First time buy to let/ investment - advice please

Angela_D_3

I have a buy to let im planning to sell in 15 years time.  Thats the time frames you should be looking at really.  

What if you need to sell thd BTL and its worth £180,000 at the time 

AdrianC

caligulablushed said:

What sort of timescale would make it feasible in your view?

I repeat - if you decide you need your money, in order to buy your home, it may take you several years to get it... from the time you decide.
12mo fixed period tenancy and/or (currently) 6mo s21 notice.
Currently north of a year queue for possession hearings. Assuming the notice was correctly issued.
Then market it and, once you have an offer, go through the conveyancing.

I would potentially be able to manage any property myself, as I'm dividing my time between Manchester and London.

The rental, presumably, in MCR?

You've just arrived in London. It's late at night.
Your phone rings. It's your tenant. They may not be entirely sober.
There's water all over the floor, the electrics have just gone out, because the boiler's gone bang. At least, that's what they think's happened - but they can't be sure, because they've locked themselves out...

Who do you call...? What do you do...?

It's not just the rental earnings I'm considering though

It should be. Because that's the only number you can even remotely predict. What are you looking at net? 2-3% post-tax, absolute maximum?

I'm also wondering if house prices will rise faster than inflation

And if they don't? If they fall?

savings interest rates

There are plenty of other investments than set-rate bank accounts.
Far more liquid than property, far lower risk, potentially higher return, and a damn sight more predictable than gambling on future property prices.

Oh, and don't forget the substantial dealing costs - the thousands of pounds in purchase costs and taxes, then the selling costs. How much does the price have to rise for you to break even on those?

If you think property prices are a good investment for the short-term future, then invest in a property-based fund, as part of a properly balanced portfolio that doesn't leave you exposed to the vagaries of a single tiny slice of a single market.

caligulablushed

Having someone to deal with emergency maintenance issues in Manchester wouldn't be a big problem, but whether house prices would rise is something to look at more, certainly. Whenever I've looked over the last few years prices have always risen and I've regretted not buying something earlier. My concern is that if this continues, what I'll be able to eventually afford will continue to decrease. The reduced liquidity is also important of course. One option was to buy something I'd be happy to live in myself if necessary, in case there were selling issues. How easy is it change a btl mortgage to residential and vice versa? Asking this just in case it's already known, I don't expect anyone to do research for me!

On the other points - being a first time buyer seems to come with fewer costs, particularly if a purchase is outright. This thread was intended to weigh up the maths and whether they worked.

I clearly need to look at how common it is to have to issue eviction proceedings. Some options I've considered are letting to friends or HMO properties, possibly with student tenants already in situ, as the term they would need the property for would be more clearly defined. 

Angela_D_3

The question for me would be if you cant sell.  Nobody wants the house,  even at a loss,  does that affect your life significantly? 

Angela_D_3

Letting to friend and family is such a minefield banks dont allow it by the way.  If your friend stops paying rent are you really going to evict them ? 

caligulablushed

I think with the friend scenario it would be if I purchased outright - I know a couple looking for somewhere to rent right now. I can see how mixing friendship with money wouldn't necessarily be ideal, so worth considering fully, but I don't know how the bank would know, in the event of a mortgage purchase. 

Not being able to sell would cause a problem, yes, which is why one option i've considered was buying a house i'd be happy to live in if it came down to it. The one I viewed last week is opposite a park in an outstanding school ofsted catchment so I do think it would sell easily, though obviously impossible to say for sure whether that would be at a profit given it needs a few repairs. It would get less rent than a student house but potentially being able to live in it myself would mean I could wait to sell if the market deteriorated. 

MaryNB

caligulablushed said:

I think with the friend scenario it would be if I purchased outright - I know a couple looking for somewhere to rent right now. I can see how mixing friendship with money wouldn't necessarily be ideal, so worth considering fully, but I don't know how the bank would know, in the event of a mortgage purchase. 

Not being able to sell would cause a problem, yes, which is why one option i've considered was buying a house i'd be happy to live in if it came down to it. The one I viewed last week is opposite a park in an outstanding school ofsted catchment so I do think it would sell easily, though obviously impossible to say for sure whether that would be at a profit given it needs a few repairs. It would get less rent than a student house but potentially being able to live in it myself would mean I could wait to sell if the market deteriorated. 

If you do buy with cash and let out to friends may sure you do a full tenancy agreement to mitigate any issues that may arise. Treat them like strangers from a legal perspective. 

root

MaryNB said:

caligulablushed said:

I think with the friend scenario it would be if I purchased outright - I know a couple looking for somewhere to rent right now. I can see how mixing friendship with money wouldn't necessarily be ideal, so worth considering fully, but I don't know how the bank would know, in the event of a mortgage purchase. 

Not being able to sell would cause a problem, yes, which is why one option i've considered was buying a house i'd be happy to live in if it came down to it. The one I viewed last week is opposite a park in an outstanding school ofsted catchment so I do think it would sell easily, though obviously impossible to say for sure whether that would be at a profit given it needs a few repairs. It would get less rent than a student house but potentially being able to live in it myself would mean I could wait to sell if the market deteriorated. 

If you do buy with cash and let out to friends may sure you do a full tenancy agreement to mitigate any issues that may arise. Treat them like strangers from a legal perspective. 

I think you would have to think extremely hard about letting to friends in the first place, and accept that you could very easily lose friendships over it. Tenancy agreement or not.

rik111

You do realise that property can go down in value and current rental yields are the lowest they have ever been and property at the highest price level it has ever been.
I cant think if a worse time for a shirt term rental investment.....

steampowered

Buy to let would be an awful, awful idea for someone in your situation:

- You would forfeit first time buyer stamp duty relief. That's £10k down the drain right there.
- You would pay mortgage fees and conveyancing costs when buying.
- You would pay estate agent fees and conveyancing costs when selling.
- You would pay income tax on the rent you receive.
- You would pay letting agent fees to manage it for you.
- You have no guarantee that you will be able to sell the property when you want to buy a property of your own. Tenant's don't have to leave just because you ask them nicely.
- You cannot claim the government bonus on the HTB ISA if you intend to let out the property.


Don't do it. When you add up all of the costs involved, you will lose money doing this. Especially if you want to buy a property of your own in 2022 / 2023.

BTL is only really suitable as a much longer term investment. If you want to invest, purchase a normal investment. The stock markets generate better returns than property, but without all of the costs associated with buying and selling. A stock market tracker fund would be a good place to start.

Also, why are you assuming that a joint mortgage is impossible? A joint mortgage may well be possible, particularly if your boyfriend's CCJ is marked as "satisfied". Go and speak to a mortgage broker.