Discussion
While not in a position to purchase yet, my partner is working again so we will be saving around £2k per month. Our intention is to go down the BTL route so im looking for advice from people with a few rental properties.
I would prefer a higher volume of lower value properties while my partner wants the reverse. Are properties in the £20-30,000 bracket a lot of hassle to manage? Im quite handy so renovating properties wouldnt be an issue.
Assuming I do get my way, are lenders likely to offer mortgages on such low value properties? I'd like to get started as soon as possible but wondering if saving for a year and buying a cheap one in cash is better than having it mortgaged.
Also, general thoughts on buying at auction welcomed. With the fees is it not quite expensive?
Any and all help appreciated!
I would prefer a higher volume of lower value properties while my partner wants the reverse. Are properties in the £20-30,000 bracket a lot of hassle to manage? Im quite handy so renovating properties wouldnt be an issue.
Assuming I do get my way, are lenders likely to offer mortgages on such low value properties? I'd like to get started as soon as possible but wondering if saving for a year and buying a cheap one in cash is better than having it mortgaged.
Also, general thoughts on buying at auction welcomed. With the fees is it not quite expensive?
Any and all help appreciated!
If you have lots of cheaper flats, then your cashflow won't be dented as much if one or two are empty. If you've only got a few expensive houses, then just one unexpected vacancy can be a real problem. Our small rental business is currently a single group of 14 flats for that reason - we could only have afforded about 5 houses in the area for the same outlay.
The flip side of that argument is ... if you have 14 flats, you have 14 boilers that can break.
I couldn't see how you would recover your cash in a palatable period on a £30K flat that needs any new appliance / carpet / anything. How high do you anticipate your yield to be?
Lastly, I have 0 experience with low-end flats, but the 'clientele' you will be dealing with will likely be more of a handful and dramatic than in the higher bands.
I couldn't see how you would recover your cash in a palatable period on a £30K flat that needs any new appliance / carpet / anything. How high do you anticipate your yield to be?
Lastly, I have 0 experience with low-end flats, but the 'clientele' you will be dealing with will likely be more of a handful and dramatic than in the higher bands.
What would you class as a "palatable period"? We dont need the money so the plan would be to operate as a ltd company and reinvest accordingly.
The clientele being different is obviously a consideration but, assuming there is someone in the flat paying rent, surely the occasional outlay would be outweighed by the higher yield and number of flats making money? Where I am, it seems renting a £100k house would net about as much per month as one at half the cost which doesnt make financial sense to me.
I wouldnt want to deal exclusively in the low end of the market but, unless im missing something glaring, it appears to make a reasonable amount of sense for starting out.
The clientele being different is obviously a consideration but, assuming there is someone in the flat paying rent, surely the occasional outlay would be outweighed by the higher yield and number of flats making money? Where I am, it seems renting a £100k house would net about as much per month as one at half the cost which doesnt make financial sense to me.
I wouldnt want to deal exclusively in the low end of the market but, unless im missing something glaring, it appears to make a reasonable amount of sense for starting out.
I 8 a 4RE said:
The flip side of that argument is ... if you have 14 flats, you have 14 boilers that can break.
I couldn't see how you would recover your cash in a palatable period on a £30K flat that needs any new appliance / carpet / anything. How high do you anticipate your yield to be?
Lastly, I have 0 experience with low-end flats, but the 'clientele' you will be dealing with will likely be more of a handful and dramatic than in the higher bands.
I'd definitely agree with this, also more estate agent fees, service charges if they're flats and more hassle in general.I couldn't see how you would recover your cash in a palatable period on a £30K flat that needs any new appliance / carpet / anything. How high do you anticipate your yield to be?
Lastly, I have 0 experience with low-end flats, but the 'clientele' you will be dealing with will likely be more of a handful and dramatic than in the higher bands.
Water cylinder in one of my flats broke recently and leaked downstairs, £3k for a new one and £800 for the make good of the downstairs flat. Also replaced a broken fridge, those kind of things would really eat into a cheaper flat.
GT03ROB said:
Think you need to be talking to Groat on here. He is our resident slum landlord guru.
