Thinking of buying some property for letting...advice please.

Rjhsteel

What I'm getting from the respondents so far is the buy to let market isn't worth investing in......

Wonder how others make a success out of it then....mmmmmmm.

00ec25

Rjhsteel wrote: »

Wonder how others make a success out of it then....mmmmmmm.

they bought at a different time to you and they know a LOT more about how the finances work than you do

go and do more reading

steampowered

Rjhsteel wrote: »

And income tax cant be factored in until any expenses eg office, travel etc are eventually worked out so an actual figure isn't possible to work out.

I don't think you can claim office/travel expenses for a buy-to-let property. The rules for BTL properties are a bit different to the rules for self-employed tradesmen.

Rjhsteel wrote: »

What I'm getting from the respondents so far is the buy to let market isn't worth investing in......

Buy-to-let was much more lucrative the past, in no small part due to rising house prices and a favourable tax regime.

That performance is unlikely to be repeated for those who are investing now.

It is also worth noting that your strategy is a specific type of BTL. You are investing in very cheap properties, using 75% debt and only 25% your own savings.

That's the riskiest possible type of BTL investment. You are not going to get quality tenants at the bottom end of the market, so your risk of property damage or tenants who don't pay rent is high, and using 75% debt is high risk (since you are very exposed to interest rates and remortgage fees). It could work out fine if you luck out with the tenants but it could also be a complete disaster.

You are likely to be much better off investing into a stocks & shares ISA ... average return on stocks & shares is about 6-8% a year, no tax on the profits, and no letting agent expenses or tenant problems.

AdrianC

Rjhsteel wrote: »

The value of the property is 60k.
So eventually would remortgage so £15k deposit. £45k on the mortgage.

Then your repayments are going to be more than £75/mo. You won't find a 2% APR 75% LtV BtL interest-only mortgage.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

Mutton_Geoff

Rjhsteel wrote: »

Rent £400x12 =£4800
Costs

Interest only mortgage £75x12 £900
Property management 10% £480
Repairs 10% £480
Voids £400
Cancel tax £580

Total after costs £1960

Profit £1960 divided by amount invested £17500

11.2%

Don't you mean council tax? Surely your tenant pays that?


You forgot to factor in your own money to the sums, that still needs to be earning it's keep. You'd get 1.45% from instant access savings or 2% for term deposit. Or over the long term 5-6% on investments.


I've been a BTL landlord in the past but no longer. I'd say you're a bit late to the party. It's human nature for people to embellish their own decisions a little, have you drilled down into your BIL property investments and found out what he's really earning after all costs and tax? I bet it's not worth the hassle for such an illiquid asset.

Tiglet2

I sold my BTL property a year ago, having had it since 2009. It was in a good location, near to a mainline station and shops and I was lucky to have had good tenants. It was a good source of income over the 10 years. Once it was sold, I invested the sales proceeds into my Pension and a Stocks and Shares ISA (plus gifted similar amounts to my children for their first step on the property ladder) and am now earning a very similar figure to the profit I made from my BTL. What I am not getting is the increase in value of the property (if property prices go up obviously!).

There are associated costs with BTL (buildings insurance/annual gas service/letting agent fees, income tax, mortgage costs), and the profit made is not as much as you think it would be when you take off those costs, together with any maintenance costs that crop up over the year. I made a good profit, but the property was mortgage free. I don't regret selling up.

Crashy_Time

Rjhsteel wrote: »

What I'm getting from the respondents so far is the buy to let market isn't worth investing in......

Wonder how others make a success out of it then....mmmmmmm.

Exactly, there is a secret sauce success recipe for BTL out there somewhere, you just need to find it......

Rjhsteel

I apologise.

I’ve had a quick work out of figures and it doesn’t seem viable unfortunately. Unless I’m wrong, house prices haven’t changed much in N.Ireland in 10 years so even if prices went up 23% in 20 years and I had 10 properties, I’d still be better off paying off my current mortgage.

Say I bought 10 properties at £60k, £48700 in mortgages interest only x 10 £487500 outstanding after 20 years. Sell the properties at £700000 in total.(15% rise roughly)
After capital gains tax and paying off the mortgages I’m left with £203k. Which sounds good. Unfortunately I’ve sold my home. So would still be paying out in rent.

Have I miscalculated somewhere?

[Deleted User]

Here is my story. Slightly different to the usual.

I bought an investment property for my son. House was only a year old three storey townhouse - nice south east area. Had a fantastic tenant for 5 years over fixed term. A professional located via work. I used the profit I made to pay extra on the mortgage. I dont pay tax ( high tax free pension ) so had my whole personal allowance to use for rental income. I encouraged my young son to also save save save. House bought for £330,000 mortgage was £247500 and now about £220,000. Son managed to save £40,000 over that 5 years. He only needs a mortgage of £180k on a £400 k property. We are transferring it to him now. I’ll have capital gains but not too much as Ive not used much of my personal allowance this year and its only 18% for me. Never lived there so no reliefs

I doubt all lettings have success stories such as this tho

hazyjo

A good friend of mine has 7 BTLs and keeps banging on at us to do it and how she's raking it in. I am bloody sure she's missing something somewhere down the line that may come back to bite her on the backside. All (inc her own house) are on interest only mortgages. Have no idea what bank is letting her borrow all this money without paying anything back other than interest :think: