Talk to me about buying to let
Discussion
Ok, situation brief is that I'm 28, have a small family and currently rent the house we live in. My o/h stays at home with our 20month old twin boys during the day, as the cost of childcare exceeds the amount of money she would realistically earn (before tax!) if she were to find a job. My current wages won't stretch to a mortgage to buy a house for us to live in, however when she starts teacher training when our kids have grown up and gone to school, our combined wages probably would as things stand. We have no deposit yet either and am blowing money away each month to live in our current house (as nice a house as it is!)
However I'm keen to try and get a foot on the ladder and speaking to a mate last night he suggested buying to let. If I could get a loan from the bank of Dad or similar for a deposit, a small mortgage might be achievable and I could purchase a crummy flat in the s
t neck of the woods to then rent out. Obviously it'll probably go to the dregs of society, so most of it will be done on the cheap, although my mate was also keen to point out that the housing benefit lot are the best to rent out to, as the council picks up their tab and I won't need to worry as much about missed rent etc.
There are alot of knowledgable people here and I wondered what people's thoughts on buying to let are? I know already you need a specific buy to let mortgage and that they do cost more. But it seemed a very good way to get a foot on the ladder; if property prices increase, in a few years time I could sell the place and take out a bigger mortgage to buy a house for us to live in with the money I'd made.
As you can tell, I'm not knowledgable about all this, I'm a total novice so I'm after any advice anyone can spare on the subject! Thanks.
However I'm keen to try and get a foot on the ladder and speaking to a mate last night he suggested buying to let. If I could get a loan from the bank of Dad or similar for a deposit, a small mortgage might be achievable and I could purchase a crummy flat in the s
t neck of the woods to then rent out. Obviously it'll probably go to the dregs of society, so most of it will be done on the cheap, although my mate was also keen to point out that the housing benefit lot are the best to rent out to, as the council picks up their tab and I won't need to worry as much about missed rent etc.There are alot of knowledgable people here and I wondered what people's thoughts on buying to let are? I know already you need a specific buy to let mortgage and that they do cost more. But it seemed a very good way to get a foot on the ladder; if property prices increase, in a few years time I could sell the place and take out a bigger mortgage to buy a house for us to live in with the money I'd made.
As you can tell, I'm not knowledgable about all this, I'm a total novice so I'm after any advice anyone can spare on the subject! Thanks.
Kitchski said:
I could purchase a crummy flat in the st neck of the woods to then rent out. Obviously it'll probably go to the dregs of society, so most of it will be done on the cheap, although my mate was also keen to point out that the housing benefit lot are the best to rent out to, as the council picks up their tab and I won't need to worry as much about missed rent etc.
Would the return be worth it?t neck of the woods to then rent out. Obviously it'll probably go to the dregs of society, so most of it will be done on the cheap, although my mate was also keen to point out that the housing benefit lot are the best to rent out to, as the council picks up their tab and I won't need to worry as much about missed rent etc.How much are the flats, and what is the likely rent?
Tenants are hit and miss, I probably wouldn't want any housing benefit types in, especially not in what seems to be a small flat. Who would be living in a small flat, realistically?
I wouldn't rely on it appreciating in value any time soon. Especially if that what you'll be counting on to use as a deposit for your own home purchase. I'f you're keeping it for maybe 10 years, then yeah, but not short term.
I don't see it as a being worth it. Why not just wait a couple of years and then get your dad to help you out with a mortgage for your own place?
Kitchski said:
I'm 28... our 20month old twin boys...current wages won't stretch to a mortgage to buy a house....We have no deposit ... am blowing money away each month to live in our current house
BTL is too risky in your situation!BTL was a sure fire winner when property prices was guarranteed to go up (10 years ago) but the future for house prices are very uncertain now.
Housing benefits are normally given to tenants and it is their responsibility to hand it over to the landlord. Guess who gets stuffed if the tenants blow their money on fags and booze!
Worse still, what would you do if the tenants trash your house and do not pay their rent? How would you pay your own rent and the BTL mortgage then? The court can remove delinquent tenants for you but it take time and money, both of which you won't have!
Kitchski said:
I'm keen to get a foot on the ladder, but the foot I've got is only a small one!
Sell three of your four cars and you will have a bigger foot.And then buy something for yourself instead of a buy to let.
And there is no need to rush, because house prices are not about to go up.
At the moment, your only loss is the money you are pissing away in rent.
