Should we invest in buy to let?

palford

Hi, we have around £100,000 to invest and don’t want to keep it in the bank for obvious reasons. We’re thinking about investing in a buy to let property in London. We saw one at £365,000 which would mean borrowing a lot possibly using our existing home as collateral to raise the funds. With an interest only mortgage and a good rental income (the current property has an HMO license) we could clear around around £1,000 per month but there’d be agency fees and other expenses. We’d also be partly banking on the value of the property increasing. There are other options we’re considering - buying a local less expensive buy to let, pension, ISAs, invest in commercial property through a property syndicate. Would love to hear your thoughts.

MaryNB

How much have you looked into what being a landlord entails? If you get anything wrong you'll find it very difficult to get the tenants out if you want the property back. Can you afford the mortgage if they stop paying rent? 

You can assign tasks to a letting agency but you cannot assign responsibility. If any legislation is missed you will be held responsible. 

dimbo61

Do the figures stack up ?
Are you both higher rate tax payers ?
Would it be better to buy in a Limited company ?
Does this property have a good yield.
Condition, location, local HMO market ?
Students or professionals ?
Housing benefits or posh expensive bedsits/apartments ?
HMO Licence, EPC, EICR, GSC, Fire safety, PAT testing, Right to rent, how to rent , room size, fit for habitation, good homes standards, etc etc 
Would you be better putting funds into Pensions, LISA stocks and shares, ISA,s ????

palford

Hi thanks for the replies. I agree there’s an ethical component which is part of our consideration. Also thanks for the reply with practical advice about ability to pay mortgage if not let. 

Slithery

[DELETED BY FORUM TEAM]

There's a massive shortage of rentals and HMO's in my area. Where do you suggest that all the people that choose to rent live if all the properties are bought by owner-occupiers.

We need more houses being built of all types.

dimbo61

Do your research very carefully.
If you are looking at a number of self contained bedsits many councils are now trying to change the Council tax from one large buildings with say council tax band E/F or G to individual " flats " with there own council tax of A or B 

Thrugelmir

One thing to have a £100,000 to invest. Another to leverage up with debt against a backdrop of rising interest rates and hold an illiquid asset. Crunch the numbers in detail. Doing nothing is sometimes the better option. Rather than letting the money burn a hole in your pocket. 

3card

Just my thoughts as a private landlord

I wouldnt want to borrow money to buy a property to let out because you can never guarantee that rent will be paid.
We have a problem tenant at the moment thats not paid and rent since December and if i had got a mortgage this would cause problems.

Just my penny's worth

canaldumidi

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

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

Post 9: Letting agents: how should a landlord select or sack?

All from the stickie:

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

Woolsery

Farm land has never fallen much if at all in downturns and it's usually possible to let acreage to someone with a financial interest in caring for it.  If you don't believe me, ask Bill Gates!

[Deleted User]

palford said:

Hi thanks for the replies. I agree there’s an ethical component which is part of our consideration. Also thanks for the reply with practical advice about ability to pay mortgage if not let. 

The only ethical component is that it's unethical.