As rob says search out posts on the subject by Groat he’s the only proper slum lord on here. I dabbled with slumlording student let a long time back I think from memory the property was a £40k terrace with 3 beds upstairs and the second living room also a bedroom so 4 in total £250 a month each but by god it was a hassle with students not paying and leaving it in a terrible state every summer. Currently I have 1 3 bed terrace tenants seem to stay on average for 3-4 years decorate it themselves make themselves at home, never miss payments tend to leave the house in a better condition that when they moved in and last change over there were 4 applications for it within 10 days. So I’m very much staying with the family home rather than slumlording it. I’d prefer no hassle steady income than loads of hassle and large income.
Shaoxter said:
I'd definitely agree with this, also more estate agent fees, service charges if they're flats and more hassle in general.
Water cylinder in one of my flats broke recently and leaked downstairs, £3k for a new one and £800 for the make good of the downstairs flat. Also replaced a broken fridge, those kind of things would really eat into a cheaper flat.
Why did you pay to make good the downstairs flat? That's what their insurance is for.Water cylinder in one of my flats broke recently and leaked downstairs, £3k for a new one and £800 for the make good of the downstairs flat. Also replaced a broken fridge, those kind of things would really eat into a cheaper flat.
BoRED S2upid said:
GT03ROB said:
Think you need to be talking to Groat on here. He is our resident slum landlord guru.
As rob says search out posts on the subject by Groat he’s the only proper slum lord on here. Good topic and a subject I've given much thought to. I own 3 BTLs as a side business and it largely depends on your business model and long term objectives. Based on my income, I have two in a ltd company and the third I keep in my own name just to spread the risk.
I own mine outright and have two at the lower end of the market £110-120k and one at £250k. I think for me its all about capital appreciation, I have a 10-15 year plan. Zoopla says my £250k house is now at 277k and my 110k house is now at 130k., so not a bad gain in 2 years. Even without mortgages, your rent money soon reduces due to tax, repairs and running costs etc. My lower priced houses I manage myself. I live 100 miles form these properties but have got to know some good tradesmen that I trust in the local area. I advertise them myself and most of the applicants were on some kind of benefits, and after some extensive vetting I have found (touch wood) some good tenants who look after the place. I don't think I'd have half the market for these tenants if I went through an estate agent as they simply wouldn't pass their initial checks. I wouldn't be put off by people on benefits, many have just been dealt a bad hand in life or have had limited opportunities. But when I am sitting in a meeting at work and I get messages from them, my heart skips a beat before reading it. Luckily so far no major problems but its always at the back of my mind.
My plan is to add more to my ltd company from accumulation of rents to form a deposit. Again, the rent will merely cover the running costs with a mortgage but its all about the capital gain. And btw, if you go through a ltd company, lenders only start at 100k minimum in general, and expect the mortgage rates and fees to be generally higher.
And also keep your eye on government policy as if the Labour party get in at the next election, things may well change with rent caps etc.
Aside from this, its something that I enjoy doing
I own mine outright and have two at the lower end of the market £110-120k and one at £250k. I think for me its all about capital appreciation, I have a 10-15 year plan. Zoopla says my £250k house is now at 277k and my 110k house is now at 130k., so not a bad gain in 2 years. Even without mortgages, your rent money soon reduces due to tax, repairs and running costs etc. My lower priced houses I manage myself. I live 100 miles form these properties but have got to know some good tradesmen that I trust in the local area. I advertise them myself and most of the applicants were on some kind of benefits, and after some extensive vetting I have found (touch wood) some good tenants who look after the place. I don't think I'd have half the market for these tenants if I went through an estate agent as they simply wouldn't pass their initial checks. I wouldn't be put off by people on benefits, many have just been dealt a bad hand in life or have had limited opportunities. But when I am sitting in a meeting at work and I get messages from them, my heart skips a beat before reading it. Luckily so far no major problems but its always at the back of my mind.
My plan is to add more to my ltd company from accumulation of rents to form a deposit. Again, the rent will merely cover the running costs with a mortgage but its all about the capital gain. And btw, if you go through a ltd company, lenders only start at 100k minimum in general, and expect the mortgage rates and fees to be generally higher.
And also keep your eye on government policy as if the Labour party get in at the next election, things may well change with rent caps etc.
Aside from this, its something that I enjoy doing
GT03ROB said:
BoRED S2upid said:
GT03ROB said:
Think you need to be talking to Groat on here. He is our resident slum landlord guru.
As rob says search out posts on the subject by Groat he’s the only proper slum lord on here. OP I am going through a similar dilemma myself. On paper the returns for having smaller cheaper properties seems to look good but I am not sure the reality would be the same.
