Buy to rent - Small amounts
Discussion
Am going to be inheriting a small amount of money, approx 40k, was thinking about buying a small property for rent, have seen a few online around the country within that budget.
Just looking for some PHers who may own buy to rents to offer some advice, warn of pitfalls, tell me I'm barking, or any other feedback or comments.
Thanks
Just looking for some PHers who may own buy to rents to offer some advice, warn of pitfalls, tell me I'm barking, or any other feedback or comments.
Thanks
I guess the first thing to ask is if you're thinking of self managing or letting the agent do it.
Next ask yourself what kind of landlord you want to be as being a good one will eat into profits a bit more and may determine whether you self manage or not. Some agents are crooks so may not manage your house as well or as ethically as you.
It's a minefield and that's before you work out potential yeilds.
I've been lucky and have, till now, had decent tenants. But then I've made a point of being present at viewings and selected the best match for me.
I also self manage so don't actually make much money but am in it for the long term. Making sure a house is tip top isn't easy but it'll be worthwhile in the end (I'm hoping!).
ETA, are you looking to put down £40k as a deposit? If so what sort of LTV/rental are you looking at?
Next ask yourself what kind of landlord you want to be as being a good one will eat into profits a bit more and may determine whether you self manage or not. Some agents are crooks so may not manage your house as well or as ethically as you.
It's a minefield and that's before you work out potential yeilds.
I've been lucky and have, till now, had decent tenants. But then I've made a point of being present at viewings and selected the best match for me.
I also self manage so don't actually make much money but am in it for the long term. Making sure a house is tip top isn't easy but it'll be worthwhile in the end (I'm hoping!).
ETA, are you looking to put down £40k as a deposit? If so what sort of LTV/rental are you looking at?
I’ve done it for getting on for 10 years I have a 3 bed that’s probably worth £130k give or take that rents for £575 pm. Tenants normally stay for 3-4 years each and at renewal there is a long list of applicants due to the third bed. All managed by a very good agent for 10% and virtually nothing for me to do I leave everything to the agent.
If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
Just been very briefly looking at stuff at the weekend. Only looking to spend around the 40k mark in total.
Have seen a number of places that have tenants in situ, likely to be quite a distance from me so will probably get them managed.
Just scribbling on the back of a beer mat, £37k purchase, current rent in situ £350 p/m, freehold property.
Have seen a number of places that have tenants in situ, likely to be quite a distance from me so will probably get them managed.
Just scribbling on the back of a beer mat, £37k purchase, current rent in situ £350 p/m, freehold property.
This is a bit of a personal question so I wouldn't expect you to answer it on a public forum, but think about what percentage of your total assets (excluding primary residence) that £40k represents.
If it's near to 100%, I would be wary of having it concentrated in one property. If it's a much smaller percentage and you have diversified other assets and investments then it may start to make more sense.
If it's near to 100%, I would be wary of having it concentrated in one property. If it's a much smaller percentage and you have diversified other assets and investments then it may start to make more sense.
BoRED S2upid said:
I’ve done it for getting on for 10 years I have a 3 bed that’s probably worth £130k give or take that rents for £575 pm. Tenants normally stay for 3-4 years each and at renewal there is a long list of applicants due to the third bed. All managed by a very good agent for 10% and virtually nothing for me to do I leave everything to the agent.
If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
I’ve got 1 bed flats that rent for more than your 3 bed. Which is lower end?If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
Badda said:
BoRED S2upid said:
I’ve done it for getting on for 10 years I have a 3 bed that’s probably worth £130k give or take that rents for £575 pm. Tenants normally stay for 3-4 years each and at renewal there is a long list of applicants due to the third bed. All managed by a very good agent for 10% and virtually nothing for me to do I leave everything to the agent.
If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
I’ve got 1 bed flats that rent for more than your 3 bed. Which is lower end?If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
Of course Groak will be along in a moment telling me I’m talking nonsense. It’s a personal opinion.
If you're a private landlord already in BTL then I can see there are arguments for carrying on.
However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
- High Stamp Duty charge (where applicable)
- Additional Capital Gains Tax (where applicable)
- No opportunity to use tax free wrappers (ISA/SIPP)
- No tax relief on interest paid
- Tenant risk
- Significant costs of entry/exit
- Necessity of "all or nothing" sale.
BoRED S2upid said:
Badda said:
BoRED S2upid said:
I’ve done it for getting on for 10 years I have a 3 bed that’s probably worth £130k give or take that rents for £575 pm. Tenants normally stay for 3-4 years each and at renewal there is a long list of applicants due to the third bed. All managed by a very good agent for 10% and virtually nothing for me to do I leave everything to the agent.
