Buy to let property in liverpool city centre

ashu.doc

Dear all
I am from liverpool and I am interested in buying a property which is a studio flat for the purpose of buy to let. This property is in liverpool city center. The property will be ready to occupy in september 2015. The builder is asking 50% payment now and 50% on completion.
According to market review there is a good potential in future for rent in this property as it is in centre.
Since I am new in this kind of buying of properties I would be grateful if someone can advice in this business. How much appreciation shall I expect in 2-3 years time?
I expect I should be able to clear mortgage with rent, is that correct approach for such a property which is at the heart of city and close to univeristy?

Thanks a lot
Ash

kinger101

This sounds like a terrible idea. I don't know what you mean by "according to market review", but studios and one bed flats are awful investments. Nobody wants to live in them, for the simple reason that you get a two bedroom place for just a little bit more. Hence, nobody wants to rent them, and nobody wants to buy them. New build flats are also a bad idea, as they lose 20-30 % of their value almost immediately. Some lenders still refuse to give mortgages for them.

Sorry to be negative, but it just sounds like a spectacularly bad idea.

EverGreen_2

ashu.doc wrote: »

Dear all
I am from liverpool and I am interested in buying a property which is a studio flat for the purpose of buy to let. This property is in liverpool city center. The property will be ready to occupy in september 2015. The builder is asking 50% payment now and 50% on completion.
According to market review there is a good potential in future for rent in this property as it is in centre.
Since I am new in this kind of buying of properties I would be grateful if someone can advice in this business. How much appreciation shall I expect in 2-3 years time?
I expect I should be able to clear mortgage with rent, is that correct approach for such a property which is at the heart of city and close to univeristy?


Thanks a lot
Ash

I know Liverpool very well. Had lived there for years and currently I am the regular visitor.
I can not advise on the price of the flat. This is your decision that is based on the market and area. If the flat is in the heart of the city centre, in good street, within good building, and parking space allocated, security..etc, then go ahead. It will be good investment project. Just remember that the city centre is huge area. Not every part of that centre is as attractive as others.

G_M

ashu.doc wrote: »

Dear all

I expect I should be able to clear mortgage with rent, is that correct approach for such a property which is at the heart of city and close to univeristy?

No. You need to exceed the mortgage. And cover for breakdowns repairs overheads tax etc.

And you should base your budget on 10 months rent a year to allow for voids.

See

New Landlords (information for new or prospective landlords)

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

EverGreen_2

kinger101 wrote: »

This sounds like a terrible idea. I don't know what you mean by "according to market review", but studios and one bed flats are awful investments. Nobody wants to live in them, for the simple reason that you get a two bedroom place for just a little bit more. Hence, nobody wants to rent them, and nobody wants to buy them. New build flats are also a bad idea, as they lose 20-30 % of their value almost immediately. Some lenders still refuse to give mortgages for them.

Sorry to be negative, but it just sounds like a spectacularly bad idea.

Oh, I missed it. If it is just studio, then yes think twice before you buy. Again it also depends on where it is in the city centre.
The prospective tenants would love more space. They would be either a couple or 2-3 students who would share.

davidmcn

ashu.doc wrote: »

The builder is asking 50% payment now and 50% on completion.

What? Nobody in their right mind gives that sort of money up front. You certainly won't get it from your mortgage lender anyway (assuming you find one happy with studio flats).

ashu.doc

kinger101 wrote: »

This sounds like a terrible idea. I don't know what you mean by "according to market review", but studios and one bed flats are awful investments. Nobody wants to live in them, for the simple reason that you get a two bedroom place for just a little bit more. Hence, nobody wants to rent them, and nobody wants to buy them. New build flats are also a bad idea, as they lose 20-30 % of their value almost immediately. Some lenders still refuse to give mortgages for them.

Sorry to be negative, but it just sounds like a spectacularly bad idea.

Thanks for your answer, I would say any view is helpful.

dimbo61

Have you looked at the local letting agents and what is available to rent in City centre Liverpool.
Would you live in a studio flat in the heart of the city ( You may have too)
Forget couples or 2/3 students this is a Studio Flat so one person and they also have to pay Electric, water, Council Tax etc
Lots of Property Developers Talking B---!!!! about great returns and No problems getting tenants.
50% Cash Deposit !!!!

ashu.doc

EverGreen wrote: »

Oh, I missed it. If it is just studio, then yes think twice before you buy. Again it also dependes on where it is in the city centre.
The prospective tenants would love more space. They would be either a couple or 2-3 students who would share.

It's on Seymour street behind the lime street station. Location wise it's a nice location. But as you and other people have said that studio flats are not a good choice for investment, I am reviewing my plan. I didn't realise that after construction their prices slash down 20-30% because I am only looking to sell it in 2-3 years. I only thought about this investment because of close proximity of liverpool uni and student these days like to have these fancy studios, but thanks for saving me from bad investment.

EverGreen_2

ashu.doc wrote: »

It's on Seymour street behind the lime street station. Location wise it's a nice location. But as you and other people have said that studio flats are not a good choice for investment, I am reviewing my plan. I didn't realise that after construction their prices slash down 20-30% because I am only looking to sell it in 2-3 years. I only thought about this investment because of close proximity of liverpool uni and student these days like to have these fancy studios, but thanks for saving me from bad investment.

I hope I am wrong ..(not judgmental). Seymour Street and Lime Street station are not the attarctive areas in the centre. If you know Liverpool you would understand what I mean.

kinger101

I hope you don't mind me asking, but do you remember what happened in cities like Leeds, Sheffield, Nottingham and Cardiff (possibly Liverpool too) with new build flats at the last crash around 2008/2009? It sounds like you're at the risk of being dragged into a property speculation bubble. The BTL "investment" needs to be sound from day one. It can't rely on selling the property on in a few years time at a profit, particularly not if you are leveraged with the bank's money.

There's a particular reason the developers target amateur BTL investors with these type of properties.