Keen to get on the property ladder
Discussion
Hi all,
Just want to float an idea I have at the moment - I'm sure it has more holes than a sieve but that's what you guys are for!
I want to get onto the property ladder and rather than trying to get a mortgage on a place in the area I want to live (Devon), I am thinking about getting a BTL place and then renting a place for me to live in. My questions are to do with the BTL side of things.
I have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
I know that I need to renovate it, so that will have to paid for upfront but what other costs are there? I have never owned a place before, so don't know what fees are involved in purchasing a property.
My reasoning behind a cheaper property is that I can get on the ladder more easily. A smaller deposit, less risk, I can cover the mortgage payments even if its empty.
Can anyone fill in the gaps for me? Have I missed anything vital? How easy is it to rent a place that is a good 6 hours drive away? I would try to just put it all through an agency to deal with it all.
Thoughts and guidance please!
Just want to float an idea I have at the moment - I'm sure it has more holes than a sieve but that's what you guys are for!
I want to get onto the property ladder and rather than trying to get a mortgage on a place in the area I want to live (Devon), I am thinking about getting a BTL place and then renting a place for me to live in. My questions are to do with the BTL side of things.
I have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
I know that I need to renovate it, so that will have to paid for upfront but what other costs are there? I have never owned a place before, so don't know what fees are involved in purchasing a property.
My reasoning behind a cheaper property is that I can get on the ladder more easily. A smaller deposit, less risk, I can cover the mortgage payments even if its empty.
Can anyone fill in the gaps for me? Have I missed anything vital? How easy is it to rent a place that is a good 6 hours drive away? I would try to just put it all through an agency to deal with it all.
Thoughts and guidance please!
Max Turbo said:
I want to get onto the property ladder and rather than trying to get a mortgage on a place in the area I want to live (Devon), I am thinking about getting a BTL place and then renting a place for me to live in. My questions are to do with the BTL side of things.
I have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
run that one by me again pleaseI have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
sleep envy said:
Max Turbo said:
I want to get onto the property ladder and rather than trying to get a mortgage on a place in the area I want to live (Devon), I am thinking about getting a BTL place and then renting a place for me to live in. My questions are to do with the BTL side of things.
I have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
run that one by me again pleaseI have seen a place up north (15 miles from Durham or so)for £25k ish, in need of modernisation but doesn't appear to need anything structural doing. Its a 2 bed, has a small garden and road parking is readily available. Rental in the area is approx £250 a month. I have done a quick BTL mortgage calculation on moneysupermarket and can get a 5 year deal for £170ish per month.
So I could turn a small profit each month.
House is approx 25k which is approx 170 a month on mortgage payments. Typical rent for the area is £250, giving me a small profit when its being rented. I added the caveat of the one-off renovation cost at the end of the post.
Any further reoccurring costs are unknown to me, which was kind of the point of the post - I am new to all of this!
Thanks
angryS3owner said:
I'm not being funny but you're telling me there is still somewhere in the UK where you can buy somewhere to live for £25,000? That explains why I can hardly even find anything near the 'average' price around here then!
Uhuh, I didn't think it was possible either, until I randomly stumbled across this. I am not going to pretend its some amazing detached pad with acres of land, but its commutable to some fairly decent sized towns and cities etc etc.Just wondering if there was anything that I had overlooked that would piss on my bonfire. I know there are lots of fees involved in buying houses, but have no real idea what any of them are, and how to minimise them etc.
Thanks
angryS3owner said:
I'm not being funny but you're telling me there is still somewhere in the UK where you can buy somewhere to live for £25,000? That explains why I can hardly even find anything near the 'average' price around here then!
£21,000http://www.findaproperty.com/displayprop.aspx?edid...
As for being the landlord to tennats that are in the market for £250 PCM, no thank you. I can imagine that they are not exactly going to be, well, nice.
Max Turbo said:
No problem
House is approx 25k which is approx 170 a month on mortgage payments. Typical rent for the area is £250, giving me a small profit when its being rented. I added the caveat of the one-off renovation cost at the end of the post.
Any further reoccurring costs are unknown to me, which was kind of the point of the post - I am new to all of this!
Thanks
I think your biggest sumbling blocks will be the distance between Devon and Durham, the currently unknown state of the property and your ablity to afford the mortgage if the interest rates rise and you can't rent the property for say 6 months?House is approx 25k which is approx 170 a month on mortgage payments. Typical rent for the area is £250, giving me a small profit when its being rented. I added the caveat of the one-off renovation cost at the end of the post.
Any further reoccurring costs are unknown to me, which was kind of the point of the post - I am new to all of this!
Thanks
How much of the £80pcm profit do the "agents" want?
It leaves you with the best part of jack all and a crap house in a crap area miles away from where you know.
If you want to do it, you need to focus on a (geographical) area that you know very well.
ETA: We bought a house for 8k a few weeks ago. There's hundreds of cheap snotters about.
It leaves you with the best part of jack all and a crap house in a crap area miles away from where you know.
If you want to do it, you need to focus on a (geographical) area that you know very well.
ETA: We bought a house for 8k a few weeks ago. There's hundreds of cheap snotters about.
Edited by Nolar Dog on Thursday 23 July 16:23
To answer the OP a bit more.
£70 - £80 an month is not enough 'profit' to make this viable. Rent isn't calculated solely on what the mortgage payment is. There are other costs too - insurance (building, tenancy), utilities, maintenance, management (finding a tenant, rent collection). Then there are periods when the property is empty.
The properties are £20-£25k and rents £250 a month for a reason.
Now you could buy it, take the risk that you're going to have to subsidise it a few grand each year for the next ten years by which time the value has perked up enough to turn a reasonable profit but it's a big risk.
£70 - £80 an month is not enough 'profit' to make this viable. Rent isn't calculated solely on what the mortgage payment is. There are other costs too - insurance (building, tenancy), utilities, maintenance, management (finding a tenant, rent collection). Then there are periods when the property is empty.
The properties are £20-£25k and rents £250 a month for a reason.
Now you could buy it, take the risk that you're going to have to subsidise it a few grand each year for the next ten years by which time the value has perked up enough to turn a reasonable profit but it's a big risk.
All good points - just the sort of info I am after.
My reasoning behind it is that its a less risky way to hit the ladder (compared to a 100k plus mortgage), the rate I was quoted was fixed for 5 years so no hidden hikes. To be honest, if I were to do it, I would be plowing a fair wedge into it to overpay the mortgage and try and clear it much earlier, maybe even within the 5 year bracket.
Im not sure how much agents charge - you are right that it would probably soak up any profit and probably a bit more. I am not really interested in making a profit each month, but rather the fact that in 5-10 years, I would have a mortgage free property that could be sold to give a rather more substantial deposit on a local property.
To the poster who said they picked up an 8k house, how do you hear about these? I presume you are in the trade? I would imagine that its unlikely I find any serious bargains like this down in Devon but I really don't know enough to say that with any certainty.
Thanks for the input everyone
Max
My reasoning behind it is that its a less risky way to hit the ladder (compared to a 100k plus mortgage), the rate I was quoted was fixed for 5 years so no hidden hikes. To be honest, if I were to do it, I would be plowing a fair wedge into it to overpay the mortgage and try and clear it much earlier, maybe even within the 5 year bracket.
Im not sure how much agents charge - you are right that it would probably soak up any profit and probably a bit more. I am not really interested in making a profit each month, but rather the fact that in 5-10 years, I would have a mortgage free property that could be sold to give a rather more substantial deposit on a local property.
To the poster who said they picked up an 8k house, how do you hear about these? I presume you are in the trade? I would imagine that its unlikely I find any serious bargains like this down in Devon but I really don't know enough to say that with any certainty.
Thanks for the input everyone
Max
SoapyShowerBoy said:
What the?!? Rough area I guess.Does it come with hot and cold running gun fights and easy access to hard drugs?
Max Turbo said:
To the poster who said they picked up an 8k house, how do you hear about these? I presume you are in the trade?
"We" buy all sorts of houses/flats so get "offered" various priced stuff. This year we've bought stuff from 8k to 800k and everything in-between.The particular house I referred to was in Lancashire (Oldham) and was a 2 bed terrace in need of renovation. We sold it exactly as we'd bought it for 11k three days later.
Can't you do something like that instead of "sitting on" them as investments?
I would agree that finding one closer to home is a much better option. What happens when the tenant's break the front door or there's a leak or the grass needs cutting or the gutters need clearing. You'll be amazed what tenant's do to properties and expect you to sort. And I suspect the type of tenant's you'll attract in a £25,000 are unlikely to be brain surgeons. If you start having to pay contractors for everything because you live so far away you definately won't make any money. Even if you have to save a bit longer for a deposit to get one closer to home it will be definately worth it.
