Buy To Let Mortgages and first time landlord
Discussion
Hi all,
I'm a 19yr old university student who has finally been allowed my grandparent's inheritance. I don't come from a rich family, quite the opposite, my parents are currently on benefits (one due to disability the other their carer). With this in mind I'd like to use this money (£100k) to setup some sort of income. My parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
At the moment I'm looking at a few properties that are £90k-£100k with the intent of buying one with a 25%-30% deposit on a 30yr fixed rate repayment BTL mortgage. Repayments seem to be around £250/month and I'm not 100% sure but rent seems to be around £500-£600/month on these properties so it seems feasible (contacting people about this tomorrow). I'm aware of a few things that I'd need to sort with any house that I'd rent like a gas safety check, landlord license (depending on location), insurance and the rest of a small list I've made. Ideally I'd buy one property this year, start renting and if after a year everything is running relatively smoothly I'd use the rest of the money to look into other properties, making sure I always have savings to fall back on of course.
Could anyone with experience renting out properties and buy to let mortgages share what to avoid, what's required to be a landlord and any general advice as I'm sure you've noticed I'm just learning about BTL and being a potential landlord.
Thanks in advance
I'm a 19yr old university student who has finally been allowed my grandparent's inheritance. I don't come from a rich family, quite the opposite, my parents are currently on benefits (one due to disability the other their carer). With this in mind I'd like to use this money (£100k) to setup some sort of income. My parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
At the moment I'm looking at a few properties that are £90k-£100k with the intent of buying one with a 25%-30% deposit on a 30yr fixed rate repayment BTL mortgage. Repayments seem to be around £250/month and I'm not 100% sure but rent seems to be around £500-£600/month on these properties so it seems feasible (contacting people about this tomorrow). I'm aware of a few things that I'd need to sort with any house that I'd rent like a gas safety check, landlord license (depending on location), insurance and the rest of a small list I've made. Ideally I'd buy one property this year, start renting and if after a year everything is running relatively smoothly I'd use the rest of the money to look into other properties, making sure I always have savings to fall back on of course.
Could anyone with experience renting out properties and buy to let mortgages share what to avoid, what's required to be a landlord and any general advice as I'm sure you've noticed I'm just learning about BTL and being a potential landlord.
Thanks in advance
slipknotted said:
Hi all,
My parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
Whose money is it? Show them this:https://www.pistonheads.com/gassing/topic.asp?h=0&f=207&t=1909981&i=0 and they may re-evaluate the choice of BTLMy parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
Remember BTW that intellect is at least partly an inherited trait when calling your parents dim.
xeny said:
slipknotted said:
Hi all,
My parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
Whose money is it? Show them this:https://www.pistonheads.com/gassing/topic.asp?h=0&f=207&t=1909981&i=0 and they may re-evaluate the choice of BTLMy parents who currently control the money are adamant that it must be spent on property, despite them having no financial skills or experience of note and actually being quite dim. They've finally decided to let me invest the money in buy to let mortgages instead of buying a house outright to live in.
Remember BTW that intellect is at least partly an inherited trait when calling your parents dim.
k of people not doing things correctly. The money came from my grandmother's estate when she died, she had no will but the whole family was very aware she wanted the inheritance to go to the grandchildren. My father being the gent he is honoured this and my sister and I each got our share. When I say got our share what I mean is my sister holds all the money as my parents can't hold it due to being on benefits, etc. My mother came up with the notion that we had to to spend the money on a house, bare in mind this isn't her money it's her husband's, soon to be mine, but my father being spineless refuses to comment on this decision. This meant my sister got her share immediately as she wanted to buy a house, all good, but because I was just finishing sixth form at the time and I didn't want to buy a house and wanted to learn to make this money work as I doubt I'd get a lump sum like this again in my life, wasn't allowed my share.
Until recently when my mother suddenly had the completely original idea that I totally hadn't mentioned to her multiple times to invest in BTL. I'm aware that BTL, like any investment has risk but also reward and so far those risks seem acceptable, but that may change with my education on the subject.
And for those who care about me insulting my parent's intelligence, please that is not something you'd contest if you met them and knew their history. Don't defend people you don't know. At least my sister and I are making a change to our attitude and socioeconomic standing.
Spend £90k on a 2 bedroomed place and live in it.
Rent a room to someone.
Spend 6 months or a year "learning" about property and the hassles and costs and benefits of owning one.
Students have part time jobs, don't they? Get one in a property-managing letting agents.
After 6 months or a year, if you still fancy it, refinance the original and.......off you go!!
(that's one of 100 possible varieties of "advice" you could adopt or ignore)
Rent a room to someone.
Spend 6 months or a year "learning" about property and the hassles and costs and benefits of owning one.
Students have part time jobs, don't they? Get one in a property-managing letting agents.
After 6 months or a year, if you still fancy it, refinance the original and.......off you go!!
(that's one of 100 possible varieties of "advice" you could adopt or ignore)
Spending it on property is probably a good idea but, as posted above, you're likely best to buy a place to live in yourself.
