Help & advice requested for potential buying to lets.

Wulfrune

Dear good people of money saving expert forums, my wife and I request your help if you can offer it.

I'm about to reach 60 years old and because of a motorbike accident, it looks like I'm going to be taking early retirement because the accident left me disabled and not really able to work as well as I did.  The upside to this is that I have been paying substantially into a good pension fund for the last 22 years and it's going to give me tax-free lump sum of a £100,000, couple this with the compensation from my accident and this could add up to a grand total of £300,000.

What my wife and I would like to potentially consider doing is to enter into the "buy to let" market.  We are toying with the idea of buying several properties in some of the cheaper parts of England and hopefully getting them into a position where they could be rented out and helping us with an income into retirement.

Herein lies my problem, I am new to this and I really don't know where to start, I don't know the pitfalls , the benefits or really anything pertaining to this, this is why I am here to ask you now, can someone offer us any advice or websites we can visit? Or anything for that matter that you may feel useful would be greatly appreciated by us both.

Kindest regards

Wulfrune

[Deleted User]

Wulfrune said:

Dear good people of money saving expert forums, my wife and I request your help if you can offer it.

I'm about to reach 60 years old and because of a motorbike accident, it looks like I'm going to be taking early retirement because the accident left me disabled and not really able to work as well as I did.  The upside to this is that I have been paying substantially into a good pension fund for the last 22 years and it's going to give me tax-free lump sum of a £100,000, couple this with the compensation from my accident and this could add up to a grand total of £300,000.

What my wife and I would like to potentially consider doing is to enter into the "buy to let" market.  We are toying with the idea of buying several properties in some of the cheaper parts of England and hopefully getting them into a position where they could be rented out and helping us with an income into retirement.

Herein lies my problem, I am new to this and I really don't know where to start, I don't know the pitfalls , the benefits or really anything pertaining to this, this is why I am here to ask you now, can someone offer us any advice or websites we can visit? Or anything for that matter that you may feel useful would be greatly appreciated by us both.

Kindest regards

Wulfrune

How cheap is cheap?  Who is your target tenant?  How will you manage the lets, by yourself or using an agent?  Are you planning to buy the properties outright or with mortgages?  How does BTL stack up against other investment vehicles? 

JayRitchie

Do you have any particular skills that might make you more successful than average? For example are you skilled in any of the building trades? Do you know the areas particularly well?

Fosterdog

Getting into rentals is not the easy money it once was, regulations are changing all the time and where some landlords used to just see it as a cash cow there are now minimum criteria and conditions that properties have to meet to allow them to be let out.

Some pitfalls of your idea would be
Cost of renovation, cheap houses are cheap for a reason and something that looks like it just needs a lick of paint could end up needing major structural repairs, buying a fix it up house will cost thousands on top of the purchase price to bring up to standard, even more if you are not doing any of the work yourself.
Agent costs if you are not self managing (you need to know the ins and outs of rentals to do this)
Ongoing maintenance costs, you could buy 6 houses and all of them need major works like a new roof within a year of each other, even without major repairs there's the general maintenance to keep the property up to a liveable standard.
Void periods when there are no tenants and either you're struggling to get new ones or you are carrying out maintenance there is no money coming in.
Eviction costs if you need to get a tenant out, even following all of the correct procedures this can take 6 months and the rent might be being paid in that time.
Work between tenants, the costs of new flooring, redecoration and putting right general wear and tear before it is ready for new tenants.

Im sure there are more that others can think of but that list alone makes renting not worth worth the time and financial investment for me. The number of years it would take you to even break even on your investment makes it a poor financial decision.

csgohan4

putting all your money into one investment is risky, tenants can and will not pay rent and trash the house,repair costs, e.t.c

As with any business, what is your business plan, overheads, profit e.t.c?

greatcrested

Get yourself a (free) bookon BTL from your local library and do a lot of reading & research.

But also consider the alternatives. Investments are far more liquid, far less time-consuming, and allow far more diversification.

yksi

Rental income is generally quite poor compared with other investments. For some very simple maths - the basic rule of thumb is that anything you charge in rent, you'll lose half (tax, upkeep, repairs, and paying someone to manage them for you). You don't want to manage them yourself unless you want a full-time job, trust me on that.

There seems to be a perpetual myth that BTL rental income is easy money. It's not anymore and it doesn't stack up against better investments. Property investment can POTENTIALLY be something to think about if you are more focussed on the capital gain of the properties themselves - but this isn't BTL, it's property development and flipping, and you can't "make money" out of flipping if you sit on the property and let it out.

Incidentally, most property investors would caution you against doing anything at all until we see what COVID-19 does to the economy and housing market in general. Put it into a short-term low-risk investment and sit tight for a few months. There will probably be problems in the rental market with a lot of tenants losing jobs and defaulting on their rents, which ends up pushing rental prices down (and profits down).

shinytop

Setting aside the financial issues, do you want to retire or not?  Because with several BTLs, you won't be retired, you'll be self employed running a property lettings business.  As well as having the financial side to worry about, you'll also have several families dependent on you for their homes.  That could end up being a lot of work, worry and stress.  I used to have one BTL and that was one too many for me.  I'll happily admit I just wasn't cut out for it.  Make sure you are if you go ahead.