Buying property to rent out
Discussion
Been toying with the idea of buying somewhere (most likely a flat) within my local area to rent out. I'm happy where I am at the moment, living at home with the parents, but feel that now might be the right time to buy. I've never had any form of credit, so getting a mortgage might be difficult, but I'm on good enough money and house prices aren't too bad locally.
My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
Not a bad idea at all, as long as your in for the long term.
Check the area for flats, around my way we're saturated with them, hence they dont sell very easy and the rental income isnt great.
Go into your local letting agents and ask whats in demand at the moment. If they're in your budget, two bed semis would be a better bet.
Check the area for flats, around my way we're saturated with them, hence they dont sell very easy and the rental income isnt great.
Go into your local letting agents and ask whats in demand at the moment. If they're in your budget, two bed semis would be a better bet.
Not sure if this is the best time to buy. Prices are low but could go lower. Also doesn't look like it is going up any time soon.
If you can get a bargain with say 10 percent gross yield then it might be worthwhile.
In anycase you will need to be holding the property for 10+ years to be confident of a profit.
If you can get a bargain with say 10 percent gross yield then it might be worthwhile.
In anycase you will need to be holding the property for 10+ years to be confident of a profit.
ArtVandelay said:
Been toying with the idea of buying somewhere (most likely a flat) within my local area to rent out. I'm happy where I am at the moment, living at home with the parents, but feel that now might be the right time to buy. I've never had any form of credit, so getting a mortgage might be difficult, but I'm on good enough money and house prices aren't too bad locally.
My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
My ten penneth for what its worth:My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
1. There are lots of apartments available to let. Competition is high and rental incomes are under pressure they can be harder to let.
2. Steer away from properties that need work on them.....unless you can do the work yourself, or you know what your doing, as costs can easily out of control. Look for something that is finished and ready to stick straight onto the rental market.
4. Be realisitc in terms of rental you ask. Its better to have it rented out than stood empty.
5. Don't over stretch your self just in case you have longish periods when the place is empty and you have to pay the mortgage.
6. Remeber at some stage you may want to sell it. So pay attention asto whether it will be an interesting proposition for buyers when the time is right.
BatleyBoy said:
ArtVandelay said:
Been toying with the idea of buying somewhere (most likely a flat) within my local area to rent out. I'm happy where I am at the moment, living at home with the parents, but feel that now might be the right time to buy. I've never had any form of credit, so getting a mortgage might be difficult, but I'm on good enough money and house prices aren't too bad locally.
My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
My ten penneth for what its worth:My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
1. There are lots of apartments available to let. Competition is high and rental incomes are under pressure they can be harder to let.
2. Steer away from properties that need work on them.....unless you can do the work yourself, or you know what your doing, as costs can easily out of control. Look for something that is finished and ready to stick straight onto the rental market.
4. Be realisitc in terms of rental you ask. Its better to have it rented out than stood empty.
5. Don't over stretch your self just in case you have longish periods when the place is empty and you have to pay the mortgage.
6. Remeber at some stage you may want to sell it. So pay attention asto whether it will be an interesting proposition for buyers when the time is right.
I won't be stretching myself financially although I do work away half the year meaning managing the property will be difficult. I'd be buying something decent, not requiring too much work although I've got friends who are plumbers etc.
Buying a flat, one then becomes dependent upon what the other occupants/tenants of the other flats are like, noise, vandalism, nuisance etc., and of course if the flat is within a block of flats, then you have both management clauses and maintenance costs etc.
If you are thinking of student lets, then to escape both legislation/regulations etc., then perhaps a small 2-3 bed terrace house, letting to two or three students, might offer a greater investment return.
If you are thinking of student lets, then to escape both legislation/regulations etc., then perhaps a small 2-3 bed terrace house, letting to two or three students, might offer a greater investment return.
Wings said:
Buying a flat, one then becomes dependent upon what the other occupants/tenants of the other flats are like, noise, vandalism, nuisance etc., and of course if the flat is within a block of flats, then you have both management clauses and maintenance costs etc.
If you are thinking of student lets, then to escape both legislation/regulations etc., then perhaps a small 2-3 bed terrace house, letting to two or three students, might offer a greater investment return.
