Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    misterman
    400 a month to invest - should I get a BTL?
    • #1
    • 30th May 07, 10:07 AM
    400 a month to invest - should I get a BTL? 30th May 07 at 10:07 AM
    Hi
    This is my first post on here, so go easy on me! Wife and I have 400 every month left over after all bills, fuel, food, leisure spending etc. We are seriously considering a buy to let, using the money to top up the interest on the BTL mortgage and also save each month to cover times when the property isn't let. We have seen a few houses at around 100k, we can put down 10k from savings and get a BTL mortgage on 90k for approx 450 per month. The property would let for 425, so from our spare 400 would be used to pay letting agent fees (approx 50), top up the mortgage (25) and insure the house (approx 15 month). The rest will be saved to cover times when the house isnt let. We'd then rely on house price increases over the next 5 - 10 years to make this worthwhile. To us this sounds like a feasible and 'relatively' low risk plan - but we have no experience of BTLs and would really welcome any input. Our alternative plan is to spend the 10k on our existing home, primarily to add value, and look at other options for the 400 / month.
    Thanks in advance for any advice
    MM
Page 1
  • Feanor
    • #2
    • 30th May 07, 10:19 AM
    • #2
    • 30th May 07, 10:19 AM
    What area do you live in? Do you know what the rental market is like at all?
  • prudryden
    • #3
    • 30th May 07, 10:19 AM
    • #3
    • 30th May 07, 10:19 AM
    Second option sounds much less stressful.
    FREEDOM IS NOT FREE
  • nelly
    • #4
    • 30th May 07, 10:24 AM
    • #4
    • 30th May 07, 10:24 AM
    Bacon lettuce and tomatoe has had its day mate
  • mr.broderick
    • #5
    • 30th May 07, 10:27 AM
    • #5
    • 30th May 07, 10:27 AM
    Bacon lettuce and tomatoe has had its day mate
    Originally posted by nelly
    that one tickled me
    • Doozergirl
    • By Doozergirl 30th May 07, 10:29 AM
    • 26,604 Posts
    • 71,428 Thanks
    Doozergirl
    • #6
    • 30th May 07, 10:29 AM
    • #6
    • 30th May 07, 10:29 AM
    I think pretty much all of us agree that 5-10 years is not the timescale to be thinking of. You either go short term or very long term but 5-10 years is just a very hazy place for property prices.

    Relying on capital gains is the wrong reason for BTL. You also need a 15% deposit, and your rent needs to cover 130% of the mortgage repayments, so you're scuppered already.

    Do you really want to buy an investment when it was really expensive, and you'd have to subsidise your tenants rent? What if interest rates keep going up?

    Contrary to popular opinion, house prices do not always go up. Prices haven't moved much at all in my part of the world in three years. You should check what they're actually doing in yours.
    Everything that is supposed to be in heaven is already here on earth.
  • misterman
    • #7
    • 30th May 07, 10:31 AM
    • #7
    • 30th May 07, 10:31 AM
    Hi
    Feanor -We're in the North West, the 2 houses we're looking at at for sale are about 10% below current market value based on others in the area, and both require no work to get them ready to let. After speaking to others who rent and judging from the low number of empty rental properties there seems a very good chance of letting. prudryden - im not averse to a bit of stress(!) but wouldnt want to take a major risk. nelly - thats the impression I get from reading a few threads on here- but is this the case for all areas and price bands?
    Thanks
    MM
  • Ad
    • #8
    • 30th May 07, 10:40 AM
    • #8
    • 30th May 07, 10:40 AM
    Why not leave the homes for a first time buyer. YOU haver a home afterall.
  • misterman
    • #9
    • 30th May 07, 10:43 AM
    • #9
    • 30th May 07, 10:43 AM
    Thanks for the advice Doozergirl, I thought we'd need 15% and 125% rental but we were offered a 90% BTL mortgage at 5.?% (cant remember exact figure, think it was 5.9%) based on the figures i quoted in the first post, with the conditon that we'd top it up ourselves. So 5-10 yrs is neither here nor there, I presume then its got to be approx 2 years or alternatively > 15 years. We would probably then go for the long term option. I appreciate the impending rise in interest rates but there does seem to be a lot of people round here still snapping up houses and apartments at around 100 - 130k and then letting them.
    • pinkshoes
    • By pinkshoes 30th May 07, 10:47 AM
    • 16,362 Posts
    • 22,565 Thanks
    pinkshoes
    Some areas will always require BTL investors to rent to the private sector, and other areas are saturated already, so you could risk having the house empty for long periods of time. Do you homework, check out the type of people that live in the area i.e hospital workers, students, immigrants, that may require private rented houses, and make your decision based on that.

    Unless your "spare" money easily covers the interest on the BTL mortgage, I don't think it's a great idea. Doozergirl, where did you get the 130% figure from?


    It's not necessarily a risk, but you should look at it as more long term than 5 years. Some people are speculating about a housing crash, but that doesn't necessarily mean doom and gloom. Most house owners I know have extra cash put aside to pay their mortgage even if interest rates rise above 12%, and if houseprices drop, it just means that if they ever went to move, they'd rent their house out rather than selling, which will just mean even less properties available to FTBs.

    Most the negative house crash speculators are those who rent privately and are hoping they'll be able to bag themselves a 4 bed detached mansion with extensive grounds for 50p!
  • misterman
    Obviously not all FTBS can afford the mortgage but may still like to have a place of their own
    • Doozergirl
    • By Doozergirl 30th May 07, 10:56 AM
    • 26,604 Posts
    • 71,428 Thanks
    Doozergirl
    I appreciate the impending rise in interest rates but there does seem to be a lot of people round here still snapping up houses and apartments at around 1f 00 - 130k and then letting them.
    Originally posted by misterman
    So you don't think it's people like that artificially buoying up the market?

