when to do buy to let?

want2bmortgage3

Obviously you need your own place to live first with a residential mortgage, but if you are considering a buy to let, when do you do it?

Should you pay your own mortgage off first or do it as soon as you can afford 25% equity in each property?

AndyT678

It very much depends on your attitude to risk.

Putting some of your money into BTL when you have paid off your own mortgage, have alternative income with good pension arrangements and a balanced portfolio of other investments is fairly low risk.

Putting all of your money into BTL when you have no other assets is shoving all your eggs into one basket. It might pay off brilliantly but it could also turn into a disaster.

want2bmortgage3

Thanks Andy the risks being interest rates rises and house prices dropping right?

pathtofreedom

want2bmortgage3 wrote: »

Thanks Andy the risks being interest rates rises and house prices dropping right?

Bad tenants, voids, place burning down....

By making property part of a balanced portfolio if something did happen then you'd only lose 25% if you had say another 25% bonds, 25% shares, 25% cash (don't use these splits it is just an example to make the numbers easy) if you have 90% of your money tied up in bricks, and just 10% in cash savings and nothing else, then that is quite high risk if something happens to the bricks. Insuarnce doesn't always pay out how you want.

teddysmum

want2bmortgage3 wrote: »

Thanks Andy the risks being interest rates rises and house prices dropping right?

Plus cost of damage by tenants, unforeseen repairs (new boiler, weather damage not covered by insurance), periods with no tenant, difficult tenants needing long time or legal action to eject, tenants who don't pay the rent or even moonlight taking your goods with them etc etc.