IFAs and Buy to Let

Mossfarr

"My understanding of a BTL mortgage is that you can carry on paying the interest only portion of it indefinitely whilst hopefully seeing the equity gradually increase".

No no no.... You do not pay interest indefinitely you pay it until the end of the mortgage term then you have to pay back the amount you originally borrowed!!!!Definitely more research needed.

ognum

JosephM wrote: »

Hi,

I am new here, my first post.

I am considering buying an off plan apartment in Sheffield which will go on the market at full completion value in Sept 2017. I could then arrange a buy to let mortgage paying off the interest from rental income. I am aware of some of the dangers of buying off plan, and I am also nervous about the prospects of a crash in the housing market in the near future. What bothers me is that you cannot seem to get independent financial advice on this kind of investment. Most advisors want to sit down with you, do a complete financial health check, recommend products and establish a long term business relationship. I am happy to make the final decision for myself but it would be nice to gain some insight from the professionals. Am I asking too much here? Any comments or thoughts very welcome. Thanks.

Firstly welcome, I hope as a first time poster you have not been put of by the newbie baiting that seems to have gone on here today, not sure why, maybe a slightly naive first post maybe the weather who can tell.

You are right it is difficult to get 'independent advice' regarding property purchases but I believe it is difficult to get independent advice with any financial matters, everyone seems to want a bit of you cash.

No one can call the housing market for you. There are some likely hoods.

Buying a new build will likely mean you loose capital value before it grows again. That is the price you pay for the sparkly new property.

If it is a leasehold property read the lease very carefully prior to committing any money. Many new build flats have short leases and escalating ground rents. As a LL if I am buying a flat I would buy the older property with smaller service charge, 999 year lease or share of freehold, no lift as expensive to repair and keep maintained. To many people come on here shocked at what they have bought. I would be in direct competition for your tenant and I could charge a lot less rent.

Have enough cash In reserve to pay your mortgage for at least six months and for unexpected maintainence, that is fair for your tenant.

Be aware of the future changes to mortgage interest relief, you could get badly stung.

Read carefully about being a LL, it is time consuming and not just about accepting cash at the end of the months, there are a multitude of laws regarding letting property.

Don't believe what the agents are letting you about the rent you will receive. Study the market.

Think carefully about what you are buying it may not be the best purchase to let.

Beckyy

You'll need a hefty deposit to get a decent interest rate (ideally 40%+), and probably a minimum income of £20/30,000+ to give you a good selection of products.

I would advise getting good LL insurance. I had to make a very substantial claim when I was a LL which could have been a disaster if we hadn't had a decent policy.

It's not easy money, even with good tenants there is a lot of work involved and with the tax and expenses you need a great property and great tenant(s) to make it worth while now IMO.

I don't know Sheffield but I'm wary of new builds, they seem renowned for losing value. Make sure you know if it's something you want to do long term and can afford to pay for voids, suck up losses or potential decreases in value and afford repairs/maintenance. Bets of luck.

Guest101

JosephM wrote: »

The property is in a city centre with a high turnover of students and young professionals so there should be a steady rental income. Having said that, if the rent is not paid you would obviously need to follow a procedure and perhaps fund the mortgage yourself until things are settled. I am not expecting this to be easy.

Living in a student city I know a few things.

1: there are too many properties for the students. Individuals like you will be competing against developers.
2: that's the thing you need to learn about these procedures ( and other obligations ).
3: students and young professionals are not interchangeable.

AnotherJoe

JosephM wrote: »

Hi,

I am new here, my first post.

I am considering buying an off plan apartment in Sheffield which will go on the market at full completion value in Sept 2017. I could then arrange a buy to let mortgage paying off the interest from rental income. I am aware of some of the dangers of buying off plan, and I am also nervous about the prospects of a crash in the housing market in the near future. What bothers me is that you cannot seem to get independent financial advice on this kind of investment.

You appear to be asking for advice from Madame Fifi and her crystal ball, not an IFA.

JosephM wrote: »

Most advisors want to sit down with you, do a complete financial health check, recommend products and establish a long term business relationship.

Yes, that's their business. Not forecasting what the housing market will do.

JosephM wrote: »

I am happy to make the final decision for myself but it would be nice to gain some insight from the professionals. Am I asking too much here?

You dont mean "insight" you mean fortune tell and yes you are asking too much. An accountant not an adviser could help you run some numbers, but really that would be trivial since you can do the sums yourself. You know what it would cost, what the repayments would be what rental income and expenses would be. The unknowns such as a housing crash, thats back to Madame Fifi.

Kynthia

You usually make more money by keeping existing tenants rather than having new tenants every year or two. This is because you'll have a void and a large tenant find fee from your agent (unless you do this yourself). The property needs to be right for your target market and then do the numbers for that property and target market. If there's a glut of 2 bed flats you might find you get a better return on a 2 bed house that accepts pets. Local agents should be able to tell you what type of properties they have a demand for but a shortage of supply, and what people would pay.

JosephM_2

“
Most advisors want to sit down with you, do a complete financial health check, recommend products and establish a long term business relationship.

Originally posted by JosephM
” Yes, that's their business. Not forecasting what the housing market will do.

Their business is to make money from you, pure and simple.

AdrianC

JosephM wrote: »

Their business is to make money from you, pure and simple.

Isn't that why just about every private sector business exists...?

Guest101

Typically in student towns the demand for family homes shoots up (as LLs turn their 3 bed terraced into a 5 bed HMO)


I would be looking at 3 bed semi's with a garden - accept some wear and tear due to kids / pets. You'll have reasonably long term tenants.

JosephM_2

AnotherJoe wrote: »

You appear to be asking for advice from Madame Fifi and her crystal ball, not an IFA.



Yes, that's their business. Not forecasting what the housing market will do.



You dont mean "insight" you mean fortune tell and yes you are asking too much. An accountant not an adviser could help you run some numbers, but really that would be trivial since you can do the sums yourself. You know what it would cost, what the repayments would be what rental income and expenses would be. The unknowns such as a housing crash, thats back to Madame Fifi.

Yes, I can do the sums myself and I have done, but an outside view would be helpful and there appears to be none available. Perhaps I have spotted a gap in the market here. Lol