buying cheap flats to rent out - cos my friends are doing it too

spencer999

My credit rating has shot up lately (468 against national average of 414) and I'm thinking of dipping toes slightly further into renting out. We have a mortgage of about £98,000 on our house and we have a flat rented out mainly because we had no choice as it's in negative equity. That's in my missis' name though.

That flat was bought as a new build about ten years ago and the price immediately plummeted, so they are attractive buys now. The service charge is over £2000 though, and the flat we rent out there doesn't make a profit. BUT as they are so cheap now it does look like an attractive prospect to buy another,
A lot of my friends are doing it and it feels like I would be joining a trend just before it goes sour in some way - or is there a never ending stream of people desperate to rent? One friend has ten houses, and says that the poor economy and growing population means that there is indeed a guaranteed market. Hmmm

An agent looks after our flat and we never have to think about it from one month to the next.

Thanks kids

spadoosh

You dont make any money on a flat you rent out but you want to buy another of the same flats to rent out?

Before all that it doesnt sound like you have a lot of capital, or there is at least a distinct lack of mentioning any capital.

With all due respect, it doesnt sound like youd make a particularly good landlord. Maybe think about putting your money in a savings account where it would return more than you will likely get from being a landlord based off previous returns.

G_M

spencer999 wrote: »

An agent looks after our flat and we never have to think about it from one month to the next.

Thanks kids

Some agents are good. Some are not. Likewise tenants. Often even the poor agents appear OK if the tenants are good, stay long term, and all the agent has to for their commission is cream off the rent regularly. You've been lucky.


Not aways like that though. It's when issues arise you findout what the agent is like.


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


Remember ultimately allegallibility stops with you, so even with an agent you need to kow what's going on.

* New landlords (1):advice & information :see links in next post

* New landlords (2): Essential links for further information


As for your question? Trends can be risky! If you get in at the start of a trend - great (so long as it does become a trend!). The letting arena has got tougher with lots of changes to tenancy law, and tax, so get up to speed on that.


And imagine General Election leading to a Labour government: JC is not that sympathetic to LLs and all sorts of leglislation could come in.......

tom9980

Everything you have said tells me one thing, you ain't cut out for this kid.

Crashy_Time

spencer999 wrote: »

My credit rating has shot up lately (468 against national average of 414) and I'm thinking of dipping toes slightly further into renting out. We have a mortgage of about £98,000 on our house and we have a flat rented out mainly because we had no choice as it's in negative equity. That's in my missis' name though.

That flat was bought as a new build about ten years ago and the price immediately plummeted, so they are attractive buys now. The service charge is over £2000 though, and the flat we rent out there doesn't make a profit. BUT as they are so cheap now it does look like an attractive prospect to buy another,
A lot of my friends are doing it and it feels like I would be joining a trend just before it goes sour in some way - or is there a never ending stream of people desperate to rent? One friend has ten houses, and says that the poor economy and growing population means that there is indeed a guaranteed market. Hmmm

An agent looks after our flat and we never have to think about it from one month to the next.

Thanks kids

Poor economy + Brexit will mean less people wanting to rent.

AnotherJoe

There's a very old joke about a business that makes a loss on each widget but plans to make it up by selling in volume. I never thought I'd see someone in real life actually set out to do it.

Crashy_Time

The post is obviously a wind up, but does underline the attitude many of the public had towards property until recently.

ACG

He is looking to purchase a property which now costs significantly less than the one he currently owns. Surely you can see the difference?

Buying something that costs £10 a month and renting it out at £10 does not make sense. Buying something that costs £5 a month and renting it out for £10 can make sense...

That all being said, I have been a landlord and would never do it again. I would like to think I was a decent landlord and tried my best to vet tenants. People just do not give a crap about your belongings. They know you wont chase them for the money because you may not be able to find them and even if you do, it is not worth it.

The law is on the side of whoever knows how to play the system the best (which is either dodgy landlords or dodgy tenants).

HampshireH

Are the flats being let or are there a lot of for rent signs out side?

Would the 2nd flat turn a profit?

Could you get another mortgage?

Also did you resolve the mould issue in the flat your partner owns?

00ec25

spencer999 wrote: »

Thanks kids

do you want sensible adult advice, or playground tattle?

spencer999

sorry if I misled some folks, allow me to clarify:

My mortgage is about £98,000, house is worth about £170,000, I've got about £30,000 liquid savings. I'm free of a vindictive divorce which has boosted my credit score.

The rented out flat doesn't make a profit because the mortgage is too high. However these flats are now selling for less than half of what my OH paid for it. She paid about £110,000 and they are going for 45 to 50 now. So it might make sense in that case, as the rent she is currently getting is 495 minus 10% agent fee. As I said though the service charge is high IMO, c. £2000 pa.

There are other blocks around that might have lower service charges and demand is high, there is a huge council house waiting list and families are looking for rented all the time.

ALSO - the humidity problem in the flat was just bad ventilation. Once we kept the air moving everything was "bon".

The final clincher might indeed be if we live under the Corbyn Terror. Being a landlord might get a lot more difficult. So maybe I'll look for something else....

All input gratefully received y'all