Buy to let?

Cakeguts

bytheseas wrote: »

Well guys. I've gone ahead with it. Made an offer on a property pre auction for the starting price and got accepted.
1 bed cottage, about a quarter of a mile from my house. Fair bit of research done. Nothing similar to it currently to let within 3 miles. I hoping that means it will be in demand. Based on similar properties further way in the same city I should expect 375 - 425.

Property cost Exactly 40k + £2,006 solicitor fees/stamp. Probably needs 2 - 3k spending on it so round up to 45k total. So looking at 8%+ yield if occupied full time.

It's the sort of property that's ideal for an older person or maybe a disability. Very close to shops, all on one level. Small and easy to maintain but in a nice street too.

Cheaper than I was expecting to get a property for so I've also paid my max 10% over my own mortgage too so the rest doesn't just get wasted.

You have got to get an EPC and it has got to be in at least band E or you will not be allowed to let it.

bytheseas

tom9980 wrote: »

Not much research done really? you should know what the demand is and with certainty the rent.

I am also concerned you bought an auction property (means problems usually) for cheap before auction. I hope you had a good survey or walked around with someone with knowledge to spot the issues.

Well my research was what's available to rent now and what's not. There's 100+ 2 beds to let. A dozen or so 3 beds and 0 1 beds. Not really sure how I would find demand? Phone estate agents I'm guessing now? As for rent, I did mention that in the post.

It already has a brand new roof so no issues there. There's a small patch of damp on the front wall but there's a sealed up air brick just and a drainpipe running down the same wall so I have no doubt that will be fixed with one of those two.
No cracks or movement to be seen but it's literally a tiny terrace cottage. Very little that could do wrong.

bytheseas

Cakeguts wrote: »

You have got to get an EPC and it has got to be in at least band E or you will not be allowed to let it.

Thank for the info. It's got a high D.

G_M

I would have suggested you consider other options beyond your 3 eg

* Pension (for the tax advantages)
* S & Ss (for liquidity)
* specialist investments (eg wine,antiques for the hobby interest)


But you've made your choice. I hope it works out.


** Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

hazyjo

Seeing your market as older or disabled tenants sounds very limiting to me. Plus, the fact there were no one beds would actually ring more alarm bells suggesting they're not in demand at all.

Did you have a survey? Are you sure it's freehold? Standard construction? Nothing alarming being built nearby?

Not got a large garden has it?

Good luck, let us know how it goes!

csgohan4

OP you need to treat a BTL as with any business, overheads and income and tax


here's when it goes wrong, can you handle it?
https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs

buglawton

I'd say that BTL suits several different profiles of investor.

1. Government ministers who can buy a batch of over 6 BTLs from a Conservative party sponsor, buying over 6 avoids paying the extra 3% Stamp Duty.

2. Medium to high net worth individuals living in countries with poor rule of law. They urgently need to park wealth in liberal countries with strong rule of law and good wealth protection rights.

3. People who want to pass properties onto their children. ROI won't be the only motive and can subsidise the situation.

4. People who enjoy the challenge of managing the DIY and tradesmen involved in running BTLs, and even the process of finding and managing their tenants. Who at the same time don't trust the share market as an investment, because it's a lot of overpaid CEOs managing the investment.

Decide if you fit nicely into one of these slots.

tom9980

I would lay money the op didn't do a side by side comparison in a spreadsheet of the various options available. I fear that their idea of research was looking at rightmove for comparison and running a few fag packet numbers over a weekend cuppa and cake.

It might work out they may be lucky but I wouldn't call it a smart way to start a business or investment.

Teamocil

I'd bet that with their new found cash they outbid people who actually wanted a secure place to live.

bytheseas

hazyjo wrote: »

Seeing your market as older or disabled tenants sounds very limiting to me. Plus, the fact there were no one beds would actually ring more alarm bells suggesting they're not in demand at all.

Did you have a survey? Are you sure it's freehold? Standard construction? Nothing alarming being built nearby?

Not got a large garden has it?

Good luck, let us know how it goes!

Well that's probably the best suited option. But certainly not the only market. Literally 5 minute drive to the biggest business park in the city in one direction. City centre a 10 minute drive in the other direction. So could be of mass appeal to many people. That was just me thinking of who would become a long term tenant.

No, I didn't get a survey (slaps hand) Yeah, I have confirmed that it's freehold with them. Standard construction, brick build terrace cottage. There's a care home under construction probably 4 streets away and a new executive house estate about a mile up the road. But nothing else.

No garden, just a small yard to the rear.

Thank you. I will do.

csgohan4 wrote: »

OP you need to treat a BTL as with any business, overheads and income and tax


here's when it goes wrong, can you handle it?
https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs

Yeah, that's scary. Obviously. luckily I'm in a position where I wouldn't have the mortgage to pay and still work full time. So yeah it would be a horrible situation to be in. But it wouldn't be the end of the world.

buglawton wrote: »

I'd say that BTL suits several different profiles of investor.

1. Government ministers who can buy a batch of over 6 BTLs from a Conservative party sponsor, buying over 6 avoids paying the extra 3% Stamp Duty.

2. Medium to high net worth individuals living in countries with poor rule of law. They urgently need to park wealth in liberal countries with strong rule of law and good wealth protection rights.

3. People who want to pass properties onto their children. ROI won't be the only motive and can subsidise the situation.

4. People who enjoy the challenge of managing the DIY and tradesmen involved in running BTLs, and even the process of finding and managing their tenants. Who at the same time don't trust the share market as an investment, because it's a lot of overpaid CEOs managing the investment.

Decide if you fit nicely into one of these slots.

I would genuinely say I fit perfectly into both 3 and 4.

tom9980 wrote: »

I would lay money the op didn't do a side by side comparison in a spreadsheet of the various options available. I fear that their idea of research was looking at rightmove for comparison and running a few fag packet numbers over a weekend cuppa and cake.

It might work out they may be lucky but I wouldn't call it a smart way to start a business or investment.

No, I didn't. I went with my gut. I viewed probably 10 properties. Most of which required far too much work/cash than I have the time for. The only ones that didn't were little leasehold flats, which didn't excite me too much.

There's many more on the market within my budget but in pretty bad areas. I picked a property that needs work but mainly cosmetic in an area which I know is nice (walk my dog through the street on the way to the beach 2-3 times a week)
The reason it's so cheap is because it's tiny. It's genuinely the smallest property I've ever been in.

Teamocil wrote: »

I'd bet that with their new found cash they outbid people who actually wanted a secure place to live.

Not really relevant though is it?