    Just because lots of people are doing it doesn't mean that it's a good thing to do. It's herd mentality, pure and simple. All over the country there are thousands and thousands of apartments not even what worth what people paid for them.

    I buy and sell property for a living. I would not BTL. I take my risks calculated; you can't rely on luck to carry you upwards. My first flat is worth three times what I paid for it 8 years ago. How much higher can it go?
    Everything that is supposed to be in heaven is already here on earth.
    • lynzpower
    • By lynzpower 30th May 07, 10:59 AM
    • 24,745 Posts
    • 39,940 Thanks
    lynzpower
    I am investing 450 pcm ( about to send the paperwork off today) in a Yorkshire Building Society regular saver.

    Its 7.00% pretax and 5.60 after ( as long as you continue to pay in) http://www.ybs.co.uk/savings/interest_rates/regularsaver.jsp

    Im sure this isnt the best performing investment- however, it does the job I'll need it to, and it sure seems a hell of a lot less hassle than your current plan, as your figs might not stack up.

    In order to determine demand put a "fake" advert on your local loot/ gumtree etc and see how much the phone rings.

    If there are many others "snapping them up" are there enough tenants to go round?
    Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
    Theres no dollar sign on piece of mind
    This Ive come to know...
    So if you agree have a drink with me, raise your glasses for a toast
  • Romani Ite Domum
    Some people are speculating about a housing crash, but that doesn't necessarily mean doom and gloom.
    Originally posted by pinkshoes
    you've finally seen the light!

    Most house owners I know have extra cash put aside to pay their mortgage even if interest rates rise above 12%, and if houseprices drop, it just means that if they ever went to move, they'd rent their house out rather than selling, which will just mean even less properties available to FTBs.
    Originally posted by pinkshoes




    Most the negative house crash speculators are those who rent privately and are hoping they'll be able to bag themselves a 4 bed detached mansion with extensive grounds for 50p!
    Originally posted by pinkshoes
    Nothing like a bit of bear bashing eh?
  • misterman
    Thanks for the advice everyone. I'm going to spend some time looking at buying abroad as we considered this last year (apartment in Canaries, year round sun, low cost airlines adding routes), look at buying properties needing refurb and selling on quickly and then weigh these up against a BTL
    • Doozergirl
    • By Doozergirl 30th May 07, 11:07 AM
    • 26,604 Posts
    • 71,428 Thanks
    Doozergirl
    Doozergirl, where did you get the 130% figure from?!
    Originally posted by pinkshoes
    From my IFA last year when I was looking at maybe renting aflat that I'd got at a particularly good price.

    Most the negative house crash speculators are those who rent privately and are hoping they'll be able to bag themselves a 4 bed detached mansion with extensive grounds for 50p!
    Originally posted by pinkshoes
    Right. So that's a good reason to have a BTL is it?
    Everything that is supposed to be in heaven is already here on earth.
    • dancingfairy
    • By dancingfairy 30th May 07, 11:11 AM
    • 8,961 Posts
    • 7,344 Thanks
    dancingfairy
    I think property people generally allow for a property being empty for 3-4 months of the year average to make sure they can still afford to keep it. Also have you got a current mortgage on your house - if interest rates rise could you afford all the repayments necessary?
    Making my money go further with MSE
    How much can I save in 2012 challenge
    75/1200
    • pinkshoes
    • By pinkshoes 30th May 07, 11:58 AM
    • 16,362 Posts
    • 22,565 Thanks
    pinkshoes
    Quote:
    Originally Posted by pinkshoes
    Most the negative house crash speculators are those who rent privately and are hoping they'll be able to bag themselves a 4 bed detached mansion with extensive grounds for 50p!

    Right. So that's a good reason to have a BTL is it?
    Originally posted by Doozergirl
    er.... no. why on earth would that be a good reason to have a BTL?!?! I personally wouldn't bother with a BTL because it's not worth the hassle, and not really a good ROI at the moment.


    Quote:
    Originally Posted by pinkshoes
    Most the negative house crash speculators are those who rent privately and are hoping they'll be able to bag themselves a 4 bed detached mansion with extensive grounds for 50p!

    Nothing like a bit of bear bashing eh?
    just some good 'ole english sarcasm.
    • phlash
    • By phlash 30th May 07, 12:05 PM
    • 868 Posts
    • 621 Thanks
    phlash
    " Let's get a BTL, or do our house up a bit to add value, or we can buy abroad and do it up.....we'll make LOADSA MONEEEEYYYY!!!! There's no other way to make money is there? "
  • granville
    Instead of taking on *more* debt why not build up savings?

    Or, look at investing in the stock market?

    BTL is something which maybe 5-10 years ago would have been a fine investment, but not now (imo).

    These days it really is a lot of hard work for very little reward. You must have read other posts on this board from landlords / tenants who are having problems?

    ymmv
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,833Posts Today

7,485Users online

Martin's Twitter
  • Have a great Easter, or a chag sameach to those like me attending Passover seder tomorrow. I?m taking all of next? https://t.co/qrAFTIpqWl

  • RT @rowlyc1980: A whopping 18 days off work for only 9 days leave! I?ll have a bit of that please......thanks @MartinSLewis for your crafty?

  • RT @dinokyp: That feeling when you realise that you have 18 days of work and only used 9 days of your annual leave! Thanks @MartinSLewis h?

  • Follow Martin