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Property Portfolio

Hi All,

I want to save 10-15k per year as deposit for a buy to let.

My maximum budget is 40-50k per flat .

I live in london and have a mortgage on my house and be very hard for me to buy house here or even flat at 200k+ per flat .

I have sat down and thought if I can spend 10-15k on a property every year and rent it then in 10 years theoretically I will have 10 x 50k houses with their prices going up every year.

Am I too ambitious here?

would you have done the same ?

what part of the country will you invest in ? I am new castle or areas with big universities
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Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    stranger12 wrote: »
    I have sat down and thought if I can spend 10-15k on a property every year and rent it then in 10 years theoretically I will have 10 x 50k houses with their prices going up every year.

    Am I too ambitious here?

    Will lenders fund your plans?

    Why are house prices going to rise every year?
  • I am not sure and doing research but wanted to know what people think here

    I think they will as buy to let is based on rental so if you can find a nice decent house/flat with good return and have at leat 30% deposit , why not.

    re house prices, I think they will just looking at the past 10 years and even if they don't, if I get the BTL mortgage on 25 years term, the tenant will pay for the mortgage so in 25 years I will have 10 x flats which I have only paid 25-30% of each
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Some questions to ask yourself;
    What else could you have done with the money you'd be putting into deposits?
    If its that easy where arent there numerous firms doing this (why instead is it mainly agents charging people like yourself for managing these properties rather than owning them)
    Whats are the risks - perhaps such cheap houses become worth less or even worthless rather than "go up every year" - if they already went up over the past ten years, as you say, what were they costing ten years ago? £50? Or have they in fact not gone up at all and you are comparing house price rises in London to areas you know zero about where they've been flat or declining?
    What are the taxes (especially compared to what else you could do with the money such as in ISA or pension)
    At what stage does it become a full time job in itself? is that what you want to do (it may be, I dont know)
    Where can you get properties for £40k, what kind of repair will they be in, what demographic is renting those, how stable is their income?
    With low priced property, fixed costs like windows, boilers and other repairs will be proportionately higher than on a more expensive property and will disproportionately reduce the profits, eg the boiler for a £40k house will cost a similar amount to a £100k house, so your profits will be lower. You might recoup the cost of a boiler on a £200k house in a quarters rent. On a £40k house, maybe a years rent.
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
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    That Boat has sailed a long time ago!
    Not read the news recently?
    3% extra Stamp duty for anyone who already owns a property.
    Now there are properties for sale on the UK at £50K or less BUT they are in poor areas and do not tend to go up in value.
    BTL in student areas !
    You need to know what you are doing and be on hand 24/7 to sort all the little problems out.
    Much bigger investment than £15/25K
    Are you a 40/45% Tax payer ? you could be losing money from renting by 2020
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    stranger12 wrote: »
    the tenant will pay for the mortgage so in 25 years I will have 10 x flats which I have only paid 25-30% of each

    Have you factored tax into your calculations?
  • Aware of tax changes but 3% on a 40k is not much (1.5k)

    Well I have seen some decent flats in newcastle for 50k

    You can buy a nice big house in there for 200k in good area
    In london you need around 1m for such property

    Having said this , I haven't done any research around the areas and rental market

    It was just a thought which I wanted to get people view on

    Yes i am 40% tax payer, what will i lose money by 2020? Any new rules coming to effect?
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    randomi15 wrote: »
    Aware of tax changes but 3% on a 40k is not much (1.5k)

    Well I have seen some decent flats in newcastle for 50k. And what do they rent for? Have you thought about the extra costs of having an agent manage an apartment since you won't be on hand to deal with issues?

    You can buy a nice big house in there for 200k in good area
    In london you need around 1m for such property But why is that relevant to buying £40k rental properties?

    Having said this , I haven't done any research around the areas and rental market

    It was just a thought which I wanted to get people view on.

    Yes i am 40% tax payer, what will i lose money by 2020? Any new rules coming to effect?

    If that isn't a joke I suggest you do some googling. Many LLs on 40% selling up as they will be be making a loss from 2020 onwards.
  • GreatApe
    GreatApe Posts: 4,452 Forumite
    Although property is cheaper up north you tend to have higher relative costs and voids this is double true for flats. Personally I would not go for a flats outside of London and would only consider houses. If I were thinking of purchasing property elsewhere and I lived in London I would probably consider Birmingham rather than Newcastle. You will have to do some visits and its roughly 100 miles vs 300 miles. Birmingham is more expensive than newcastle but the rents are higher.
  • kingstreet
    kingstreet Posts: 39,316 Forumite
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    New PRA rental calculation rules from January 2017 mean mortgages are going to be tested at 145% of perhaps 6% in future.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    randomi15 wrote: »
    Aware of tax changes but 3% on a 40k is not much (1.5k)

    That's per annum. You are also talking about owning 10 houses.
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