JQ said:
I would agree that finding one closer to home is a much better option. What happens when the tenant's break the front door or there's a leak or the grass needs cutting or the gutters need clearing. You'll be amazed what tenant's do to properties and expect you to sort. And I suspect the type of tenant's you'll attract in a £25,000 are unlikely to be brain surgeons. If you start having to pay contractors for everything because you live so far away you definately won't make any money. Even if you have to save a bit longer for a deposit to get one closer to home it will be definately worth it.
Sounds like a stellar plan. Think you (and others on here) may well be right. Time to do some investigating a bit closer to home...Nolar Dog said:
Max Turbo said:
To the poster who said they picked up an 8k house, how do you hear about these? I presume you are in the trade?
"We" buy all sorts of houses/flats so get "offered" various priced stuff. This year we've bought stuff from 8k to 800k and everything in-between.The particular house I referred to was in Lancashire (Oldham) and was a 2 bed terrace in need of renovation. We sold it exactly as we'd bought it for 11k three days later.
Can't you do something like that instead of "sitting on" them as investments?
Sitting on it as an investment would probably suit me slightly better as I don't have the capital at the moment to buy the places outright (unless it was similar to the 8k like your example)
Thanks
Bear in mind that not all BTL Lenders will offer a mortgage to first time buyers. (they assume you are going to buy the house as a BTL becuase you can't finance it as a resi, and then live in it yourself)
Some have minimum salary amounts, so if you don't earn above that they won't offer you a loan.
Some have minimum lending amounts, so they might not offer you a mortgage as small as you want.(this is dieing out)
As has been said distance is going to be a real problem for you, if and when the tenants want something done. I'm not sure any agent is going to offer a decent full service to you on their cut of £250 pcm.
Some have minimum salary amounts, so if you don't earn above that they won't offer you a loan.
Some have minimum lending amounts, so they might not offer you a mortgage as small as you want.(this is dieing out)
As has been said distance is going to be a real problem for you, if and when the tenants want something done. I'm not sure any agent is going to offer a decent full service to you on their cut of £250 pcm.
Max Turbo said:
Sounds like a good plan. How would someone who doesn't buy properties regularly get to hear about these sorts of places? I am assuming that just keeping an eye out rightmove, globrix and findaproperty isn't enough. Any other places that you can recommend?
Contacts. Contacts. Contacts.You need as many of them as you can, from the local estate agents, to the builder/joiner/plasterer, the guy in the pub and the wife's friends' sister's uncle's cousin
Tell anyone and everyone basically.
Good luck.
You should work on an average of 10 months a year occupancy i.e. £250pcm = £2500 gross per year.
Stay local. Everyone's criteria is different, but my houses are all within twenty minutes driving of my own house and I assure you, if you run it yourself( advertise/interview/vet & let), that you will get a wet, wintry Tuesday night call to sort a problem out that no one could have foreseen.
Find out about your responsibilities regarding Shorthold Assured Tenancy agreements, deposit protection schemes and tax liabilities BEFORE you think about buying anything.
Your initial purchase will incur standard house buying costs; conveyancing, land registry fees etc. All of these will be over and above the asking price.
Finally, above all, stand outside the property your thinking about and ask yourself two questions;
Would I want to live here?
Would I be uneasy parking my car outside this place at night?
After all of it, I'd say that it's worth while doing. Good luck with it.
Mark.
Stay local. Everyone's criteria is different, but my houses are all within twenty minutes driving of my own house and I assure you, if you run it yourself( advertise/interview/vet & let), that you will get a wet, wintry Tuesday night call to sort a problem out that no one could have foreseen.
Find out about your responsibilities regarding Shorthold Assured Tenancy agreements, deposit protection schemes and tax liabilities BEFORE you think about buying anything.
Your initial purchase will incur standard house buying costs; conveyancing, land registry fees etc. All of these will be over and above the asking price.
Finally, above all, stand outside the property your thinking about and ask yourself two questions;
Would I want to live here?
Would I be uneasy parking my car outside this place at night?
After all of it, I'd say that it's worth while doing. Good luck with it.
Mark.
Nolar Dog said:
Max Turbo said:
Sounds like a good plan. How would someone who doesn't buy properties regularly get to hear about these sorts of places? I am assuming that just keeping an eye out rightmove, globrix and findaproperty isn't enough. Any other places that you can recommend?
Contacts. Contacts. Contacts.You need as many of them as you can, from the local estate agents, to the builder/joiner/plasterer, the guy in the pub and the wife's friends' sister's uncle's cousin
Tell anyone and everyone basically.
Good luck.
I will start to build a network of contacts in a slightly larger catchment area, such as the "20 min circle" as suggested by DB7 Pilot
Thanks!!
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