B2L Dilemma

Caravan_of_Love

Hi guys,

Just looking for some opinions. I am 35 and want to really start planning my future. I already put 15% in to a pension which my employer matches, and also plan to start a S&S ISA this month with a £400 per month SO to fund it.

I have always fancied the idea of a B2L and was wondering if it is a risky move at this stage of Brexit? Couple that with the dragon Sturgeon threatening another indy vote I am not entirely sure how the Scottish market will fair.

I have no credit card and have disposable so really just looking for opinion on the above.

Appreciated as always :beer:

Pixie5740

I'll just polish my crystal ball shall I?

Why do you fancy a BTL property? What sort of returns would you expect to make based on your research?

Is Nicole Sturgeon a dragon? Isn't the SNP's whole raison d'être is to gain independence for Scotland which is why she's going for a second referendum. Why are you so interest in Scottish politics anyway? Are you planning on buying a BTL in Scotland? If so then I would think that the The Private Housing (Tenancies) (Scotland) Act 2016 would be of more interest to you.

Cakeguts

Letting property is a business so you can't just decide to do it on a whim. You need to do some research into all the aspects of being a landlord and also of running a business that lets property.

If you need a mortgage would you be able to continue to pay that for 6 months or more if the tenant stopped paying rent. Remember that even if you are not getting any rent you are still responsible for doing repairs and paying for them. At the end of the tenancy the tenant might also have wrecked the property.

Do some research.

Victor_the_Gink

My S&S ISA returned 15% last tax year. My BTL a fraction of that. With the tax changes, I'm looking to offload the latter.

I will assume you are a HR taxpayer and already own a property. You would be mad to buy a BTL unless there are some exceptional yields in your area.

Too many people watch homes under the hammer and assume property is just a license to print money. They have never, ever, stated that people made a loss even when it's obvious they will. When people make money they crow about it. It's probably the least balanced show on telly.

Hoploz

I've no idea of the market in Scotland but right now unless you're paying cash, the new tax rules coming in now are a killer. Look into this side of it before you go any further. It's really not worth the effort anymore.

Tyler119

Would you plan to manage the property yourself, or have an agent do it? What is the attraction of property to you? Without being blunt, you would have to rent it out for a considerable number of years before seeing a change in the price it could sell for, like shares, could go up or down.

From a risk point of view, would you be prepared for the property say in 10 years time to be valued at 15% less than what you purchase it now for? I agree Brexit and the SNP are pretty much a toxic mix, but like mixing meth-elated spirit with petrol and then wondering if it is going to taste good??

If you have disposable income, you could always check out the Vanguard 80 Fund and pump a regular amount in to that. While nothing is certain in shares, or property, this sort of fund is quite consistent over a long enough timescale.

Back to property. You would likely need to set aside perhaps 20% of rent income each year for on going maintenance and the issues of boilers breaking down etc and void periods where you are getting no income due to no tenant.

If you are a high earner, check out the new tax rules regarding BTL as it is possible that it would make it unprofitable for you.

I have recently myself been looking at buying a terraced house to rent out. Nothing fancy and a few have appeared locally with sitting tenants. The market here according to local agents is about to be flooded with them due to the new tax rules. I'm in the far north west and you can pick them up for about £55k with a monthly rent of £450.00. Now if I take off 20% for the ongoing maintenance, a two month void period, it brings it down to around 6.3% return. Not stellar, but steady as I like to think of it. However add in the extra tax and it is down to around 5%. This may rise a little every now and again if I was to get lucky and no maintenance or repairs were needing done in a particular year.

However I'm edging towards a fund that on average returns 8% to 9% and my timescale is minimum 10 years and I'm 31. While some years will be down, others will IMO be up and over the long timescale will balance itself out. However with property I would find myself stuck with the same percentage and no way for it to increase...unless Facebook, Google and Apple all decide to relocate to our little corner.