As you're currently at university, if you buy somewhere in the area your university is in, you've got 2-3 years to learn more about the specifics of renting etc, plus renting a room to a fellow student to give some extra income.
Then once you graduate, you can make a decision as to what to do. If you move somewhere else for a job, maybe buy a place there for yourself.
As you're currently at university, if you buy somewhere in the area your university is in, you've got 2-3 years to learn more about the specifics of renting etc, plus renting a room to a fellow student to give some extra income.
Then once you graduate, you can make a decision as to what to do. If you move somewhere else for a job, maybe buy a place there for yourself.
A buy to let for a first time buyer, first time landlord and as a student with low or no income is a tough old mortgage to place (I am a broker). most lenders have £25k min income requirement and are far more stringent when it is a first time buyer as they are very concerned that you will live in it.
Buy for cash, if you can, near your uni and rent a room, maybe then keep it when you graduate and get a job, then refinance it on a let to buy and use the deposit for another place.
Buy for cash, if you can, near your uni and rent a room, maybe then keep it when you graduate and get a job, then refinance it on a let to buy and use the deposit for another place.
Op
I did exactly this when I was in Uni - but rather than inheritance back then you could open as many student bank accounts (in different banks) with 0% overdraft. So I drew all the cash out and then once a week took £50 out of one paid it into another etc as they needed to log “income”.
Anyway I bought a BTL with that and firstly it meant I had zero rent to pay plus made money to cover mortgage and more + the lovely capital growth.
Also back then there wasn’t the 3% SDLT surcharge. This now is a royal PITA as if you have BTL plus your main house and want to move from your main house it will cost 3% of the new property unless I sell up the other BTL’s which in turn triggers a potential capital gains tax charge.
You could of course buy a house outright with the cash which is lovely risk free, you could rent a room out too which will help towards food bills utilities and any DIY needed.
I did exactly this when I was in Uni - but rather than inheritance back then you could open as many student bank accounts (in different banks) with 0% overdraft. So I drew all the cash out and then once a week took £50 out of one paid it into another etc as they needed to log “income”.
Anyway I bought a BTL with that and firstly it meant I had zero rent to pay plus made money to cover mortgage and more + the lovely capital growth.
Also back then there wasn’t the 3% SDLT surcharge. This now is a royal PITA as if you have BTL plus your main house and want to move from your main house it will cost 3% of the new property unless I sell up the other BTL’s which in turn triggers a potential capital gains tax charge.
You could of course buy a house outright with the cash which is lovely risk free, you could rent a room out too which will help towards food bills utilities and any DIY needed.
Caddyshack said:
A buy to let for a first time buyer, first time landlord and as a student with low or no income is a tough old mortgage to place (I am a broker). most lenders have £25k min income requirement and are far more stringent when it is a first time buyer as they are very concerned that you will live in it.
Buy for cash, if you can, near your uni and rent a room, maybe then keep it when you graduate and get a job, then refinance it on a let to buy and use the deposit for another place.
Hmm I noticed most lenders want that £25k/annum income...is there a possibility for flexibility as I've already got a place to live and have enough cash to pay off the mortgage outright?Buy for cash, if you can, near your uni and rent a room, maybe then keep it when you graduate and get a job, then refinance it on a let to buy and use the deposit for another place.
Would've been a good idea to buy a place near my uni and rent a room but I go to Winchester so it's pretty much impossible to get a 2 bed anything for £100k. Plus I've already signed a rental agreement with my mates for the upcoming uni year. I was thinking of buying up north where you can get a decent 2 bed house for ~£100k
slipknotted said:
Hmm I noticed most lenders want that £25k/annum income...is there a possibility for flexibility as I've already got a place to live and have enough cash to pay off the mortgage outright?
Would've been a good idea to buy a place near my uni and rent a room but I go to Winchester so it's pretty much impossible to get a 2 bed anything for £100k. Plus I've already signed a rental agreement with my mates for the upcoming uni year. I was thinking of buying up north where you can get a decent 2 bed house for ~£100k
The “cheap up north” bit also means it remains so. Would've been a good idea to buy a place near my uni and rent a room but I go to Winchester so it's pretty much impossible to get a 2 bed anything for £100k. Plus I've already signed a rental agreement with my mates for the upcoming uni year. I was thinking of buying up north where you can get a decent 2 bed house for ~£100k
If you live in the SE and then “move away” you’ll never be able to come back onto the same rung of the ladder unless you have more cash or borrow more. Basically the compound growth on the higher value asset keeps pushing up & SE is such high demand.
Welshbeef said:
Op
I did exactly this when I was in Uni - but rather than inheritance back then you could open as many student bank accounts (in different banks) with 0% overdraft. So I drew all the cash out and then once a week took £50 out of one paid it into another etc as they needed to log “income”.
Anyway I bought a BTL with that and firstly it meant I had zero rent to pay plus made money to cover mortgage and more + the lovely capital growth.
