Advice for buying 2 bed apartment

krish123

Evening all,
I have recently been looking at the option of buying a flat/apartment and came across 2 bed apartments that are soon to be built in my town starting at 165k. It is a 2 minute walk to the train station and 5 minute walk to town.
My thinking is I could purchase a 2 bed (there are also 1 bed one’s available) and initially rent this out. 

As I currently live at home my idea was I would then use my surplus money to overpay the mortgage. I could perhaps overpay by 200-300 pounds a month, with the option in the future of my moving into one of the bedrooms and renting out the other.
currently I can put down a 30k deposit but have the option of putting down a further 20-30k if necessary. 

Are my plans robust and is there anything I need to be aware of before exploring this?
I would like to overpay the mortgage so I have one day a fully paid off asset but also eliminating risk of not having tenants etc.
any Input would be much appreciated.

dimbo61

Robust plans.
You need a BTL mortgage if your buying with the intention of renting the flat out.
So you need 25% deposit and most BTL lenders like you to all ready own your own home.
So problem number one.
Most new builds like most new cars lose money so your paying for the shinny new kitchen and bathroom.
If you look on " spareroom " you can find thousands of hopeful young people wanting to rent a city centre apartment ! ( Posh word for a flat ) and it must have a balcony, ensuite bedroom, broadband and an owner who likes to clean the property all day.
Maybe a complex with a gym and heated indoor swimming pool.
They are willing to pay £400/500 a month and that includes the bills !
You would be a Landlord if you could buy a flat and that comes with responsibility.
With the current pandemic and lending criteria from most Lenders you won't get past point one 

Slithery

For a BtL mortgage you need to already own your own property and have a 25% deposit.

NinjaTune

Just move into the property and take in a lodger. 

dimbo61

You need to do your research about this development.
Will it come with a parking space ?
What are the management charges?
It will be leasehold 
How much can the ground rent be increased each year.
What will the building be made of ! Plastic cladding ☹️
EPC rating, size of bedrooms, number of bathrooms 
What floor, lifts and cost to maintain

NameUnavailable

Wait a while. The market is going to take a downturn soon and the developer may drop their asking prices or offer incentives, or possibly even stall the whole project.

krish123

dimbo61 said:

Robust plans.
You need a BTL mortgage if your buying with the intention of renting the flat out.
So you need 25% deposit and most BTL lenders like you to all ready own your own home.
So problem number one.
Most new builds like most new cars lose money so your paying for the shinny new kitchen and bathroom.
If you look on " spareroom " you can find thousands of hopeful young people wanting to rent a city centre apartment ! ( Posh word for a flat ) and it must have a balcony, ensuite bedroom, broadband and an owner who likes to clean the property all day.
Maybe a complex with a gym and heated indoor swimming pool.
They are willing to pay £400/500 a month and that includes the bills !
You would be a Landlord if you could buy a flat and that comes with responsibility.
With the current pandemic and lending criteria from most Lenders you won't get past point one 

Seems ridiculous they expect you to already own a property, that’s what I’m trying to achieve if they let me! 

I looked at other 2 bed flats are renting for around the same area and it seems to be between £650_ £800.
But as you say how will I get past point 1! 

krish123

NinjaTune said:

Just move into the property and take in a lodger. 

That’s the other option yes! 

Are you well protected taking in a lodger though? Can you evict them etc if there are problems.
obviously this route means I won’t be able to over pay the mortgage as I will only be getting rent for one room , which is likely to be around £300-400. 

krish123

dimbo61 said:

You need to do your research about this development.
Will it come with a parking space ?
What are the management charges?
It will be leasehold 
How much can the ground rent be increased each year.
What will the building be made of ! Plastic cladding ☹️
EPC rating, size of bedrooms, number of bathrooms 
What floor, lifts and cost to maintain

Good comments, I need to ring them up and find out the details, but I know there is car parking space. 125 year lease. 

krish123

NameUnavailable said:

Wait a while. The market is going to take a downturn soon and the developer may drop their asking prices or offer incentives, or possibly even stall the whole project.

True,
i will find out details of when they are planning to build etc. 

There are also one bedroom flats starting at 115k I’m thinking whether that may be a better option and using residential mortgage, but it will no longer be the investment I planned.

hazyjo

You'll need to check the lease. New builds sometimes come with clauses saying they can't be rented out (some will allow but with permission).

Moot point though anyway (see above).