Good luck with whatever you decide, just make sure you whatever you pick you understand how much risk you are willing to tolerate and look long term at everything, I know people that just think of how much rent they are getting in the first 12 months and ignore all the boring stuff.

theartfullodger

Caravan_of_Love wrote: »

............ Couple that with the dragon Sturgeon threatening another....

There's no need to be insulting to the mother of the nation. Forum rules Sir!

Caravan_of_Love

Pixie5740 wrote: »

I'll just polish my crystal ball shall I?

Why do you fancy a BTL property? What sort of returns would you expect to make based on your research?

Is Nicole Sturgeon a dragon? Isn't the SNP's whole raison d'être is to gain independence for Scotland which is why she's going for a second referendum. Why are you so interest in Scottish politics anyway? Are you planning on buying a BTL in Scotland? If so then I would think that the The Private Housing (Tenancies) (Scotland) Act 2016 would be of more interest to you.

No need for the antagonistic manner of your reply. You don't like what you read then simply don't reply.

The mention of Sturgeon and independence was fairly obvious, I am based in Scotland. I have no interest in Scottish politics, or any for that matter, as I personally find them all to be bare faced liars with personal agendas. I do though care about my future hence the questions above and know enough that Scotland would be in a disastrous place if the devil got her way.

Tyler119

theartfullodger wrote: »

There's no need to be insulting to the mother of the nation. Forum rules Sir!

http://www.heraldscotland.com/resources/images/5222786.png?type=article-full

Caravan_of_Love

Tyler119 wrote: »

Would you plan to manage the property yourself, or have an agent do it? What is the attraction of property to you? Without being blunt, you would have to rent it out for a considerable number of years before seeing a change in the price it could sell for, like shares, could go up or down.

From a risk point of view, would you be prepared for the property say in 10 years time to be valued at 15% less than what you purchase it now for? I agree Brexit and the SNP are pretty much a toxic mix, but like mixing meth-elated spirit with petrol and then wondering if it is going to taste good??

If you have disposable income, you could always check out the Vanguard 80 Fund and pump a regular amount in to that. While nothing is certain in shares, or property, this sort of fund is quite consistent over a long enough timescale.

Back to property. You would likely need to set aside perhaps 20% of rent income each year for on going maintenance and the issues of boilers breaking down etc and void periods where you are getting no income due to no tenant.

If you are a high earner, check out the new tax rules regarding BTL as it is possible that it would make it unprofitable for you.

I have recently myself been looking at buying a terraced house to rent out. Nothing fancy and a few have appeared locally with sitting tenants. The market here according to local agents is about to be flooded with them due to the new tax rules. I'm in the far north west and you can pick them up for about £55k with a monthly rent of £450.00. Now if I take off 20% for the ongoing maintenance, a two month void period, it brings it down to around 6.3% return. Not stellar, but steady as I like to think of it. However add in the extra tax and it is down to around 5%. This may rise a little every now and again if I was to get lucky and no maintenance or repairs were needing done in a particular year.

However I'm edging towards a fund that on average returns 8% to 9% and my timescale is minimum 10 years and I'm 31. While some years will be down, others will IMO be up and over the long timescale will balance itself out. However with property I would find myself stuck with the same percentage and no way for it to increase...unless Facebook, Google and Apple all decide to relocate to our little corner.

Good luck with whatever you decide, just make sure you whatever you pick you understand how much risk you are willing to tolerate and look long term at everything, I know people that just think of how much rent they are getting in the first 12 months and ignore all the boring stuff.

Very good post, thank you.

Caravan_of_Love

To add in my view on why I am considering B2L from a high level, I was looking at the B2L from the point of view that I put 25% down and at the end of the 20 year mortgage, all going well and let has been steady, the property would be in a position to be paid off from what I have made on the rent.

Granted the stamp duty and tax relief rules have changed but essentially you are making from the banks money. They don't lend for an ISA fund. In terms of the black and white figures, I have not gotten that far yet hence why I was just testing the water and looking for opinion.

Sadly a few rude people have surfaced though.......