is it still worth buying a second home to let?

mumps

wolfplayer wrote: »

Ok Seven-Day. My view remains you have outbid a would-be owner. You can't claim for certain you did not.

I would be interested to get a general idea of situation of your current tenants, but would understand if you'd prefer not to share that. Younger workers?

I think that is an interesting question. I have a house I let, I won't call it a BTL as I inherited it and due to market conditions selling wasn't really an option at the time. A family member has been living in it for several years but they moved on this year and we have just let it for the first time.

I was feeling sorry for the young family who moved in. I realised if they had a deposit they could get a mortgage for what they are paying in rent. It seemed unfair and then I had to arrange for a workman to get in to do a job that we hadn't managed to get done before they moved in. Well we had to delay it for a while as they were off to Disneyland.

I don't know what it would cost for a family but with flights to USA hotels and passes for the parks I am sure it cost a fair bit. If you add that to the months deposit and agents fees I can't help thinking they could have bought the house a few doors down that was up for sale.

It is their decision, when I was a young mother we went down the route of no car, no holidays for a few years and bought a house but they have made their choice.

Just wanted to add that I don't live in the South East and property prices here aren't too bad. I won't say they are cheap but a couple who are both earning close to average earnings would easily get a mortgage for the 3 bed house I am talking about. In fact they wouldn't even need to be close.

mumps

Pixie5740 wrote: »

Not every BTL is businesslike some are just eejits jumping on a bandwagon.

Oh well if we are including eejits what can I say.

seven-day-weekend

BarryBlue wrote: »

Of course investors don't pay premiums, you are correct. I have BTL properties and the difference between buying one and buying your own home is that there is no emotional attachment to a BTL property. It is purely an investment, so the purchase price, and everything else, has to make sound financial sense. The primary issue is getting it at the right price, and if it isn't happening you just move on and find another.

My last purchase was a ground floor apartment in a nice secluded location. The agent told me the circumstances of the seller and how she needed to sell quickly and use the equity to upsize for her forthcoming new baby. I went in with a very low offer, we did a little negotiating, and agreed a price, £97k. No mortgage involved so we were able to go aead reasonably quickly. Everyone happy. The going rate in the development is nearer £120k, which is the asking price for one that has just come up for sale. If and when they get desperate I will bid for it. I get it or I don't, life moves on.

Bear in mind, re your last point, that not all BTL investors require mortgages. For many of us it is simply getting a better return that our savings get in a bank, 7-8% as opposed to 1-2%.

I agree. The flat we purchased was up for sale for £99950, we looked at it just as it was reduced to £89950, and got it for £85k for a quick sale. So £15k under the original asking price. We would not have paid £100k for it.

There are similar flats up for sale in the development now for £100k, and some that have sold for near that asking price.

Hoploz

_CC_ wrote: »

This is more down to your misunderstanding of pensions rather than sound financial planning.

It's just my preference, which is based on my experience.

1) i like the fact i am in charge and can see my investment - even physically by standing outside the property if i choose. Invested, I give my money to other people and rely on them to do what they think at the time is best. Their decisions may or may not prove to be good ones.

2) I believe the return is greater, and I am in control of when I take that return. For example, the last property I bought was in 2011. Mortgage payments are covered. There's a monthly profit, but even without this, it's covered. My £30k investment is now valued at 70k due to market rises over the 5 years. I believe this is a better return than I would have at this point if I'd given it to an investment company, and I would have my funds tied in till a certain age. Like my mother in law, who paid in for a pension which paid out at 60, sadly she died age 59.

We make our own decisions - it'd be a dull world if we all made the same ones!

Pixie5740

Ray_Singh-Blue wrote: »

I have a friend who left his job in finance and now just lets houses. His formula is to buy a certain sort of house, at the right price, in the right place, give them a basic refurb, and then let them quickly to tenants receiving housing benefit.

Most of his houses are in northern or midlands towns, he only buys 2 or 3 bed terraced houses. The basic refurb usually involves new UPVC windows, new bathroom and kitchen, new flooring all done extremely economically.

I don't know how many houses he owns but it seems to keep him busy. He is a clever guy & I think he said he looks for a yield of 8% to make it work for him.

This post got me thinking about a couple of threads by the same user who had a similar business plan (his was a business plan in the loosest sense of the term). Yes, at the lower end of the rental market you can make some good yields but that higher reward comes with higher risk. If your friend's business plan is 100% reliant on tenants in receipt of housing benefit then his business is at the mercy of government policy. If you are going to have a BTL portfolio it's important to diversity or you could end up like ptwparkinson.

buy to let warning

buy to let council tax warning and other warnings

seven-day-weekend

Hoploz wrote: »

It's just my preference, which is based on my experience.

1) i like the fact i am in charge and can see my investment - even physically by standing outside the property if i choose. Invested, I give my money to other people and rely on them to do what they think at the time is best. Their decisions may or may not prove to be good ones.

2) I believe the return is greater, and I am in control of when I take that return. For example, the last property I bought was in 2011. Mortgage payments are covered. There's a monthly profit, but even without this, it's covered. My £30k investment is now valued at 70k due to market rises over the 5 years. I believe this is a better return than I would have at this point if I'd given it to an investment company, and I would have my funds tied in till a certain age. Like my mother in law, who paid in for a pension which paid out at 60, sadly she died age 59.


We make our own decisions - it'd be a dull world if we all made the same ones!

My husband and I came to the same conclusions as yourself, although we do both have pensions too (in payment). We often drive past our little flat as it is near to Aldi, even though all we can see is three windows with blinds up them! We can see it and touch it or trade it in for cash. It hasn't risen in value yet, as we only bought it this year, but I'm sure it will - and because we got it cheap, I'm sure even now we could get more than we paid for it.

We still have some spare cash so are considering getting another and in fact are going to view one in the next few days.

saajan_12

I don't think having x more BTL properties (instead being owner-occupied) is a problem and here's why:

1) Being focussed on the highest yield, unattached emotionally and needing atleast 25% of the value upfront means a BTL investor is not going to pay more than a FTB for the same property.

2) However by just being another buyer, I do agree having BTL investors increases the demand for properties and hence pushes up prices. In other words x more properties not bought as BTL -> increased supply for owner occupiers -> Sale Price down

2) Conversely, the loss of those x properties from the rental market DECREASES supply for renters -> Rent INCREASES. This makes it harder for FTBs to save money for a deposit so even if the house price is lower, they have smaller savings each month.

Also house affordability aside, there will always be a need for rentals - young people before they accumulate a deposit, people that need to move frequently / don't want to be tied down, students..