I suppose a terraced house would be the better option, there's plenty in the area to choose from too.If you are thinking of student lets, then to escape both legislation/regulations etc., then perhaps a small 2-3 bed terrace house, letting to two or three students, might offer a greater investment return.
In terms of a deposit, I've got savings I can use and if need be, parents could offer a lending hand
Flats are usually owned as a leasehold and often subject to restrictions on letting, such as not allowed or allowed subjedt to landlord's consent for which you will be charged. They may wish to see references and perhaps not like them so no consent forhcoming.
Flats do have the advantage of someone else looking after the exterior. Freehold houses are easier but then you have to fix the roof etc and how do you police it if vacant and you are away. Can family help you on that score?
Houses in South Shields often are subject to Ground Rents so ask about that.
Flats do have the advantage of someone else looking after the exterior. Freehold houses are easier but then you have to fix the roof etc and how do you police it if vacant and you are away. Can family help you on that score?
Houses in South Shields often are subject to Ground Rents so ask about that.
Second what a lot of people have said here already.
I rent a flat out in an area which has an oversupply of flats and selling prices were forced down due to a lot of repossessions of flats which had been BTL. I was unable to sell and had to let instead. It's turned out to be a good move - the flat is a very good size 2 bed with a garage and hence slightly more in demand. I also didn't have 100% mortgage (absolute no-no IMHO) and had managed to get a decent tracker mortgage plus was lucky with interest rates.
If you do decide to go ahead with BTL, the following may be helpful:
- as said, find a flat where there's not already a lot of competition.
- manage it yourself - don't let an agent do it for you.
- total the service charges and ground rent for the year, divide by 12 and put aside that amount every month WITHOUT FAIL plus some extra for any unexpected repairs. Trust me on this one.
- maintain a good relationship with your tenants, don't penny pinch or mess them about.
- consider it a long term investment - can you really afford it? What happens if you meet someone and want to buy/rent a house together? Can you afford both? Can you afford to pay the mortgage yourself between tenants?
- rental insurance in case of floods/non payment of rent etc.
- presentation of the flat is everything - decorate it nicely, put nice furniture in (if letting furnished, you don't have to spend a fortune).
- DO NOT let to DSS, however much your social conscience pricks you. Just don't.
I rent a flat out in an area which has an oversupply of flats and selling prices were forced down due to a lot of repossessions of flats which had been BTL. I was unable to sell and had to let instead. It's turned out to be a good move - the flat is a very good size 2 bed with a garage and hence slightly more in demand. I also didn't have 100% mortgage (absolute no-no IMHO) and had managed to get a decent tracker mortgage plus was lucky with interest rates.
If you do decide to go ahead with BTL, the following may be helpful:
- as said, find a flat where there's not already a lot of competition.
- manage it yourself - don't let an agent do it for you.
- total the service charges and ground rent for the year, divide by 12 and put aside that amount every month WITHOUT FAIL plus some extra for any unexpected repairs. Trust me on this one.
- maintain a good relationship with your tenants, don't penny pinch or mess them about.
- consider it a long term investment - can you really afford it? What happens if you meet someone and want to buy/rent a house together? Can you afford both? Can you afford to pay the mortgage yourself between tenants?
- rental insurance in case of floods/non payment of rent etc.
- presentation of the flat is everything - decorate it nicely, put nice furniture in (if letting furnished, you don't have to spend a fortune).
- DO NOT let to DSS, however much your social conscience pricks you. Just don't.
Edited by Silver on Tuesday 25th January 21:11
I bought one last year and at the moment it's all going reasonably well.
I think a lot will depend on what sort of deposit you can get as this will determine what interest rate you get offered, I got mine at 3.19% fixed as I borrowed against my existing property rather than using a BTL mortgage as BTL mortgages will have higher rates.
Mine was a bit scruffy when I bought it which put a lot of people off, estate agents photography skills didn't help!, but the kitchen and bathroom fittings were all good and therefore completely painting, carpeting, new doors, ironmongery and electrical fittings came out at around £2k including 2 new windows.
If your buying a flat look at the ground rent and maintenance charges, these can be silly and can easily turn a modest profit into a loss, luckily mine has no communal areas to maintain and private access.
Only real issue I've had 8 months down the line is that the original tenants are moving out in a few weeks, so there will be another lot of agents fee's although as the rental market in strong in my area I should be able to offset those against increasing the rent slightly.
When I was looking I worked on the basis that if I couldn't see me living in the property I would expect anyone else to pay top rates to rent it.
I think a lot will depend on what sort of deposit you can get as this will determine what interest rate you get offered, I got mine at 3.19% fixed as I borrowed against my existing property rather than using a BTL mortgage as BTL mortgages will have higher rates.
Mine was a bit scruffy when I bought it which put a lot of people off, estate agents photography skills didn't help!, but the kitchen and bathroom fittings were all good and therefore completely painting, carpeting, new doors, ironmongery and electrical fittings came out at around £2k including 2 new windows.
If your buying a flat look at the ground rent and maintenance charges, these can be silly and can easily turn a modest profit into a loss, luckily mine has no communal areas to maintain and private access.
Only real issue I've had 8 months down the line is that the original tenants are moving out in a few weeks, so there will be another lot of agents fee's although as the rental market in strong in my area I should be able to offset those against increasing the rent slightly.
When I was looking I worked on the basis that if I couldn't see me living in the property I would expect anyone else to pay top rates to rent it.
andye30m3 said:
I think a lot will depend on what sort of deposit you can get as this will determine what interest rate you get offered, I got mine at 3.19% fixed as I borrowed against my existing property rather than using a BTL mortgage as BTL mortgages will have higher rates.
NoelWatson said:
andye30m3 said:
I think a lot will depend on what sort of deposit you can get as this will determine what interest rate you get offered, I got mine at 3.19% fixed as I borrowed against my existing property rather than using a BTL mortgage as BTL mortgages will have higher rates.
Once the fixed rate runs out it will just be a matter of seeing how mortgage rates / repayments compare to the rental income. I guess it depends on if rents go up, down or stay the same and by how much compared to repayments
Good luck with the property hunt, I'm looking at something similar, couple of other points.
If its a gross return on your property price, remember at resale you could be charged capital gains tax. Although this is possible to avoid in some cases if you have had the property for less than 3 years when you sell.
If it's investment you are looking for some funds offer to return 100% of your initial investment after 5 years.
It depends on if you can afford to enough money down to turn a profit that will allow you to get something from it, otherwise you could end up paying out of your own pocket for repairs, upgrades etc.
Good luck with the property hunt, oh one other thing look outside your local area, a bit of research is always worth while in areas a bit further away.
If its a gross return on your property price, remember at resale you could be charged capital gains tax. Although this is possible to avoid in some cases if you have had the property for less than 3 years when you sell.
If it's investment you are looking for some funds offer to return 100% of your initial investment after 5 years.
It depends on if you can afford to enough money down to turn a profit that will allow you to get something from it, otherwise you could end up paying out of your own pocket for repairs, upgrades etc.
Good luck with the property hunt, oh one other thing look outside your local area, a bit of research is always worth while in areas a bit further away.
Silver said:
- DO NOT let to DSS, however much your social conscience pricks you. Just don't.
That's a tricky one. I know several landlords who have been very lucky with their DSS tenants. Paid on time, no hassle from the tenant, property kept in good order.I know others who have had a nightmare with young professional couples.
Tenant selection is a bit of a lottery.
ArtVandelay said:
Been toying with the idea of buying somewhere (most likely a flat) within my local area to rent out. I'm happy where I am at the moment, living at home with the parents, but feel that now might be the right time to buy. I've never had any form of credit, so getting a mortgage might be difficult, but I'm on good enough money and house prices aren't too bad locally.
My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
The biggest problem you will have from a finance point of view is that you are a first time buyer.My questions are: is now the time to buy? Will it be a good investment? Am I mad?
Cheers, all advice appreciated
Alot of lenders won't offer BTL products to people who have never had a mortgage as they think (rightly or wrongly it doesn't matter) that an applicant will obtain a BTL mortgage they couldn't get on a resi basis and then simply live in the property.
scotal said:
Silver said:
- DO NOT let to DSS, however much your social conscience pricks you. Just don't.
That's a tricky one. I know several landlords who have been very lucky with their DSS tenants. Paid on time, no hassle from the tenant, property kept in good order.I know others who have had a nightmare with young professional couples.
Tenant selection is a bit of a lottery.
The other coincidental thing to happen out of it was that the nutter was unfortunate enough to come to some harm at a time when I was elsewhere.
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