Buy to let / renovation question

[BoxsterS3.2]

Can anyone spot any glaringly obvious problems with this plan...

Buy a flat for roughly £100k

Put down £25k deposit

Get a buy to let mortgage for the remainding £75k

Spend a couple of grand on a minor makeover.


Rent it out to cover £75k mortgage payments.

Flog it when property market eventually rises (even if it does take a number of years).


If I go down this line, does anyone know how you go about financing another property after the first ? I work full time (not in property) and own a house, but wouldn't be prepared to take any equity out of it. I can get together £25k for the first mortgage deposit but wouldn't be able to manage another one after that.

Any tips / pearls of wisdom from members who are already multiple property owners greatly received.

[Dr_Gonzo]

Problems include:

Void periods - How will you cover the mortgage and bills when there's no rent?
Bad Tenants - No rent and or/damage. How will you cover this?
Interest rate increases - Will the rent still cover the mortgage? Fixed rate deal ending?
Does the rent minus costs really cover the mortgage?
- Fees (Agents, EPC etc)
- Wear & Tear
- Insurance
- Repairs
- Tax

[Ungarsee]

Have you checked to see if you can actually get a 75%ltv? Btl's really aren't flavour of the month with lenders and as an example woolwich will only go to 60%. If you can get 75% you're fees will be well over a grand for arranging it

[Slagathore]

I also thought buy to let mortgages wanted a bigger deposit.

It sounds so easy and simple, but I'd imagine it's far from it. If it were that easy, a lot more people would be doing it.

[M400 NBL]

Could you make more profit from putting the £25k in an high interest account (not high compared to the old days, but that's what they call them.

I rent out a flat b ut it's a dozen doors away so any problems can be sorted by me. Also I don't pay a letting agent 10% for doing nothing (this is my experience). If the flat is far away it will cost you more in tradesmen/your time and fuel.

Have you an idea of where you would purchase? There is a discussion about hous prices (I think it's "how low will house prices go") which suggests that we are at the bottom in a lot of places.

This thread may get more replies in the business forum.

Best of luck, and drop me an PM if you want a copy of my AST. If you choose not to use a letting agent that is.

[PistonReg]

BoxsterS3.2 said:

Can anyone spot any glaringly obvious problems with this plan...

Buy a flat for roughly £100k

Put down £25k deposit

Get a buy to let mortgage for the remainding £75k

Spend a couple of grand on a minor makeover.


Rent it out to cover £75k mortgage payments.

Flog it when property market eventually rises (even if it does take a number of years).


If I go down this line, does anyone know how you go about financing another property after the first ? I work full time (not in property) and own a house, but wouldn't be prepared to take any equity out of it. I can get together £25k for the first mortgage deposit but wouldn't be able to manage another one after that.

Any tips / pearls of wisdom from members who are already multiple property owners greatly received.

As others state it's a lot of hard work, but if you're serious about getting a few together, why not buy a property in need of renvoation/modernisation and after the work, remortgage to get your original investment out. For figures, I'm just finishing renovating a flat in London which I bought at 99k inc fees, spent about 15k on and will comfortably be worth 145, so something like that would just allow you to take out most of your dep + ren costs (for the next one) and still maintain 25% equity on remortgaging. Immense amount of work involved though :-O

[northwest monkey]

PistonReg said:

BoxsterS3.2 said:

Can anyone spot any glaringly obvious problems with this plan...

Buy a flat for roughly £100k

Put down £25k deposit

Get a buy to let mortgage for the remainding £75k

Spend a couple of grand on a minor makeover.


Rent it out to cover £75k mortgage payments.

Flog it when property market eventually rises (even if it does take a number of years).


If I go down this line, does anyone know how you go about financing another property after the first ? I work full time (not in property) and own a house, but wouldn't be prepared to take any equity out of it. I can get together £25k for the first mortgage deposit but wouldn't be able to manage another one after that.

Any tips / pearls of wisdom from members who are already multiple property owners greatly received.

As others state it's a lot of hard work, but if you're serious about getting a few together, why not buy a property in need of renvoation/modernisation and after the work, remortgage to get your original investment out. For figures, I'm just finishing renovating a flat in London which I bought at 99k inc fees, spent about 15k on and will comfortably be worth 145, so something like that would just allow you to take out most of your dep + ren costs (for the next one) and still maintain 25% equity on remortgaging. Immense amount of work involved though :-O

There lies the problem. In a rising or stable market, the lender will happily re-mortgage as you have increased the value of the property by improving its condition etc. In a falling or volatile market, the lender will argue you haven't increased its value as the value has fallen. Either that or they shaft you with massive interest rates on your remortgage. Or they want a ridiculous LTV that there is no way a rent will cover hence you can't have anything more. You can try arguing your case with them - recent sales in the area etc, but you might as well be arguing with a 2 year old.

The OP's line about working full time & owning a place but not being prepared to risk his own home is one of the reasons the housing market is in the situation its in. I've been involved in renovating properties for 15 years - the amount of people I speak to who "want to get into property" is incredible. My dentist earns £80k a year & drives a Porsche but I bet nobody says to him "I've got a mirror - I think I'll be a dentist"....

My advice - pay £25k off your mortgage if it's burning a hole.