Is there money to be made in renting?

aaryal

Hi,

I know the answer to this will be personal/different to everyone, but overall, is there money to be made in renting out your property?
I'm considering buying a new property and not sure if I should just sell my current house and cash in, or if I should keep my current property and become a landlord. 
I get so many mixed views - some say being a landlord is a huge hassle, and new types of costs such as covid taxes. 
Others say it's all part parcel and you can make a good amount.

If I do keep my current property and rent it out, does it impact the amount a lender will borrow me? So for example, if a lender will give me 5x salary, will me keeping my current property as buy to let mean they will only lend me 3x salary, for example?

What else do I need to know before going the landlord route? What pitfalls are there?

All thought much appreciated as this will be a big decision for me so let me just say thank you for the comments in advance

Pixie5740

aaryal said:

Hi,

I know the answer to this will be personal/different to everyone, but overall, is there money to be made in renting out your property?
I'm considering buying a new property and not sure if I should just sell my current house and cash in, or if I should keep my current property and become a landlord. 
I get so many mixed views - some say being a landlord is a huge hassle, and new types of costs such as covid taxes. 
Others say it's all part parcel and you can make a good amount.

If I do keep my current property and rent it out, does it impact the amount a lender will borrow me? So for example, if a lender will give me 5x salary, will me keeping my current property as buy to let mean they will only lend me 3x salary, for example?

What else do I need to know before going the landlord route? What pitfalls are there?

All thought much appreciated as this will be a big decision for me so let me just say thank you for the comments in advance

This topic comes up on the forum over and over again.  This thread is from just a few days ago.  There are many others if you search for them.

https://forums.moneysavingexpert.com/discussion/6302429/is-this-a-sensible-idea-letting-my-current-house-to-buy-another-looking-for-input

The glaringly obvious cost you are missing is the higher rate of SDLT on the purchase of your new home which will be an extra 3%.  Not an inconsiderable sum if you are looking to buy in Kent.

AdrianC

Is there money to be made? Yes.
Is there a shedload of money to be made? Not if you focus on income, rather than on potential for capital growth.
Is there money to be made if you have to borrow money to do so? Probably not, at best.

MaryNB

aaryal said:

What else do I need to know before going the landlord route? What pitfalls are there?

From the sticky thread at the top of this forum

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Some potential pitfalls -

• tenants don't pay rent and you lose months of rental income while trying to evict them
• tenants trash the property and !!!!!! the neighbours 
• tenants constantly ringing you to fix this that and the other
• you want to get the property back but you or your letting agent forgot to issue, for example, a gas safety cert so you find it near impossible to evict the tenants
• you or your letting agent forget to protect the deposit so have to pay 3x the deposit back to the tenants 

With regards to your BTL mortgage, for many lenders the rental income will need to be 125% to 145% of the monthly mortgage repayments and you'll need a deposit of about 25%.

user1977

MaryNB said:

aaryal said:

What else do I need to know before going the landlord route? What pitfalls are there?

• tenants trash the property and !!!!!! the neighbours

And sometimes they don't get on that well with the neighbours!

MaryNB

user1977 said:

MaryNB said:

aaryal said:

What else do I need to know before going the landlord route? What pitfalls are there?

• tenants trash the property and !!!!!! the neighbours

And sometimes they don't get on that well with the neighbours!

haha I forgot how sensitive MSE is to certain language

* trash the property and annoy the neighbours to a significant extent. 

lookstraightahead

Is there money to be made in any business / profession?

yes if you do it correctly, wholeheartedly, responsibly and knowledgeably.

no if you think you can just do it as a bit of a side income.

Your tenants (renters) are your customers. There is a plethora of information, including health and safety, which you must learn about. 

You need to have a business mind and you need to put yourself out. I wish every landlord had to study and get a qualification.

theartfullodger

aaryal said:

Is there money to be made in renting?

Yes at various times & in various circumstances by agents, tenants, lawyers, builders, mortgage lenders, auctioneers and insurers etc etc...

Not entirely convinced it is still possible for landlords.

My experience (since 2000) so far is most years I have made money - but not always!  If you don;t have the financial AND EMOTIONAL reserves to cope with e.g 7 months of no rent from the tenant-from-hell (or agent-from..) whilst you pay mortgage & legal fees and repair costs while to try to get them out and ditto unexpected LARGE repair bills, don;t go anywhere this minefield.

NEVER put all you eggs in one basket: Me, assets & income roughly split 33%/33%/33% between pensions, property, savings/shares etc. ANY asset may go up or down in real value (including money stashed under the bed).

Artful: Landlord since 2000.

Thrugelmir

At the very least you need to crunch the numbers in a detailed manner.  To see if the idea you have even has traction. 

[Deleted User]

You can make money, but you take on a lot of responsibility owning someone else's home.

It's also immoral as someone else could buy your house and pay much less on a mortgage than they will pay you in rent. There is a shortage of housing to live in and letting property makes it worse.

Slithery

[Deleted User] said:

It's also immoral as someone else could buy your house and pay much less on a mortgage than they will pay you in rent. There is a shortage of housing to live in and letting property makes it worse.

What about the people that choose to rent? Not everyone wants to own their own property.