Case study of buy to let, I thought it was quite good.
Discussion
You can't presume house prices will continue to go up he presumed another 24% in 10 years. You can find areas of the country where they haven't increased at all or even gone down.
His article is very positive with the only negative being a £500 yearly cost to cover void periods. You could write an article from the other view where your in court evicting tenants who have left rotting food in your fridge and although you said no damn cats there is cat poo all over her bedroom!
His article is very positive with the only negative being a £500 yearly cost to cover void periods. You could write an article from the other view where your in court evicting tenants who have left rotting food in your fridge and although you said no damn cats there is cat poo all over her bedroom!
The way that case study is set out is like a marketing example for wet behind the ears landlords...
Landlord and rental insurance at £80 a month is just unviable in that example. Insurance for a property like that would be £8 a month and then is £72 a month rental guarantee really worth it, especially given mortgage in that example is less than £100 a week.
Anyone looking to get into btl, you need to get the agent fees down if you can and best way of this is a let only package so if tenant stays for following years there is no or minimal £100, costs so if land lord can keep tenant can save £75 a month.
The mortgage set up costs are very high at £3500.
For a capital gain of just £34k in 10 years and minimal rental income he has done a great job of convincing me not to invest in that type of property in whatever location it is!
Just this year in SE I have seen 15 per cent value increases on my btls due to new builds in area which always seem to command a massive premium over the older equivalents yet are worse ie smaller plot, no garage etc etc.
In SE for certain properties 6 to 8 per cent annual increases is more than reasonable and in the depths of the recession there really wasn't a drop in values.
I know land lords with a £120k mortgage on a btl worth £320k with a low rental yield of 3.5 per cent of property value (same tenant 8 years) but 10 per cent of mortgage value. Over the last 10 years it has gone up in value £10k a year and has made about £800 a month profit every month from 2008.
As a landlord imo you buy property for capital growth and that in turn either creates a rental yield or the ability to refinance and buy again. It's quite possible to buy well, renovate well and see property values double over a period of six years in certain parts of the UK.
Landlord and rental insurance at £80 a month is just unviable in that example. Insurance for a property like that would be £8 a month and then is £72 a month rental guarantee really worth it, especially given mortgage in that example is less than £100 a week.
Anyone looking to get into btl, you need to get the agent fees down if you can and best way of this is a let only package so if tenant stays for following years there is no or minimal £100, costs so if land lord can keep tenant can save £75 a month.
The mortgage set up costs are very high at £3500.
For a capital gain of just £34k in 10 years and minimal rental income he has done a great job of convincing me not to invest in that type of property in whatever location it is!
Just this year in SE I have seen 15 per cent value increases on my btls due to new builds in area which always seem to command a massive premium over the older equivalents yet are worse ie smaller plot, no garage etc etc.
In SE for certain properties 6 to 8 per cent annual increases is more than reasonable and in the depths of the recession there really wasn't a drop in values.
I know land lords with a £120k mortgage on a btl worth £320k with a low rental yield of 3.5 per cent of property value (same tenant 8 years) but 10 per cent of mortgage value. Over the last 10 years it has gone up in value £10k a year and has made about £800 a month profit every month from 2008.
As a landlord imo you buy property for capital growth and that in turn either creates a rental yield or the ability to refinance and buy again. It's quite possible to buy well, renovate well and see property values double over a period of six years in certain parts of the UK.
They were piss poor figures.
I could show off with my last 3 purchases and the double digit yields but it doesnt really matter as its bloody hard work purchasing, refurbing and managing properties as a landlord.
Too many before and after scenarios shown on the likes of homes under the hammer which give people unrealistic views and they all pile in.
Il give you a case study of today in the life of a landlord.
I always have a remortgage in principle on hand incase i see anything good at auction, and wednesday i snapped up a good property, put the mortgage in motion amd exchanged contracts, deposit paid and went on my merry way.
4 hours ago, after passing two credit checks on application the bank's underwriters have pulled my mortgage offer for no other reason than a missed payment on a utility bill (wtf?) leaving me 26 days to find £59,000.
I wont name and shame them...infact f
k it i will and i hope their Hq burns to the ground - Halifax
The stress can be unreal at times, especially on days like today or when you are being shafted in court over a section 21 notice.
Also capital gains should never be taken into consideration, that should be a brucey bonus on top of solid rental yields.
I could show off with my last 3 purchases and the double digit yields but it doesnt really matter as its bloody hard work purchasing, refurbing and managing properties as a landlord.
Too many before and after scenarios shown on the likes of homes under the hammer which give people unrealistic views and they all pile in.
Il give you a case study of today in the life of a landlord.
I always have a remortgage in principle on hand incase i see anything good at auction, and wednesday i snapped up a good property, put the mortgage in motion amd exchanged contracts, deposit paid and went on my merry way.
4 hours ago, after passing two credit checks on application the bank's underwriters have pulled my mortgage offer for no other reason than a missed payment on a utility bill (wtf?) leaving me 26 days to find £59,000.
I wont name and shame them...infact f
k it i will and i hope their Hq burns to the ground - HalifaxThe stress can be unreal at times, especially on days like today or when you are being shafted in court over a section 21 notice.
Also capital gains should never be taken into consideration, that should be a brucey bonus on top of solid rental yields.
Edited by dazwalsh on Friday 4th December 19:37
With respect £59k wouldn't even cover half the deposit of a 3 bed btl in SE
I only do it for capital growth and any yield is created by big deposits not the property.
If I bought a three bed cross wall 70s luvells mid terrace in Midlands would be 80 to 120k here in commuter London 280k and that was cheap with comparables at 340 once refurbed - belonged to a mate who needed the money. I had to find £140k deposit and only did it for capital growth at that kind of money I'm not bothered about a few hundred quid a month return I'm looking for long term capital growth I see it at £400k in three years - which is realistic and then again in five years more again. It will go onto a repayment mortgage and be paid for in 15 years so it doesn't matter if market doesn't move.
I only do it for capital growth and any yield is created by big deposits not the property.
If I bought a three bed cross wall 70s luvells mid terrace in Midlands would be 80 to 120k here in commuter London 280k and that was cheap with comparables at 340 once refurbed - belonged to a mate who needed the money. I had to find £140k deposit and only did it for capital growth at that kind of money I'm not bothered about a few hundred quid a month return I'm looking for long term capital growth I see it at £400k in three years - which is realistic and then again in five years more again. It will go onto a repayment mortgage and be paid for in 15 years so it doesn't matter if market doesn't move.
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