Thinking of Buy to Let

Daft_Pegasus

mikeopvc wrote: »

Thanks BTman but I can't help thinking that there is a hint of sarcasm in your quote, forgive me if I'm wrong. Perhaps an explanation of why you think there's never been a better time to get into BTL, especially since the final statement in the recent Panorama programme http://news.bbc.co.uk/player/nol/newsid_7220000/newsid_7228100/7228134.stm?bw=bb&mp=wm&news=1&bbcws=1 was that some experts are predicting a 35% price drop in properties in the next 5 years

Have you not answered your own question here?

Experts believe that house prices are going to fall but you want to get an interest only mortgage and barely enough rent to cover the mortgage.

Whilst the experts could be wrong the chances are that house prices will not rise much in the next 3-5 years. And you'd be taking on a lot of risk (no tennants) and hassle (tennants) for little or no gain.

Unless this is really a 10+ year plan I'd be very, very cautious if I were you.

As for tips:

• When viewing houses remember that it's a buisness and that what you want from a property is to maximise your profit (not a home for you).
• Don't be afraid to make a very low offer and walk away.
• Research the area and decide why people would want to rent there
• It's worth getting an agent to find your first tennant for you. They will have proper contracts, etc that you can then copy for future tennants you find yourselves.
• If there are any large businesses/government agencies close to your property contact them as they may be interested in it as a corporate let.

The biggest tip is to research, research and do more research to decide if Buy-To-Let is the best investment vehicle for you at this time (credit crunch, falling house prices, etc)

Sorry if I come across as pessimistic:D

mikeopvc

Thanks Daft Pegasus but I was merely questioning BTmans quote of "never been a better time to get into the BTL market" as he didn't explain why he thought this. I do agree with you however and am also aware that for the next 3-5 years I wouldn't make any money,( not sure if 35% decrease is likely though ) This for me is a 25 year term as I am hoping to get a decent pension out of BTL and I'm pretty confident that in this time I would see a good return.

Sam911

I think you will find he was taking the pi**

sham63

Don't click on Freddribbles link without donning a pair of sunglasses.

clutton_2

"" There are nearly 2,500 1 and 2 bed flats for sale here in Bournemouth so plenty to choose from."" - hence rents will plummet ....

DONT buy a newbuild whatever you do

Join National Landlords association; read https://www.singingpig.co.uk from front to back, and read read read and do more reading (excellent book lists on singing pig also)

learn about finance - learn more about finance and finally learn alllllll about finance

dunstonh

It is worth noting that a mortgaged buy to let is typically higher risk than a with profits endowment (ghastly things) and investing on the stockmarket without borrowing.

The risk is reduced the less you borrow and the less reliant you are on the asset/investment (The rental property). The more you gear (borrow) the higher the risk.

Unless you can get a rental yield in excess of 6% then you have to ask yourself what point there is of doing it. Another question to ask yourself is whether you would borrow money to invest in conventional investments that yield 8-9%. If not, then why you are considering borrowing money to invest in an asset that yields typically less than 5% at the moment?

fc123

DGJsaver wrote: »

Rent at £1300 per month on a 200k property ?

He`ll be lucky:eek:

Perhaps N Wales is different?
In London and SE the sums are not the same.
I rent out house in London (value £350 - £450 k who knows the true value now??? @ £1000pcm less 12.5 % agents fees + vat.

I pay £1200pcm rent on derelict 1 bed cottage (value £450k- £600k...again who knows the real worth??).

The sums work for us as our mortgage is a lot less than value and our landlord owns property outright.

I am NO expert but I would say BTL supported by MEW = NOT a good move right now....still reeling from watching repo auction today.

The cost of the MEW (or lost interest on savings used as a deposit) plus the interest on the mortgage should be taken as a whole too.

Only my humble opinion as a layman BTW.

Microstar_2

I now own (outright) a couple of properties that are let out but I wouldn't (at the moment) borrow money to BTL.
Now is definitely NOT the time to enter BTL. Park your money somewhere safe and low-risk for the next year or two and sit things out. Its going to be a bumpy ride and a good number of overstretched BTL'ers will be bailing out in the coming months.

Zebedee69

Is there something else you could invest your money in for a bit. Like Microstar said its going to be a bumpy ride for a year or two.

teabelly

If you are going to do this then talk to a good mortgage broker. Good deals around now are Birmingham Midshires with their 5.09% fixed rate and 5.09% discount tracker. They are very quick to deal with.

If you are near the wrexham area of north wales then you should be ok to rent properties out as long as you pick somewhere decent and not over price it. £350-600pcm is the sweet spot of affordability for rents in a lot of areas. If you go above that you tend to reduce your potential pool of renters. New builds are a waste of money. Find older flats in nice developments or small houses in quieter residential streets. Holiday lets are also another possibility in that area but do your research first. Bigger houses can work with multi lets but you have to be near a university or hospital which makes just north of wrexham quite good or places near Newi. Again places around Bangor to the west would also be good places to look. Old seaside towns up and down the coast might be somewhere to find an old guest house and turn it into good student accommodation if the house has easy access to the A55 or a rail station/bus station.

You can get capital appreciation if you buy smart and don't over pay. Stale properties that have been hanging around are always going after as often the seller will drop a decent chunk off just to get rid of it. Keep an eye on local papers and how much development and new employers are coming into an area. Regeneration money is also worth following around. Research, research, research!