If I were to buy smaller properties I could start buying a couple up now but I am in two minds as a part of me thinks to get a larger properties.
In my head I am thinking maybe the best compromise is 3 bed plus flats or 2 bed semis - depends on area of course but it might be the best middle ground.
Only issue I have with that is if a bigger site/property came up that I really wanted, its the hassle of having smaller properties to sell to buy it.
If I were to buy smaller properties I could start buying a couple up now but I am in two minds as a part of me thinks to get a larger properties.
In my head I am thinking maybe the best compromise is 3 bed plus flats or 2 bed semis - depends on area of course but it might be the best middle ground.
Only issue I have with that is if a bigger site/property came up that I really wanted, its the hassle of having smaller properties to sell to buy it.
I 8 a 4RE said:
Lastly, I have 0 experience with low-end flats, but the 'clientele' you will be dealing with will likely be more of a handful and dramatic than in the higher bands.
On the other hand (with a sample size of 2) I have two properties. One is a low-end flat in a seaside town and the other is a more premium one on the outskirts of London. The latter may as well have a revolving door for the number of tenants coming and going. It also has endless minor faults to be repaired (window handles, hot water issues, leaks under sinks, broken hinges... All just in the last year) whereas the lower-end flat has had a single tenant for the last 3 years and I've barely spent a month's rent in maintenance since they moved in.Interested in others' experiences of course, but I do think it depends greatly on the location and the rental market there as well as the tenant. Our long-term tenants have a cat and with most landlords not allowing pets I think it works in our favour as they have less choice in where they could move to.
My other point would be unfurnished properties - They take longer to let, but generally keep tenants for longer as well. Partly because it's more effort to move when you have furniture to take, and partly because having your own stuff means it feels more like 'home'.
Mr Pointy said:
GT03ROB said:
BoRED S2upid said:
GT03ROB said:
Think you need to be talking to Groat on here. He is our resident slum landlord guru.
As rob says search out posts on the subject by Groat he’s the only proper slum lord on here. GT03ROB said:
Mr Pointy said:
GT03ROB said:
BoRED S2upid said:
GT03ROB said:
Think you need to be talking to Groat on here. He is our resident slum landlord guru.
As rob says search out posts on the subject by Groat he’s the only proper slum lord on here. romeogolf said:
On the other hand (with a sample size of 2) I have two properties. One is a low-end flat in a seaside town and the other is a more premium one on the outskirts of London. The latter may as well have a revolving door for the number of tenants coming and going. It also has endless minor faults to be repaired (window handles, hot water issues, leaks under sinks, broken hinges... All just in the last year) whereas the lower-end flat has had a single tenant for the last 3 years and I've barely spent a month's rent in maintenance since they moved in.
Interested in others' experiences of course, but I do think it depends greatly on the location and the rental market there as well as the tenant. Our long-term tenants have a cat and with most landlords not allowing pets I think it works in our favour as they have less choice in where they could move to.
My other point would be unfurnished properties - They take longer to let, but generally keep tenants for longer as well. Partly because it's more effort to move when you have furniture to take, and partly because having your own stuff means it feels more like 'home'.
Amen. Long tenants are a panacea. Interested in others' experiences of course, but I do think it depends greatly on the location and the rental market there as well as the tenant. Our long-term tenants have a cat and with most landlords not allowing pets I think it works in our favour as they have less choice in where they could move to.
My other point would be unfurnished properties - They take longer to let, but generally keep tenants for longer as well. Partly because it's more effort to move when you have furniture to take, and partly because having your own stuff means it feels more like 'home'.
No switching costs, no empty property costs, no council tax bills for empty periods and perhaps most importantly as you point out... the 'pride in ownership' goes up for longer-term tenants.
I offer new incoming tenants significant discounts if they sign up for 24 months without break-clause.
Consider 24 month contract * £1000 = £24,000
10% discount = £2,400.
But two months vacant + agency fees + check in fees + council tax is typically more.
NickCQ said:
Mr Pointy said:
Why did you pay to make good the downstairs flat? That's what their insurance is for.
Because it’s the right thing to do?bmcshane09 said:
Assuming I do get my way, are lenders likely to offer mortgages on such low value properties? I'd like to get started as soon as possible but wondering if saving for a year and buying a cheap one in cash is better than having it mortgaged.
Some lenders have a minimum value of £50,000 so may need to speak to a broker to find out if any go below that. Gassing Station | Finance | Top of Page | What's New | My Stuff