Also back then there wasn’t the 3% SDLT surcharge. This now is a royal PITA as if you have BTL plus your main house and want to move from your main house it will cost 3% of the new property unless I sell up the other BTL’s which in turn triggers a potential capital gains tax charge.
You could of course buy a house outright with the cash which is lovely risk free, you could rent a room out too which will help towards food bills utilities and any DIY needed.
Hehe nice move with the student bank accounts, I did look and you're only allowed 1 now lol.I did exactly this when I was in Uni - but rather than inheritance back then you could open as many student bank accounts (in different banks) with 0% overdraft. So I drew all the cash out and then once a week took £50 out of one paid it into another etc as they needed to log “income”.
Anyway I bought a BTL with that and firstly it meant I had zero rent to pay plus made money to cover mortgage and more + the lovely capital growth.
Also back then there wasn’t the 3% SDLT surcharge. This now is a royal PITA as if you have BTL plus your main house and want to move from your main house it will cost 3% of the new property unless I sell up the other BTL’s which in turn triggers a potential capital gains tax charge.
You could of course buy a house outright with the cash which is lovely risk free, you could rent a room out too which will help towards food bills utilities and any DIY needed.
So you're saying BTL can work nicely as long as I work around Stamp Duty as much as I can with my residential house?
Buy this.
https://www.rightmove.co.uk/properties/105513593#/
My agent will get you 450-500 for it. You'll get 400 after his bung (10%+vat)
If after a year you don't like it, sell it again. I'd possibly buy it, or, more likely, know someone else who will.
Ps: I could sort it all for you from beginning to end, but you're not my mate and I don't owe you a favour, so it'd cost you two grand.
https://www.rightmove.co.uk/properties/105513593#/
My agent will get you 450-500 for it. You'll get 400 after his bung (10%+vat)
If after a year you don't like it, sell it again. I'd possibly buy it, or, more likely, know someone else who will.
Ps: I could sort it all for you from beginning to end, but you're not my mate and I don't owe you a favour, so it'd cost you two grand.
Groat said:
Buy this.
https://www.rightmove.co.uk/properties/105513593#/
My agent will get you 450-500 for it. You'll get 400 after his bung (10%+vat)
If after a year you don't like it, sell it again. I'd possibly buy it, or, more likely, know someone else who will.
Ps: I could sort it all for you from beginning to end, but you're not my mate and I don't owe you a favour, so it'd cost you two grand.
Is that a rough ASBO area or is that the norm. https://www.rightmove.co.uk/properties/105513593#/
My agent will get you 450-500 for it. You'll get 400 after his bung (10%+vat)
If after a year you don't like it, sell it again. I'd possibly buy it, or, more likely, know someone else who will.
Ps: I could sort it all for you from beginning to end, but you're not my mate and I don't owe you a favour, so it'd cost you two grand.
Welshbeef said:
slipknotted said:
Hmm I noticed most lenders want that £25k/annum income...is there a possibility for flexibility as I've already got a place to live and have enough cash to pay off the mortgage outright?
Would've been a good idea to buy a place near my uni and rent a room but I go to Winchester so it's pretty much impossible to get a 2 bed anything for £100k. Plus I've already signed a rental agreement with my mates for the upcoming uni year. I was thinking of buying up north where you can get a decent 2 bed house for ~£100k
The “cheap up north” bit also means it remains so. Would've been a good idea to buy a place near my uni and rent a room but I go to Winchester so it's pretty much impossible to get a 2 bed anything for £100k. Plus I've already signed a rental agreement with my mates for the upcoming uni year. I was thinking of buying up north where you can get a decent 2 bed house for ~£100k
If you live in the SE and then “move away” you’ll never be able to come back onto the same rung of the ladder unless you have more cash or borrow more. Basically the compound growth on the higher value asset keeps pushing up & SE is such high demand.
slipknotted said:
Makes sense but I was more thinking in terms of BTL that a 2 bed house would make selling it easier if it were necessary. Would it make more sense to buy a 1 bed flat in the SE or a 2 bed house in the north?
Having been a LL for a number of decades you want the property close to where you live. Welshbeef said:
Groat said:
Welshbeef said:
Is that a rough ASBO area or is that the norm.
What impression did google maps give you?
Assuming it's not an estate agent playing a game, it would be an excellent addition to any professional landlord's portfolio.
Groat said:
Welshbeef said:
Groat said:
Welshbeef said:
Is that a rough ASBO area or is that the norm.
What impression did google maps give you?Assuming it's not an estate agent playing a game, it would be an excellent addition to any professional landlord's portfolio.
Chainsaw Rebuild said:
Could you invest the money in property via investment in a fund that invests in property?
My thinking is you can avoid the hassle of being a BTL landlord, you can get control of your money and you can put it to work as an investment.
That's a thought, you'd at least get a degree of diversification, and could potentially gradually move it into ISAs.My thinking is you can avoid the hassle of being a BTL landlord, you can get control of your money and you can put it to work as an investment.
To be frank having all your assets in one BTL seems not ideal, although I appreciate the OP has troublesome constraints.
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