General BTL questions
Discussion
Hi all,
Mid next year I wish to purchse my first BTL property, more for future retirement help than any short term gains. I have a sharesave maturing in April that will net around 45-50k and I'll be using this for the deposit so a max £150k property or ideally a couple of much smaller/cheaper properties (staggered purchases) as long as the rental yields stack up.
Essentially I'm starting my homework now, several months in advance and am after advice from those who have been there/done it etc.
Firstly, how do you decide what to buy and where? Is there a good source of info that shows potential incomes from various priced properties around the country? For instance a 3 bed semi round where I am would cost circa 180k but only rent ofr 750-900 a month making the excess yield a little too narrow compared to mortgage payments.
I've seen some posters on here get lucky with flats boughts for £30k each with decent deposits and renting for 3-350 a month thus providing a better % return and spreading risk. Where do people find out about these types of property? Living nearish to Cambridge I'm in an expensive area so am happy to head towards the midlands if need be.
Do most on here use an agent or self let? Obviously costs come into it here but there must be benefits in terms of security etc.
Mortgage on interest only or repayment? Or IO and then overpay with excess income as and when?
Apologies if these are either ill thought out or basic questions but you have to start somewhere and if you don't ask you'll never know
Mid next year I wish to purchse my first BTL property, more for future retirement help than any short term gains. I have a sharesave maturing in April that will net around 45-50k and I'll be using this for the deposit so a max £150k property or ideally a couple of much smaller/cheaper properties (staggered purchases) as long as the rental yields stack up.
Essentially I'm starting my homework now, several months in advance and am after advice from those who have been there/done it etc.
Firstly, how do you decide what to buy and where? Is there a good source of info that shows potential incomes from various priced properties around the country? For instance a 3 bed semi round where I am would cost circa 180k but only rent ofr 750-900 a month making the excess yield a little too narrow compared to mortgage payments.
I've seen some posters on here get lucky with flats boughts for £30k each with decent deposits and renting for 3-350 a month thus providing a better % return and spreading risk. Where do people find out about these types of property? Living nearish to Cambridge I'm in an expensive area so am happy to head towards the midlands if need be.
Do most on here use an agent or self let? Obviously costs come into it here but there must be benefits in terms of security etc.
Mortgage on interest only or repayment? Or IO and then overpay with excess income as and when?
Apologies if these are either ill thought out or basic questions but you have to start somewhere and if you don't ask you'll never know
The BTL thing seems to be a wheeze of the past. In the old days you made a bit on the rent & enjoyed the rising market for the capital value of the property. Now the market seems to have stalled, and the arse ache of tenants seems to outweigh the income.
Just a word to the wise from a seasoned landlord.
Just a word to the wise from a seasoned landlord.
2 sMoKiN bArReLs said:
The BTL thing seems to be a wheeze of the past. In the old days you made a bit on the rent & enjoyed the rising market for the capital value of the property. Now the market seems to have stalled, and the arse ache of tenants seems to outweigh the income.
Just a word to the wise from a seasoned landlord.
The only reason I'm interested is because it seems like a reasonable place to dump a "pension" fund. Even if the market crashes further, the returns are hardly going to be worse than a "proper" pension fund are they? And that's not allowing for the possibility of my funds being raided by a desperate Treasury at any time during the rest of my working life.Just a word to the wise from a seasoned landlord.
Art0ir said:
2 sMoKiN bArReLs said:
The BTL thing seems to be a wheeze of the past. In the old days you made a bit on the rent & enjoyed the rising market for the capital value of the property. Now the market seems to have stalled, and the arse ache of tenants seems to outweigh the income.
Just a word to the wise from a seasoned landlord.
The only reason I'm interested is because it seems like a reasonable place to dump a "pension" fund. Even if the market crashes further, the returns are hardly going to be worse than a "proper" pension fund are they? And that's not allowing for the possibility of my funds being raided by a desperate Treasury at any time during the rest of my working life.Just a word to the wise from a seasoned landlord.
Good luck2 sMoKiN bArReLs said:
Art0ir said:
2 sMoKiN bArReLs said:
The BTL thing seems to be a wheeze of the past. In the old days you made a bit on the rent & enjoyed the rising market for the capital value of the property. Now the market seems to have stalled, and the arse ache of tenants seems to outweigh the income.
Just a word to the wise from a seasoned landlord.
The only reason I'm interested is because it seems like a reasonable place to dump a "pension" fund. Even if the market crashes further, the returns are hardly going to be worse than a "proper" pension fund are they? And that's not allowing for the possibility of my funds being raided by a desperate Treasury at any time during the rest of my working life.Just a word to the wise from a seasoned landlord.
Good luckArt0ir said:
2 sMoKiN bArReLs said:
The BTL thing seems to be a wheeze of the past. In the old days you made a bit on the rent & enjoyed the rising market for the capital value of the property. Now the market seems to have stalled, and the arse ache of tenants seems to outweigh the income.
