First Time Buyer

LEJC

LydiaGrace wrote: »

Hello,
Just wanting some general financial advice. My husband and I are ready to buy a small 1 bedroom flat, with a 5% deposit. We have the eventual plan to turn it into a buy-to-let mortgage and buy a second family property. Just wanting to know how financially viable this is, any advice from those who have already done it, are extremely welcome.

Thank you
Lydia

done it been there...still doing the rentals....but it's not the easy money that some may think.

For some people it works,because they are prepared to be a stand alone LL or with minimal letting agent input....but add in a letting agent charging typically anything above 8% commission on the rent and suddenly you really don't make much money on a monthly basis....add in the management costs that are usually associated with leasehold blocks of flats and a mortgage payment and suddenly it does become quite hard to break even....

You need to factor in property maintenance on the rental and the period of time between one set of tenants leaving and another taking residence.....thats a void period and you can typically lose a months rent in that time,but still have all the usual costs to pay out.

Our first rental came by chance....and long after we were in the still setting up home phase so that helped....but I can imagine it becomes an expensive hobby or maybe even a drain on finances if you are juggling two mortgages,and maybe even a growing family life.

It's not just about collecting the rent and before you embark on it please make sure you read up on all the responsibilities of being a LL...GM has produced a very informative guide which you might want to read before making too many plans.
there are a few sticky threads at the start of the thread page that have been compiled by MSE...even they make some good reading to help you decide.


What is your motivation to do it?....is it purely financial or is there the notion that you want to hold onto your first joint purchase property.....

It is something that is very difficult to detach yourself from....the fact that someone else lives where you once called home....once you rent it out..it's their home and some people find that difficult or at least challenging to deal with when maybe the tenant moves out and you are faced with clearing/cleaning and redecoration.

Bring a bad LL is easy...being a good one takes time and its a learning curve.

chappers

LEJC wrote: »

done it been there...still doing the rentals....but it's not the easy money that some may think.

For some people it works,because they are prepared to be a stand alone LL or with minimal letting agent input....but add in a letting agent charging typically anything above 8% commission on the rent and suddenly you really don't make much money on a monthly basis....add in the management costs that are usually associated with leasehold blocks of flats and a mortgage payment and suddenly it does become quite hard to break even....

You need to factor in property maintenance on the rental and the period of time between one set of tenants leaving and another taking residence.....thats a void period and you can typically lose a months rent in that time,but still have all the usual costs to pay out.

Our first rental came by chance....and long after we were in the still setting up home phase so that helped....but I can imagine it becomes an expensive hobby or maybe even a drain on finances if you are juggling two mortgages,and maybe even a growing family life.

It's not just about collecting the rent and before you embark on it please make sure you read up on all the responsibilities of being a LL...GM has produced a very informative guide which you might want to read before making too many plans.
there are a few sticky threads at the start of the thread page that have been compiled by MSE...even they make some good reading to help you decide.

Don't talk rubbish banks just throw money at buy to letters, then it's just a case of sit back and watch the cash roll in, it's like a licence to print money.
Go for it

Seriously to the OP, if you have only got a 5% deposit whilst your plan might well be viable at some point, it's going to a fair way down the line before your going to be in a position to get it off the ground.

LEJC

chappers wrote: »

Don't talk rubbish banks just throw money at buy to letters, then it's just a case of sit back and watch the cash roll in, it's like a licence to print money.
Go for it

ha ha ha....spoken like a true professional!

but the real secret to being a good LL is never reveal to your tenant that you are actually sorting out their issue whilst sipping a drink from your sunlounger in Barbados.....
or indeed replying to forum topics at the same time!!

chin chin....

Crashy_Time

chappers wrote: »

Don't talk rubbish banks just throw money at buy to letters, then it's just a case of sit back and watch the cash roll in, it's like a licence to print money.
Go for it

Seriously to the OP, if you have only got a 5% deposit whilst your plan might well be viable at some point, it's going to a fair way down the line before your going to be in a position to get it off the ground.

Good advice.

00ec25

Crashy_Time wrote: »

Good advice.

which is what you should have said rather than posting your usual links to anti landlord websites just because the thread contains your trigger word "BTL"

OP. 5% deposit may allow you to get a 1 bed flat, but is that flat in an area where such property is in demand as a rental?

Just because you own it does not mean it is an ideal rental opportunity.

as others have said, 5% deposit makes your plan unattainable for a considerable time to come.

Crashy_Time

Which of the two sites do you think are "anti-landlord"?

Crashy_Time

00ec25 wrote: »

which is what you should have said rather than posting your usual links to anti landlord websites just because the thread contains your trigger word "BTL"

OP. 5% deposit may allow you to get a 1 bed flat, but is that flat in an area where such property is in demand as a rental?

Just because you own it does not mean it is an ideal rental opportunity.

as others have said, 5% deposit makes your plan unattainable for a considerable time to come.

True, but surely better than being in debt to try and make money on it? Most property will rent out at the right price.