Is it worth buying a flat to rent out?

Soldato
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lots of people don't aim to make a profit from the rent, so long as the rent covers all the bills, that is perfectly fine. although it is obviously better to aim to make a profit so it's a win win situation, but that usually requires a much larger deposit.

also it doesn't matter if he loses a little bit of money here and there, it's a long term investment, he will reap it all back a hundred times over in the long run.

to the OP, may be better to make it an interest only mortgage, that way you make a profit every month, which you can put into a separate bank account.

i'll give you an example on one of our properties:

loan outstanding £40K (flat was bought 2 decades ago was roughly £50K at the time, it's now worth £150K+, in glasgow city centre), interest only mortgage is only £89 per month, the rent is £500 a month.

it doesn't matter if the mortgage never get's paid off, we make a profit every month and the flat has tripled in value since we have had it.

the trick is if your a first time buyer, do not tell the bank you are letting it out, get it on a private mortgage, interest only.

I was perhaps a tad hasty in my response. You need to make sure that you have the liquidity to cover any costs that come up if you are renting for less or the same as the rent you are getting. You can't just assume you'll get £400pm therefore you can afford a £400pm mortgage.
It'll matter quickly if he can't afford to take that hit!

As for your final point, that's fraud.
 
Soldato
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Illegal to get a private mortgage knowing your going to rent it out. But its not illegal If bought it to live in but your circumstances changed and you "forgot" to tell your mortgage provider that your then renting it out.

One is Fraudulant
One is breach of contract
 
Soldato
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And if the lender finds out you didn't tell them they can pull the mortgage and ask you to pay all the mortgage back. Oh and plus if you don't tell your lender it invalidates any insurance you have so if your house burns down your stuffed :)
 
Associate
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Illegal to get a private mortgage knowing your going to rent it out. But its not illegal If bought it to live in but your circumstances changed and you "forgot" to tell your mortgage provider that your then renting it out.

One is Fraudulant
One is breach of contract

??? No it's not. There many different types of mortgage.... Ones for renting are usually harder to get.
 
Associate
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First rule of fight club, if you think it's "lovely" you will make bugger all. Buy something that looks like crap in a good area.
 
Soldato
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And if the lender finds out you didn't tell them they can pull the mortgage and ask you to pay all the mortgage back. Oh and plus if you don't tell your lender it invalidates any insurance you have so if your house burns down your stuffed :)


I doubt any lender would ask for the money back. They MAY..IF they find out insist you go onto a BTL

You need to provide evidence of that as I've just checked my insurance policy and it makes NO mention of that.

I guess it'll be one of those no MOT No insurance old wives tales.
 
Soldato
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HSBC let me rent out my old house for 12 months on the normal mortgage I had with them before they required it moved to a BTL. I only lived there for about 6 months as my main home before doing this.
 
Soldato
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Hi there

I don't really have much constructively to add to your thread Andr3w - I'm not a financial expert and I've only owned three properties in my life time. However, I do have two brother in laws both also RAF, one is due to come out in Aug and doesn't have a job to go to (or a home yet) and doesn't know what he wants to do. . . . . :eek:

The other one loves his job but is potentially a candidate for redundancy later this year. :eek:

My point is I'm sure given their current circumstances if they could go back to the point you're at right now they probably wouldn't hesitate to invest in property with any money saved. Like you've said yourself it's an investment and given the current state of property prices you "should" gain a considerable profit on this investment.
 
Caporegime
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Legal NO , done often yes:o

this, everybody does it, in fact you would be stupid not to, as mentioned above all you need to do is rent it out privately or live there for a month get some bills, etc in your name then move out again.

you can also avoid capital gains tax, etc if you use family members, etc to buy properties rather than putting them all in your own name too.
 
Associate
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It's quite a sought after little town due to the railway station and it's proximity to the motorways. Location location location! Other 1 beds in the same complex are up for around £425-£475? This would be at the higher end of that.

These rents sound about right considering housing benefits, I just looked up the Leeds rate and prior to April 2011 was £109.62 a week, it has now been cut to £99.23 a week for new claimants. As this effectively puts a floor on the minimum rent then this is what you can expect as rent.

(as a renter myself it annoys me that I have to compete against those on HB who push up rents with my own tax money - argh!)
 
Associate
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Always better to buy, renting is just burning money

Codswallop - take me for example, the interest on my savings pay my rent and the actual principle itself is growing with respect to the asset I intend to buy with savings (ie house prices are stagnant/falling). Buying for me in this scenario would be stupid.
 
Soldato
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Codswallop - take me for example, the interest on my savings pay my rent and the actual principle itself is growing with respect to the asset I intend to buy with savings (ie house prices are stagnant/falling). Buying for me in this scenario would be stupid.

All I'm basing it on is this,

1. For me to rent a 3 bedroom place would cost over/around £500 per month,

2. For me to get a mortgage on a 3 bedroom place is costing me £315 per month.

1. After 20 years, I will still be the exact same position

2. After 20 years I will own the house
 
Soldato
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go via a (good) agent I pay 10% + vat fro a fully managed service they sort everything.....

Just rofl. You may pay an agent but YOU are the landlord and are responsible for anything and everything that happens. And if the agent is useless then good luck with that lol. :rolleyes:

Oh and just so you know there are no rules or regulations for becoming an agent, I could set-up tomorrow as one with no experience and happily try and manage a property lol. And there is no way to find a guaranteed good agent, obviously you can ask relatives etc but your still taking a risk. Lots of stories of rip off agents taking the money and running etc.
 
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Soldato
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All I'm basing it on is this,

1. For me to rent a 3 bedroom place would cost over/around £500 per month,

2. For me to get a mortgage on a 3 bedroom place is costing me £315 per month.

1. After 20 years, I will still be the exact same position

2. After 20 years I will own the house

What happens if you have a job that requires you to move around a lot - can't resell every 6 months can you! What happens if you need to get your kids in a certain school? I get what you are saying but it is not always true and sometimes there is a unwholly burden placed on people in this country to feel like the must own property which is hardly helpful when prices are kept artificially high - partly using this logic.
 
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