Just a word to the wise from a seasoned landlord.
The only reason I'm interested is because it seems like a reasonable place to dump a "pension" fund. Even if the market crashes further, the returns are hardly going to be worse than a "proper" pension fund are they? And that's not allowing for the possibility of my funds being raided by a desperate Treasury at any time during the rest of my working life.Just a word to the wise from a seasoned landlord.
I have a pension fund of about 120k from when I was employed. I can't touch it until I'm 55, I can't invest it in what I would like (ie residential property). Ultimately its just some numbers in an account that I have little control over. Last year it dropped in value significantly.
Property is a great pension investment, and as long as the numbers stack up, you will end up with a house that you have paid very little for, after 10-15 years.
Just my opinion after investing in both sides of the market.
Edited by 98elise on Saturday 28th September 14:28
98elise said:
This is exactly what I'm doing. I'm self employed so I don't get a pension. I've bought house 1 and 2, and until recently I had a couple of flats. I've sold the flats, and I'm buying house 3 and 4. Each of these properties is making me an income NOW, which is growing with inflation. The ROI on every pound I've put in is 10-14%, and thats ignoring any capital gains. When I die it can all be left to my kids.
I have a pension fund of about 120k from when I was employed. I can't touch it until I'm 55, I can't invest it in what I would like (ie residential property). Ultimately its just some numbers in an account that I have little control over. Last year it dropped in value significantly.
Property is a great pension investment, and as long as the numbers stack up, you will end up with a house that you have paid very little for, after 10-15 years.
Just my opinion after investing in both sides of the market.
You can use the £120k and invest it in commercial property as part of your SIPS. I know a guy who specialises in this and pools together a few pension pots, buys and develops a commercial site then splits the income of the rents back into the pots. If they sell the property the profits go back in the pot too.I have a pension fund of about 120k from when I was employed. I can't touch it until I'm 55, I can't invest it in what I would like (ie residential property). Ultimately its just some numbers in an account that I have little control over. Last year it dropped in value significantly.
Property is a great pension investment, and as long as the numbers stack up, you will end up with a house that you have paid very little for, after 10-15 years.
Just my opinion after investing in both sides of the market.
Edited by 98elise on Saturday 28th September 14:28
My pension is crap as I was asked to opt out when I was 20 by a Prudential rep otherwise I'd invest it this way. I've a substantial resi portfolio as my pension pot now so I'm not worried about the opt out, I'm sure it'll buy me a pint once a month when I retire!
cerberaperv said:
98elise said:
This is exactly what I'm doing. I'm self employed so I don't get a pension. I've bought house 1 and 2, and until recently I had a couple of flats. I've sold the flats, and I'm buying house 3 and 4. Each of these properties is making me an income NOW, which is growing with inflation. The ROI on every pound I've put in is 10-14%, and thats ignoring any capital gains. When I die it can all be left to my kids.
I have a pension fund of about 120k from when I was employed. I can't touch it until I'm 55, I can't invest it in what I would like (ie residential property). Ultimately its just some numbers in an account that I have little control over. Last year it dropped in value significantly.
Property is a great pension investment, and as long as the numbers stack up, you will end up with a house that you have paid very little for, after 10-15 years.
Just my opinion after investing in both sides of the market.
You can use the £120k and invest it in commercial property as part of your SIPS. I know a guy who specialises in this and pools together a few pension pots, buys and develops a commercial site then splits the income of the rents back into the pots. If they sell the property the profits go back in the pot too.I have a pension fund of about 120k from when I was employed. I can't touch it until I'm 55, I can't invest it in what I would like (ie residential property). Ultimately its just some numbers in an account that I have little control over. Last year it dropped in value significantly.
Property is a great pension investment, and as long as the numbers stack up, you will end up with a house that you have paid very little for, after 10-15 years.
Just my opinion after investing in both sides of the market.
Edited by 98elise on Saturday 28th September 14:28
My pension is crap as I was asked to opt out when I was 20 by a Prudential rep otherwise I'd invest it this way. I've a substantial resi portfolio as my pension pot now so I'm not worried about the opt out, I'm sure it'll buy me a pint once a month when I retire!
Edited by 98elise on Saturday 5th October 13:34
Zippee, important question first, how is the 4.3 going?
Bear in mind your share save yield will attract CGT above the 10.7k ish annual allowance from HMRC.
I took a cautious and risk averse route into the BTL market close to where you live. It was part of a plan to diversify my pension strategy & took a long term view. My experience in Ely:
I bought a 3 bed/2 bath terraced new build in 2002 given it's proximity to Cambridge/commuter belt. New build meant no maintenance requirements for the first decade.
I wanted to attract small families as tenants as opposed to migrant singletons who move more often.
