First Time Buyer Buy to Let. Sensible?

tomS_4

I'm in the slightly weird position that I'm hoping to go and work abroad for a few years. However I'm worried that, with the way the housing market is going, if I don't buy a house now then by the time i get back it'll be even harder.

So I was thinking of maybe seeing if i can buy a house and let it out while I'm away (hopefully covering the mortgage as i'll be paying rent where i am - not worried about profit) so that I have the peace of mind of knowing I have my foot on the ladder and a decent investment back home.

I know NOTHING about buying a house, so if this isn't even remotely feasible i'd appreciate people telling me. (and why). Would rental cover mortgage, maintainance and management? Is there even a rental market out there.

If it is feasible, then is there anywhere that offers "first time buy to let" mortgages? First time buyer offers usually seem to be seperate to buy to let ones. Would renting to a load of students be a good way to get several rents on one property? Any other advice.

Or should I just invest money in something else and avoid the hassle? (no idea what)

greencat_2

tomS,

Your situation might vary - but there is growing evidence that house prices are going down in many parts of the country and that rental yields aren't as good as they used to be.

I would research your local area in detail before committing to anything - and as a first time buyer you are in a very good bargaining position so don't be afraid to offer quite a bit less than the asking price.

For myself (also a FTB) - I'm waiting. In the areas I'm looking at prices have gone down between 1 and 4% over the last 3 months according to the Land Registry. And my rent is cheaper than an interest only mortgage on a similar place.

That's not to say I've stopped looking - but I am looking for a bargain (which'll help mitigate against any losses if prices continue to go down).

meanmachine_2

Tom, use your brain and RESEARCH.

You'll see that in many areas prices have either gone nowhere in the last 1-2 years or have actually gone down.

Think about the logic of your argument. You claim that, if you don't buy now, you'll never be able to buy.

That will mean your generation and every generation after that - till the end of time - will also have "missed the boat".

How likely is that?

Don't buy all the EA bull and spin. Personally I'm waiting. Houses aren't going anywhere. In fact more and more come onto the market each week - there are now over 600,000 on rightmove.

Natelle_2

Speaking as one of those terrible people known as a 'LANDLORDS' my suggestion would be to make sure you carry out a full research of the area of your possible purchase to verify the type of market for rental property. Do your sums for costs and income, and then do them again! Probably the biggest factor is the ratio of your actual capital investment to borrowings and then in turn the percentage return on your capital invested. Current returns on rentals are not all that exciting, due to current property prices. Investing Landlords are like FTBs, hoping for some degree of reduction in property prices.
I probably can best sum it up with the point that at the moment we're not buying!

Doozergirl

A student let should give you a high yield, but it essential that you buy in 'student central' for this to be successful. There are lots more fire regulations etc. for renting out rooms seperately though. If you speak to a letting agent before viewing possible properties and let them know what you are planning to do, I'm sure a nice one would be able to offer advice on regs and also what rents well and where.

If you are buying to let only, not to live, do not let your heart rule your head. Go for the highest yield possible, not somewhere you want to live. You may make more money buying in a completely different area to where you are. Don't buy in the most affluent area of town, it costs more and the difference in rent will be minimal! A simple, clean, modern interior with neutral decor should rent quickly and well. Higher yield means more spare cash and the possibility of being able to afford something a bit nicer on your return!

I think this is a bit naughty but if your mortgage company don't know it's a BTL, I don't think they mind?

Phonix

Unless incomes rise substantially very soon there's no way the housing market is going to rise much further.

It's a very bad time to buy imo, much better to wait an besides you have good reason to anyway.

Ian_W

tomS wrote: I know NOTHING about buying a house, so if this isn't even remotely feasible i'd appreciate people telling me. (and why).

It is feasible but it ain't advisable.

There's Doomsters - "prices will crash & burn", and there's Boomsters - "you never lose money on property, don't miss the boat" on this site [and many views in-between] but I don't think anyone is seriously forecasting that prices are going to rise particularly fast in the next few years.* Too many properties currently on the market for too long unsold.

So put your money in a "high" interest account, go and enjoy your time working abroad, keep saving and when you return property may be 30% cheaper or it may be a little bit more expensive, but not too much.

Being a landlord is quite a lot of hassle anyway [I'm told] so take the hint from Natelle, who is one and isn't buying at present. If you keep tuned to this site you'll soon know if prices do start to rise again and you're only Abroad, not on Mars, so if that happens you can review your options.

That's my advice, for what it's worth. Good luck - you never know you may want to buy abroad rather than here!

*EDIT: Said that last night and this morning Bradford & Bingley are reported as being bullish, worst over, prices to rise etc!! A day's a long time in posting!!

meanmachine_2

Ian_W wrote:

*EDIT: Said that last night and this morning Bradford & Bingley are reported as being bullish, worst over, prices to rise etc!! A day's a long time in posting!!

Mm, well they would say that wouldn't they? Given that they're so hopelessly exposed to fluctuations in the BTL business. You'd hardly expect them to say "sorry we've invested so much time and money into BTL, it really isn't a growth area any more, shareholders please fire us".

And whatever I personally think of landlords, if they aren't buying, then the OP certainly shouldn't be buying.

nelly_2

I think it was Deemy who posted a graph a bit back that showed prices had gone up by 2.5% per year over the last 50 years. Obviously there are peaks and troughs along the route.

And I dont think ANYBODY would seriously say were are any where near a trough.


the graph on the left here; http://www.housepricecrash.co.uk/

Its beyond me why anyone would buy now.

Corn_bit

If you do decide to let (a good idea IMHO), there's a company called Online Tenancies who reference your tenants and create a tenancy for you for free. Myself and 2 colleagues of mine have used them recently and they were v.good. Their web site is https://www.online-tenancies.co.uk

ManAtHome

Also, you may like where you're working enough to want to buy out there and stay (wherever it is).