL mortgage cost?
What will a repayment BTL cost?

How do these numbers compare?
How do these numbers compare if you shove the interest rate up by 2-3%?
Do you have a year's rent as a contingency? (In case of more expensive repairs or a dodgy tenant)

You say you wouldn't have much left if you sold up now. What sort of loan to value (LTV) are you at now? If it's above 75% many BTL products fall by the wayside, so you might be restricted to consent to let from your current lender, who might only allow it for two or three years, and then want you to do something more permanent, but that might buy you enough time for the LTV to get into BTL range.

atush

Basically 60 a month is better than nothing, but 100 would be better. If you sold up (or rented out yours) presumably your day to day costs would be lower so you could afford more?

And if you have zero equity now, as said above, renting may not even be allowed for you.

So your choices boil down to sell and save more, or take in a lodger and use that money to save.

How you save is up to you, but unless you want to work til you drop, or live very poor on the State pension, save you must. The best thing about saving into a pension is, that 100 into your pension only costs you 80.

And you can access it from 55.