Buy to let. Cash buyer

Money_Bags1447

Hi
I'm new to this forum and looking for advice from someone in the buy to let market. I live in Scotland and have £200K in banks gathering dust. I'm considering using a large chunk of this money to buy a second property and letting it out. What risks are there for me in this? I'd have no mortgage and would let through a letting agency. Any advice/pointers would begreatly appreciated.

Cheers MB

Abraham21

I also want to house in a good location in Scotland.
But do not have much amount for this.

G_M

These posts relate to England but much of the advice will be common:

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

lynsayjane

As a landlord in Scotland (albeit with a mortgage), my main suggestion is to research your chosen area as one of the biggest risks is an empty flat. Also look at property prices in this area, are they steady or in a high bubble that might burst losing you money.

From there the letting agent would be able to help you out with the rest. Deposit would need to go to a third party, you'll need PAT testing annually, Landlord gas certificate annually and EPC which is done (I think) every ten years. You also need to register as a landlord through the local authority, I think that needs reviewed every 3/5 years.

Pixie5740

Why use a letting agency? Join a landlord association and do it yourself.

thestens

Using an agent or not depends on a variety of factors:
1) Your willingness to deal with tenants personally, repairs, rent collection, tenancy agreement, deposit, etc. All manageable, if you have the time and inclination.
2) A good agent will cost, but will deal with all this for you and find tenants, vet them, etc.
3) We use an agent for 2 properties because the area they are in is dodgy and we don't get the best tenants sometimes. The agent deals with any problems for us, she is experienced in this.
4) We manage a new build flat with a 55yrs and over clause for residents ourselves - less to go wrong and (so far!) easier tenants.
Don't underestimate the problems you may have to deal with - it is a job not money for nothing! Having said that over 11 years we think we have averaged 10% interest on our investments, despite having some ups and downs. Boilers are the worst thing, we have found - get a good one and get it on a 7 yr contract!

jimpix12

1) Put the £200k into a low risk bond or invest it on the stock markets

2) Let people who want to buy a home to actually live in have a fighting chance of affording it.

Nah, thought not.

Running_Horse

It can be a lot easier to buy a property than to sell it if you need to withdraw your capital for some reason. I would suggest alternative investments such as share trackers or bonds. Not sexy, but reasonably safe. Some might say you have missed out on a lot of previous capital growth in property.

C_Mababejive

Have you thought of buying an apartment and renting it out to a high class hooker?

seven-day-weekend

spunko2010 wrote: »

1) Put the £200k into a low risk bond or invest it on the stock markets

2) Let people who want to buy a home to actually live in have a fighting chance of affording it.

Nah, thought not.

There may be other people who would like a nice place to rent!

HappyMJ

Money_Bags1447 wrote: »

Hi
I'm new to this forum and looking for advice from someone in the buy to let market. I live in Scotland and have £200K in banks gathering dust. I'm considering using a large chunk of this money to buy a second property and letting it out. What risks are there for me in this? I'd have no mortgage and would let through a letting agency. Any advice/pointers would begreatly appreciated.

Cheers MB

Personally, if I really wanted to get into BTL then buying more than 1 property is a good idea. It'll also increase your returns somewhat (smaller properties tend to rent for more as opposed to the value and quicker than larger properties) and it'll spread the risk. I would borrow another £200k against the rental income and maybe buy 4 properties. I would also make sure my portfolio was well balanced i.e you have a similar amount invested in stocks and shares ISA's and you have enough cash available to meet any periods when you aren't getting the full rent paid by the tenants. That's your main risk...the tenants don't pay or they trash the property. There's little you can do if they have nothing...all you can do is take them to court for possession of the property then once you have that you'll have to use your own money to bring it back to a good standard again. You could take them to court for the money but you might only get token payments.