If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
I’ve got 1 bed flats that rent for more than your 3 bed. Which is lower end?If you’re doing this in areas where you’re not local a good agent could probably source you a decent property and find you tenants I’m pretty sure mine would.
I would steer clear of the lower end of the market 1 bed flats.
Of course Groak will be along in a moment telling me I’m talking nonsense. It’s a personal opinion.
rockin said:
If you're a private landlord already in BTL then I can see there are arguments for carrying on.
However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
All of this.However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
- High Stamp Duty charge (where applicable)
- Additional Capital Gains Tax (where applicable)
- No opportunity to use tax free wrappers (ISA/SIPP)
- No tax relief on interest paid
- Tenant risk
- Significant costs of entry/exit
- Necessity of "all or nothing" sale.
If you want exposure to B2L there are listed vehicles which pay out a dividend higher than most B2L's (in the SE anyway), require none of your time/action, have liquidity so you can enter/exit the market a lot more easily, diversify specific tenant risk and are set up in a way which minimises tax obligations while minimising other costs....
Badda said:
Yes I take your point (the OP is also down south btw) - I would just see a family house renting out at <£600pcm being slummish but that's probably just my own naivety.
It’s in north wales I used to live in it. The prices up here would blow your southern minds not at all a slum. I’m not sure if the OP is considering a £37,000 property now that must be a slum I’d love to know what he was looking at and where in the country. Maybe he will share his find with us.
rockin said:
If you're a private landlord already in BTL then I can see there are arguments for carrying on.
However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
There is tax relief on interest paid. Just not in a favourable way. However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
- High Stamp Duty charge (where applicable)
- Additional Capital Gains Tax (where applicable)
- No opportunity to use tax free wrappers (ISA/SIPP)
- No tax relief on interest paid
- Tenant risk
- Significant costs of entry/exit
- Necessity of "all or nothing" sale.
rockin said:
If you're a private landlord already in BTL then I can see there are arguments for carrying on.
However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
Because people have been burnt by investing in the stock market and don’t understand it. However, I'm staggered that anyone still wants to enter the business. Compared with any other form of personal investing there is,
- High Stamp Duty charge (where applicable)
- Additional Capital Gains Tax (where applicable)
- No opportunity to use tax free wrappers (ISA/SIPP)
- No tax relief on interest paid
- Tenant risk
- Significant costs of entry/exit
- Necessity of "all or nothing" sale.
I think as part of a long term diversified portfolio property that you own in your name still makes sense if everything else went wrong with your stock market investments you could kick the tenants out and live in it.
kiethton said:
All of this.
If you want exposure to B2L there are listed vehicles which pay out a dividend higher than most B2L's (in the SE anyway), require none of your time/action, have liquidity so you can enter/exit the market a lot more easily, diversify specific tenant risk and are set up in a way which minimises tax obligations while minimising other costs....
I always thought the main benefit of BTL compared to other investments was leverage?If you want exposure to B2L there are listed vehicles which pay out a dividend higher than most B2L's (in the SE anyway), require none of your time/action, have liquidity so you can enter/exit the market a lot more easily, diversify specific tenant risk and are set up in a way which minimises tax obligations while minimising other costs....
I only have one BTW, a 1 bed flat in Essex worth about 150k and bringing in 700 pcm.
Not withstanding the excessive ground rent (I couldn't persuade the other owners to buy the freehold) I do make a profit of about 6k pa partly due to getting a good managing agent at 5% when the narket was bouyant and stifking eith them since.
I'd still sell up if I could though, even though I've had tenants pretty consistently for 10 years.
Life's too short.
Not withstanding the excessive ground rent (I couldn't persuade the other owners to buy the freehold) I do make a profit of about 6k pa partly due to getting a good managing agent at 5% when the narket was bouyant and stifking eith them since.
I'd still sell up if I could though, even though I've had tenants pretty consistently for 10 years.
Life's too short.
CzechItOut said:
kiethton said:
All of this.
If you want exposure to B2L there are listed vehicles which pay out a dividend higher than most B2L's (in the SE anyway), require none of your time/action, have liquidity so you can enter/exit the market a lot more easily, diversify specific tenant risk and are set up in a way which minimises tax obligations while minimising other costs....
I always thought the main benefit of BTL compared to other investments was leverage?If you want exposure to B2L there are listed vehicles which pay out a dividend higher than most B2L's (in the SE anyway), require none of your time/action, have liquidity so you can enter/exit the market a lot more easily, diversify specific tenant risk and are set up in a way which minimises tax obligations while minimising other costs....
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