Buying a property for buy-to-let worth it?

housebuyer143

Ditzy_Mitzy said:

Worth it for one property?  No chance.  In five years' time, all things being equal, you'll have made £60,000 gross income.  Subtract from that £50,000 as that's the initial investment.  You've got £10,000.  Subtract from that £30,000 as that's the mortgage interest.  You've got -£20,000.  Subtract from that income tax, repairs, maintenance, insurance, legal fees for conveyancing and establishment of tenancy and God only knows what that you haven't accounted for.

Add nothing, because you've got an interest only mortgage and haven't done anything to reduce the capital sum borrowed.  You still only own a quarter of the house; the mortgager owns the rest.  

Most people rely on house price growth to make money, rather than rent. I made £50k in growth over 5 years. I don't think house prices are going to shoot up as fast though, so this is a risky strategy. Honestly, we got lucky buying at the right time and selling at the top of the market.

Stubod

..save yourself a load of heartache, hassle, pain and suffering and don't bother...(IMHO)

MEM62

Stubod said:

..save yourself a load of heartache, hassle, pain and suffering and don't bother...(IMHO)

Absolutely.  It is being well reported that accidental and small time landlords are leaving the market in droves.  There is a reason for it!  

rnj

Given the numbers I wouldn't take the risk. Interest rates are relatively high to what they were 2 years ago so...

after deductions:
Managed service (est. 12%)
Insurance (not much)
Repairs (est. 5-10%)
Tax (20% on profit before interest)
Interest (50-60% in this case and could rise).

You will barely make a profit, if any. You can save some money managing the tenancy yourself but you have to ensure to do it right or can get in a real mess and it just becomes a 2nd job then anyway. You'd have to reference check thoroughly, manage the bond payment, deal with legal issues if any, arrange repairs, do your landlord exam, fire safety/gas safety, EPC rating.

On the other hand the price of the house may go up and probably will long term but you need cash in your pocket not equity.

Postik

I looked into it myself at one time.  As others pointed out, the returns are next to nothing at the end of it all based on the rent.  The reason I wanted to do it, is so that I would have an asset that is hopefully worth a lot more than it is now in 20-30 years time, which I could then sell.

Let's be honest if you did this 30 years ago and bought a house for £30k and now it's worth £250k then it has been a good return in the very long term.

[Deleted User]

Hopefully no fault evictions will be banned soon, so keep in mind you might have difficulty if you want to sell it but there are tenants living there and their rent is below market rate due to inflation or something.

housebuyer143

[Deleted User] said:

Hopefully no fault evictions will be banned soon, so keep in mind you might have difficulty if you want to sell it but there are tenants living there and their rent is below market rate due to inflation or something.

I don't think they will get rid of evictions for things like selling. They have tightened the law in Wales, but you are allowed to evict your tenants if you are selling the property. 
If they removed this right you would suddenly see the demise of the rental sector as most people would then have a secured tenancy like before ASTs came about and no landlord wants to be dealing with that.

topgearfan08

No.   Source, 20 year BTL landlord with multiple properties...

The glory days are gone.   Your figures are way off...

EPC
Electrical Checks
Gas Safety Checks
Legionnaires Test
Insurance
Accountants Fees
Generic Maintenance
Voids
Advertising
Deposit Protection
Professional Subscription (NRLA)
Agents Fees (if used)

Those are just off the top of my head, theres loads more.

Im currently going through an end of tenancy change after 3 years, and im 5 grand in. (carpets, decorating, some low priority  advisory electrical updates which came up in the checks, but not enough to fail it).  Let alone the loss of rent while this is all being done (nearly 2 months in)

What if it goes wrong and it's trashed, and you need to pay for a refit.  

All of this and your doing interest only, not paying down the capital.

BTL is for the long haul, and it's not that good anymore, especially if you're borrowing.   1 property, waste of time.  You need multiple properties to support the business when one or 2 go wrong at once, which they always tend to do! 

Legislations changing, the loss of Section 21 incoming, and the increased threat of rent controls, and the very Anti-Landlord Labour Party.

Theres a reason a lot of BTL landlords are getting out.

Whats your exit strategy too?  Capital gains tax is 28%, and the tax free allowance is on a multi year reduction, to next to nothing.

topgearfan08

[Deleted User] said:

Hopefully no fault evictions will be banned soon, so keep in mind you might have difficulty if you want to sell it but there are tenants living there and their rent is below market rate due to inflation or something.

some say hopefully...   Nobody ever evicts a tenant for 'no fault' theres usually a reason.  

All this will do is push up costs again indirectly for the tenant, as the landlord prices in more money to subsidise the increased risk of not getting their property back easily or cheaply.   Section 8 is not fit for purpose and can be abused. 

Zoe02

Some reviews R2R schemes.

I had a bad experience with Mears someone else messaged me about their bad experience (not got paid rent for over 5 months)


https://www.allagents.co.uk/mearsgroup.co.uk/

https://www.allagents.co.uk/southeastresidentials.co.uk/