Buying a flat at 24 to rent out

kteara

Pixie5740 wrote: »

To get a BTL mortgage, which is what you would need to let the property out then generally speaking you are looking at needing a 25% deposit and some/most BTL lenders require you to own your home too.

If you are able to get a BTL mortgage (a whole of market mortgage broker will be able to help you with this) then yes you could use the money you make from letting the property to pay off the capital. That would take years if not decades. Where would you live during that time? Still at home with mummy & daddy?

It's good to have a plan and that you're thinking about your financial future. What about buying somewhere for you to live in yourself and take in a lodger? That way you get to fly the nest and generate some extra income so that you can pay the mortgage off quicker.

The very latest age I want to stay home with parents is 26. I dont like the idea of living with a lodger so what other options do I have?

LEJC

I have recently bought a BTL...and needed a deposit of 25% as the lender would not lend more....


recent changes in mortgage offers and the criteria for obtaining a mortgage mean that lenders are regulating more what they lend and who to...


As the previous poster has said..you may find them resistant to lend on a BTL if you are not already a homeowner.


The returns on a BTL are not huge once you factor in morgage payments and the associated costs involved with rental....so you really need to sit down and work out how cost effective this will be for you as you will have maintainence issues and insuances/leasehold fees and certification fees on top of any letting agent fees should you continue down the rental line....

picket_fence

RickyC_IFSWP wrote: »

Good on you for having a savings plan.

In order to receive a mortgage, you have to jump through a series on hoops. Firstly, whether or not the £20k deposit will be sufficient will depend on the property price ("Loan to Value" ratio). Second, the maximum you can borrow will depend on your income (roughly 4 times annual income). Other factors include good credit score, mortgage providers willing to lend to first time buyer & first time landlord etc. You should also research into the responsibilities of a landlord as it isn't as simple as just collecting rent.

This is good advice. You need to think about things like building insurance, how will you pay for the maintenance of the property?, what if something goes wrong, will you have an emergencies fund? What if the tenants ruin the flat and you are unable to evict them because you didn't serve notice correctly? Would you be able to take them to court and pay a solicitor? And so on.

I think it is fantastic that you are thinking about your future (I wish I had put more thought into mine ), but you really need to make sure you know all the pitfalls and responsibilities of what you are taking on. If you read a lot of the threads on here, you will get an idea of how many things can go wrong, from both the LL and tenants points of view. Good luck.

kteara

I do understand the responsibilities as a landlord and the likely possiblity of spending money on repairs or other issues that crop up each year. I was unsure though on whether I could purchase a property to rent out. It seems harder than I initially thought.

What I want to find out is if any of you have advice regarding property purchase and what I can do at my age right now in order to get closer to owning my own home.

HappyMJ

It won't be your home though...it will be your tenants home.

The bank will be funding the majority of the purchase so you only own the equity which if kept in the bank is yours anyway and so much less hassle.

It's a good idea if you can get very cheap financing but as you have no property of your own and the deposit is low by BTL standards (to get the best rates you need 60% deposit) then it's unlikely to be a cheap or profitable investment. It's risky so it could make money when sold and on the other hand you could lose your initial investment completely and have nothing to show for many years of hard work. You should be looking to keep it for at least 10 years. If you tie up your money in this investment you'll have nothing to buy a property you actually want to live in.

I'd just save the cash in ISA's for the time being and concentrate on your studies rather than investment properties.....it's my advice you can choose to read and take it or ignore it. (HappyMJ..an accidental landlord)

Pixie5740

kteara wrote: »

The very latest age I want to stay home with parents is 26. I dont like the idea of living with a lodger so what other options do I have?

How much rent were you going to charge so the the mortgage was paid off in 2 years?

If you don't want to be living at home beyond age 26 then you're either going to have to buy your own place or rent somewhere.

If you want to buy in the near future then save as much as you can. Build up your credit history by getting a credit card if you don't already have one. Spend on it every month and pay it off in full every month.

Sometimes at the start of your career it can be better to rent so you have more flexibility to move for job opportunities. Renting will also hop you gauge the cost of living without being tied into a mortgage.

Cisco001

Just start saving and get the deposit for your own place.

CraggyRockFace

You seem to be approaching this all wrong. You want to move out of your parents place before you're 26, but are planning to buy a BTL at 24? Why not just buy your own home at 24 and save yourself the hassle?

bris

No one knows where the market will be in 4 years or you circumstances, so the thread is pretty pointless tbh.

Come back in 4 years with 20k to burn and ask again.

ging84

why do you want to buy a rental property?
are you looking for an investment or do you have a specific desire to be a landlord ?

if you are looking to invest, why would you be looking for advice now for investing in 4 years time? It's like asking should i buy apple shares in 4 years time.

If on the other hand you really just want to be a landlord, best of luck to you.