Being a complete novice I decided to use a letting agent (Cheffins), and have continued to do so despite the 10% fee they collect every month. They do a background search/credit score on tenants which provides an element of comfort re rent.
The upside being, my property has never been vacant, and in the 11 years I have only had 2 tenants, and every rent payment received on time.(holding on to timber as I type)
After 5 years of capital repayment I went Interest only as I am able to make better investment use of the excess between income and mortgage - my objective is capital gain and not to clear the mortgage.
My brother in law had a very different BTL approach - smaller properties, no agents, better yield, but his experience has been a nightmare - chasing rent, chasing tenants, damaged property (the agent I use do a inspection of my property every three months). Having said this, I also know of BTL investors with the same approach who walk around with wads of cash in their pockets....
Just one view of the BTL world
Bear in mind your share save yield will attract CGT above the 10.7k ish annual allowance from HMRC.
I took a cautious and risk averse route into the BTL market close to where you live. It was part of a plan to diversify my pension strategy & took a long term view. My experience in Ely:
I bought a 3 bed/2 bath terraced new build in 2002 given it's proximity to Cambridge/commuter belt. New build meant no maintenance requirements for the first decade.
I wanted to attract small families as tenants as opposed to migrant singletons who move more often.
Being a complete novice I decided to use a letting agent (Cheffins), and have continued to do so despite the 10% fee they collect every month. They do a background search/credit score on tenants which provides an element of comfort re rent.
The upside being, my property has never been vacant, and in the 11 years I have only had 2 tenants, and every rent payment received on time.(holding on to timber as I type)
After 5 years of capital repayment I went Interest only as I am able to make better investment use of the excess between income and mortgage - my objective is capital gain and not to clear the mortgage.
My brother in law had a very different BTL approach - smaller properties, no agents, better yield, but his experience has been a nightmare - chasing rent, chasing tenants, damaged property (the agent I use do a inspection of my property every three months). Having said this, I also know of BTL investors with the same approach who walk around with wads of cash in their pockets....
Just one view of the BTL world
BLT is hard to get to stack up these days, the nice 30k properties with good yeilds were let to the oilies, the prices there have sky rocketed.
My advice is have a serious think about if you want the effort. its a serious ballache being a landlord, I do it all myself to save money as i think i can do a better job than the agents, but it does mean youll be fixing leaking taps on the weekends, sorting boilers, lost keys, broken washing machines, dealing with tenants who dont pay, etc etc etc etc etc.. its a fair bit of effort and I only do a few houses.
My advice is have a serious think about if you want the effort. its a serious ballache being a landlord, I do it all myself to save money as i think i can do a better job than the agents, but it does mean youll be fixing leaking taps on the weekends, sorting boilers, lost keys, broken washing machines, dealing with tenants who dont pay, etc etc etc etc etc.. its a fair bit of effort and I only do a few houses.
^^^ Can't agree more.
Buying in now wouldn't really stack up for me.
I bought 6 houses between 2000 and 2005 and they've all done very well. I manage myself though and the phone calls from tenants just as you've put your feet up on Friday evening are slightly annoying to say the least. In general it is a bit of a pain in the butt being a landlord to over 12 tenants. My profit stacks up well though, and my capital appreciation has been fantastic. (They're all freehold houses in Cambridge)
Having said that, it shouldn't be viewed as a ballache really as it is just part and parcel of the investment that you make, and is to be expected. The tenants just always seem to call at the worst time!
I've looked into buying another house recently and the numbers just don't work at the moment. Certainly not in the south of England and in a town where rents will be good and easy to find. The mortgage rates on BTL, the associated fees and the possibility of lowish capital growth over the next decade, all make me think it'd be far less stress and maybe just as profitable to buy funds/shares or just pay down my own mortgage with the money instead.
That's what I've done. Just dropped a chunk into Royal Mail and I'm not a gambling man!
Buying in now wouldn't really stack up for me.
I bought 6 houses between 2000 and 2005 and they've all done very well. I manage myself though and the phone calls from tenants just as you've put your feet up on Friday evening are slightly annoying to say the least. In general it is a bit of a pain in the butt being a landlord to over 12 tenants. My profit stacks up well though, and my capital appreciation has been fantastic. (They're all freehold houses in Cambridge)
Having said that, it shouldn't be viewed as a ballache really as it is just part and parcel of the investment that you make, and is to be expected. The tenants just always seem to call at the worst time!
I've looked into buying another house recently and the numbers just don't work at the moment. Certainly not in the south of England and in a town where rents will be good and easy to find. The mortgage rates on BTL, the associated fees and the possibility of lowish capital growth over the next decade, all make me think it'd be far less stress and maybe just as profitable to buy funds/shares or just pay down my own mortgage with the money instead.
That's what I've done. Just dropped a chunk into Royal Mail
and I'm not a gambling man!Gassing Station | Finance | Top of Page | What's New | My Stuff