Buy to let rather than sell to buy advice

Crashy_Time

eggha wrote: »

your implication in "making the rental price attractive" is that it should be lowered - that is after all the mantra you use in every post you make and therefore logically you think all prices should drop to 1p

The wider point is that buy to let has and will remain a juggling act between balancing revenue income and capital growth. Certain types of properties suit certain markets and there is no utopian property where both revenue and capital prospects are in balance. I agree that many amateurs are not going to make money, but that does not mean most landlords are amateurs.

Well I don`t think many renters follow the logic of your first paragraph, yes most people will take something free if they can get it, but for most of the time people are just looking for value?
My other point was that if an owner occupier has managed to live and commute to work etc. in a property, someone else renting it could do the same, and therefore the property would be desirable to them, the boxes that a property needs to tick to be rentable are quite general IMO (you may say I know nothing about selecting BTL?) I wasn`t talking about a cottage in the middle of nowhere.

tlc678910

Hi,
I just wanted to ask you to think about some basic assumptions in your plan. I hope my thoughts add some new questions for you to consider.

You mention your dad wants to "invest" 110k. Does he need security for this money, does he need to be able to get it back in any medium timescale. Does he need a return on it? Alternatively is he happy to leave it with you, no return on it, perhaps altering his will?

Where will your dad's money be used. You plan to leave 110k equity in your current place and your dad is investing 110k. Will all the profit (if any occurs) be his? Could your dad buy your property on a buy to let himself if it is a good investment?

If your buy to let mortgage interest on 110k was £400 a month and your rent charged £800 (leaving aside the reduced ability to deduct mortgage interest for higher rate tax payers) your income would be £400 x 12 =£4,800 (before tax). Although you would hope to be in profit this would not be guaranteed after landlord insurance, gas checks, repairs and maintenance, voids and possible non paying tenants. If you make a loss will you be asking dad for more money or does he actually need an investment that promises a return free of risks.

If the above numbers are at all realistic for you you can see it will take many years to get your extra stamp duty back as profit.

Unless your dad is sure he does not need his investment back in all circumstances it needs to be legally protected or else he could lose it if you were to die or divorce.

If you do fancy a buy to let property why not sell your home in the usual way but max out on the mortgage you take on the new property (within what you can afford) so you can keep money back. Then when that is done and dusted you and your dad could go 50/50 or 80/20 or whatever on a cheaper buy to let property where the second stamp duty is less of a burden (as cheaper property) and what you can both afford is properly considered rather than trying to squeeze your finances to fit the circumstances you would like.

Tlc

Crashy_Time

http://biz.newsbelow.com/buy-to-let-slump-puts-first-time-buyers-in-the-drivers-seat-44302/

Thrugelmir

Crashy_Time wrote: »

The wider point is that most BTL people are not going to make any money.

That's a broad generalisation. Doesn't mean that the Op won't. Seeking views and opinion is sure way of improving the odds of being successful.

mysterymurdoch

Crashy_Time wrote: »

The wider point is that most BTL people are not going to make any money.

So who are people living like students going to rent from?

Crashy_Time

mysterymurdoch wrote: »

So who are people living like students going to rent from?

People living with large debts tend to be either students or mortgage borrowers, but if you mean who are renters going to rent cheaply from, then ask yourself who they rented from before the BTL mania got started.

mysterymurdoch

Can't you answer a question? I've not been here long but already noticed that. I don't know who people rent from, I've not done it for decades.

Crashy_Time

mysterymurdoch wrote: »

Can't you answer a question? I've not been here long but already noticed that. I don't know who people rent from, I've not done it for decades.

How many BTL`s do you have?

Crashy_Time

Questions questions.....:)