If you go into it with your eyes open. Do all your sums on monthly expenses (agents fees, insurance, broken boilers, inventories, cleaning, gas certs. vacant periods with you covering the mortgage etc.). Look at it long term 7yrs+ then I think you should go for it, prices are relatively low, they may go down a bit more but not much IMHO, you can haggle a good offer at the moment. The market generally doesn't have enough rental stock and that is definitely only going to get worse. As long as you buy something you would be prepeared to live in, in a good area and present it well then you'll be fine.
Do your research on what is needed in the area, talk to letting agents (not the letting arm of the sales agent, who is naturally biased) and use their knowledge.
Do your research on what is needed in the area, talk to letting agents (not the letting arm of the sales agent, who is naturally biased) and use their knowledge.
Kitchski said:
a small mortgage might be achievable and I could purchase a crummy flat in the st neck of the woods to then rent out.
When the time comes you may struggle to resell this property, therefore knackering any chances of getting a mortgage on any plaec you want to buy for you and your family.t neck of the woods to then rent out.Sit tight, save hard and get yourself something first. You've plenty of time to start investing, be smart rather than jumping in feet first
Kitchski said:
There are alot of knowledgable people here and I wondered what people's thoughts on buying to let are? I know already you need a specific buy to let mortgage and that they do cost more. But it seemed a very good way to get a foot on the ladder; if property prices increase, in a few years time I could sell the place and take out a bigger mortgage to buy a house for us to live in with the money I'd made.
As you can tell, I'm not knowledgable about all this, I'm a total novice so I'm after any advice anyone can spare on the subject! Thanks.
Don't do it.As you can tell, I'm not knowledgable about all this, I'm a total novice so I'm after any advice anyone can spare on the subject! Thanks.
From what you say of your circumstances, you would be better taking your dad's money and saving it towards the deposit for a place of your own.
You say that your partner doesn't work and you have kids, what would you do if you had a tenant and the boiler needed replacing at £1200? Don't forget the service charges and maintenance fees on leasehold flats which can come in at anything between £900+ per year. And any random repairs that need doing because as a good landlord you'd get them done properly and not scrimp.
Seriously, if your financial situation is as you say it is, BTL is not a good idea.
@ Silver.I too would advise against BTL in your particular situation. It sounds that you would be financially right on the edge of making a loss if even the slightest thing goes arwy.
If the only thing that you could afford is the cheapest of flats and the tenants will be on benefits, you're just asking for trouble.
It's just not worth the hassle, IMO.
Kitchski said:
my mate was also keen to point out that the housing benefit lot are the best to rent out to, as the council picks up their tab and I won't need to worry as much about missed rent etc.
I think you have to be very careful about this... the council gives private tenants housing benefit direct into their bank accounts. The tenant then pays the landlord. As a landlord, just because your tenants get housing benefit does not, by any stretch of the imagination, guarantee that they will pay you.ETA Sorry - from what you've said, you can't afford to do what you're suggesting.
I would also advise against it with your current situation.
You are not going to miss anything .House prices are going to fall ,interest rates will rise making loans mortgages more expensive making houses less affordable. If its 100k this year why by when it may be 85k in 12 months time?
So in a falling market you aint pissing money away on rent.
You are not going to miss anything .House prices are going to fall ,interest rates will rise making loans mortgages more expensive making houses less affordable. If its 100k this year why by when it may be 85k in 12 months time?
So in a falling market you aint pissing money away on rent.
Pat H said:
Sell three of your four cars and you will have a bigger foot.
And then buy something for yourself instead of a buy to let.
And there is no need to rush, because house prices are not about to go up.
At the moment, your only loss is the money you are pissing away in rent.
Haha, have you seen my cars? Three of them combined are probably worth as much as your shirt (or less!) and the 4th owes me money back on the loan I took out to buy it a few years ago! It's now worth more than the loan by about a grand, so when it's sold the loan will be paid off and I'll be better off each month. And guess where the grand goes.....yup, wedding!And then buy something for yourself instead of a buy to let.
And there is no need to rush, because house prices are not about to go up.
At the moment, your only loss is the money you are pissing away in rent.
Good to know theres no need to rush, thats one of the things I was worried about. I don't mind paying rent at the moment too much as the house we are in is very nice and quality of life is A1 here, but over the years the money I've lost would be scary to add up. Still, you can't take it with you!
I don't think the timing or your financial position is right for any buy to let activity at the moment.
I've recently lost rather a lot on property, enough to bankrupt many.... I'd steer well clear for the medium term particularly as interest rates are going to rise and are bound to overtake/undermine your modest equity position.
I've recently lost rather a lot on property, enough to bankrupt many.... I'd steer well clear for the medium term particularly as interest rates are going to rise and are bound to overtake/undermine your modest equity position.
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