Buy to let issues
Discussion
Bought my first buy to let 6 months ago and had tennants in for several months. Specifically purchased for my pension with the plan to buy a new property each year. Cheap start, cost me £110k (small terrace in respectable area) with monthly rental income of £625 on a 75% mortgage. Gross yield 5.7% but like anything "gross" its misleading.
I'm naturally cheap (frugal) so shocked with how much I've had to to contractors for seemingly simple work (fixing sockets, moving switch behind gas hob, handyman to fix fence etc, etc) and it wasnt in a bad state when I got it. Despite price checking and getting the best quotes, its already cost me £3k to get this stuff done (if youre interested see the list below). This means the *net yield* providing they extend their 6 month contract is virtually nothing over 12 months and I've had the tedium of dealing with tradespeople who are in most cases far from professional.
A mate with 11 properties says "at least is hasnt cost you anything" and there is the long term capital growth - but clearly its cost me £29k in initial fees and deposit to purchase. Obviously I'd get £27k of that back (the deposit) when I sell and its a long term game for me (i.e. mortgages all paid off in 20-25 years for part of my pension), but for those of us who already make very good money running businesses and can stick £29k into something and expect to make a lot more back of it within a year, I'm sure I'm not alone when I look at these figures on small BTLs and just think its not worth the effort?! Is it just me?!
Sure I can use agency to manage the tennant and the work required (thus eating into the margin some more) and remortgage every few years to release more equity for more houses, but for the effort involved in dealing with it over a year, its so much time to put into something with virtually no return over the first 12 months due to these initial costs (and this is before the year is even up with other costs that may crop up).
I think its clear anyone can do BTL, like anything in life, the trick is being good at it and I guess my first property isnt one with the greatest appreciation potential - perhaps I should look for something more expensive in an up and coming part of London yet or look at an auction buy for renovation.
Can anyone share their experience or offer any advice?
COSTS THUS FAR
Council tax (for vacant period) £257.02
Electicity + Gas (for vacant period) £63.18
Timpson keys cut £16.50
Letting Agent Fee (came off first payment) £312.50
Electrical work £540.00
Cooker fix £66
Gas work £360
Electical work £540
Insurance Premiums (3% of rent) £284.11
Windows unlocked by locksmith £90.00
Odd jobs (door, sealant, hand rail, fence fix, pointing, paint, tiles, labour) £400
I'm naturally cheap (frugal) so shocked with how much I've had to to contractors for seemingly simple work (fixing sockets, moving switch behind gas hob, handyman to fix fence etc, etc) and it wasnt in a bad state when I got it. Despite price checking and getting the best quotes, its already cost me £3k to get this stuff done (if youre interested see the list below). This means the *net yield* providing they extend their 6 month contract is virtually nothing over 12 months and I've had the tedium of dealing with tradespeople who are in most cases far from professional.
A mate with 11 properties says "at least is hasnt cost you anything" and there is the long term capital growth - but clearly its cost me £29k in initial fees and deposit to purchase. Obviously I'd get £27k of that back (the deposit) when I sell and its a long term game for me (i.e. mortgages all paid off in 20-25 years for part of my pension), but for those of us who already make very good money running businesses and can stick £29k into something and expect to make a lot more back of it within a year, I'm sure I'm not alone when I look at these figures on small BTLs and just think its not worth the effort?! Is it just me?!
Sure I can use agency to manage the tennant and the work required (thus eating into the margin some more) and remortgage every few years to release more equity for more houses, but for the effort involved in dealing with it over a year, its so much time to put into something with virtually no return over the first 12 months due to these initial costs (and this is before the year is even up with other costs that may crop up).
I think its clear anyone can do BTL, like anything in life, the trick is being good at it and I guess my first property isnt one with the greatest appreciation potential - perhaps I should look for something more expensive in an up and coming part of London yet or look at an auction buy for renovation.
Can anyone share their experience or offer any advice?
COSTS THUS FAR
Council tax (for vacant period) £257.02
Electicity + Gas (for vacant period) £63.18
Timpson keys cut £16.50
Letting Agent Fee (came off first payment) £312.50
Electrical work £540.00
Cooker fix £66
Gas work £360
Electical work £540
Insurance Premiums (3% of rent) £284.11
Windows unlocked by locksmith £90.00
Odd jobs (door, sealant, hand rail, fence fix, pointing, paint, tiles, labour) £400
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