Buy to let.......or not

pcwilkins

cee2 wrote: »

Sometimes its easy to only see the 'potential' good points of a deal

Actually, I'm finding it quite difficult to see any good points in this deal, 'potential' or not!!! :rotfl:

Peter

samone

cee2 wrote: »

Purchased our new house for £242500, mortgage of £180000. Tempted by the idea of renting out our current house on a buy to let mortgage. Had a btl mortgage aip for £136000 (80%). By the time we pay the btl mortgage, letting agents fee and insurances we are going to be approx £250 per month short, not too great a problem but we would also have to borrow an extra £10000 towards the new house at approx £250 per month over 5 years. Could this be considered a worthwhile long term investment or are we being daft. BTW our current house is worth £160000, we have an offer on our house for £8000 below value, we would of course keep that if we rented it out.......potentially.
Thanks in advance for any advice

Looking over the past 50 years of UK house prices - on average, house prices can double over seven years - think of your own. Using just one of your figures: £242.500 the growth on this one property alone would be £34.642.86 per year. Your costs would be £250 x 12 = £3000.00 - leaving you a very comfortable £30,162 in equity growth. Just be prepared to ride the rough years with the smooth, buy cheap of course, improve and move on, try and get a 85% mortgage which is more usual, however, you can sometimes get a 90% or more. Its your choice, but I know what I would do especially while we have such a house shortage - which isn't going to go away overnight.

If you need a good BTL mortgage company - let me know, I know one which I have used three times and they are quick, efficient and prove excellent informed service. Good Luck

wecanhelpu

:rotfl:

Using these figures, this house will be worth just under £2million in 21 years time.

Yeah right.

idiot

kingkano

What would be the consensus if the numbers changed? ie the rent covered the mortgage + costs (agent etc) or at worst £50 loss (after those fees)?

Or if it was the opposite and there was a £50 profit after all costs (not taking into account voids etc though).

[Deleted User]

If the circumstances changed and it would cut a profit then buy then. I wouldnt invest on IFs and BUTs because they may never come around again, we might have a 50 year depretion who knows

pcwilkins

I would only invest if the ongoing profits made it worthwhile. I wouldn't bother for £50 a month profit. I would hesitate to bank on equity growth at present. Only exception might be a seriously long-term investment (i.e. 25+ years).

Peter

Gorgeous_George

As well a small profit, BTL offers loads of risks.

The work involved can be quite time-consuming - whether it's a few hours to file a tax return or a couple of weeks to clean up after some scumbag has left your house in a mess. My own BTL was empty for 8 weeks, with a further three weeks of unpaid rent prior to the moonlight flit. Every inch of every room had to be cleaned and redecorated. Lounge, dining room, bathroom and loo carpets all needed replacing and the remaining carpets needed to be professionally cleaned.

£50 per month would not make it worthwhile.

If it's capital growth that you want, there has probably never been a worse time to buy.



GG