One for the buy-to-let empirists!

oulton

oulton

oulton

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I'm considering investing in buy to let.

My plan is to buy 3-4 houses together with my fiancee and possibly my sister also, then basically rent out the houses and save the profit (rent - mortgage + costs), and use the accumulated profits over time to put down more deposits and get more properties.

Have any of you guys managed this?

Considering the nonlinear relationship between n houses and time to raise a deposit one could end up with quite a large protfolio within 4-5 years - I would like to know about the potential of managing properties in this way, and how many would be comfortable for a three person operation.

We would probably look to buy nearly-ready properties without too much work needed, and all three of us have full time jobs.
 
I'd say it's quite a risky time to buy a portfolio of residential properties in the UK but then they probably said that 10 years ago before the rush!

Where are you considering buying? I think you'll be hard pushed to save up enough profits to buy further houses within 4-5 years - you'll have to pick carefully or pay big to get a large rental yield (Nice London flat with large deposit for low mortgage rate might get a reasonable yield but that means big money upfront). I've had a property rented in London with a 10%+ yield for years now - banking the profits - and still haven't saved up enough for another equivalent flat.
 
Value of the said properties?, estimated rental returns, factoring in empty periods, are you an existing buy to let owner with experience?

Do you know anything about landlords responsibilities?
 
oulton said:
(rent - mortgage + costs)
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I assume you mean self-assessment or business taxes, cos you'll have to pay em, which may or may not eat into any profits.

Remember BTL mortgages are quite a bit more expensive than residential ones, typically about 1.5% above.

My friend has about 10 properties in Nottingham that are student lets, that tends to be where the money is.
AFAIK he either manages it all himself or pays an agent to do it all, which is often the better way tbh.
I pay 8% to my agent for managing the letting of my house.
 
Value of the said properties?, estimated rental returns, factoring in empty periods, are you an existing buy to let owner with experience?

Do you know anything about landlords responsibilities?
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This is going to be a virgin venture! As for landlords reponsibilities the plan is to use a property management company to do most of the legwork as we all work abroad


Where are you considering buying? I think you'll be hard pushed to save up enough profits to buy further houses within 4-5 years - you'll have to pick carefully or pay big to get a large rental yield (Nice London flat with large deposit for low mortgage rate might get a reasonable yield but that means big money upfront). I've had a property rented in London with a 10%+ yield for years now - banking the profits - and still haven't saved up enough for another equivalent flat.
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We are aiming at the low end of the market in sunny Stoke and the surrounding areas! ;) The reason? Property is cheap.

I was looking at buying lower end properties, ie the 50-60K terraced houses, where a rent of around 450pcm can be achieved. If we bought 4-6 of those together and saved all profits (budgeting for void periods, parts and fittings, letting agents costs etc) I think we could raise the deposit for a new house within 8-12 months, take on the new mortgage and continue to grow.

Naive?
 
What financial deposits do you have for the initial properties?
BTL mortgages are generally look for at least 20-30% deposit

Who out of the three of you has that?

If it was that easy - everyone would be doing it.

Also need to cost in landlords insurance, property management fees, tenant searching, furnishing properties etc
 
buying property to rent at a time when house prices are high, doesnt seem a great idea. Plus you need to pay taxes, and as you already have jobs this could be at 40% you will also need insurance, agency fee's, gas servicing and certification, repair contingency fund etc etc.

Also learn about being a landlord, too many amateurs out there that are just in it to make a profit, you get a savvy tenant and it could end up costing you if you are totally amateur about it.
 
oulton said:
This is going to be a virgin venture! As for landlords reponsibilities the plan is to use a property management company to do most of the legwork as we all work abroad





We are aiming at the low end of the market in sunny Stoke and the surrounding areas! ;) The reason? Property is cheap.

I was looking at buying lower end properties, ie the 50-60K terraced houses, where a rent of around 450pcm can be achieved. If we bought 4-6 of those together and saved all profits (budgeting for void periods, parts and fittings, letting agents costs etc) I think we could raise the deposit for a new house within 8-12 months, take on the new mortgage and continue to grow.

Naive?
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its not that easy, sounds very amateurish to me, the time for doing this would have been a few years ago
 
Biggest problem i see is what happens if you and your fiancee split up / fall out with sister? Why not all just buy 1-2 houses on your own?
 
MrMoonX said:
buying property to rent at a time when house prices are high, doesnt seem a great idea. Plus you need to pay taxes, and as you already have jobs this could be at 40% you will also need insurance, agency fee's, gas servicing and certification, repair contingency fund etc etc.

Also learn about being a landlord, too many amateurs out there that are just in it to make a profit, you get a savvy tenant and it could end up costing you if you are totally amateur about it.
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Due to this in particular I doubt it's a great money spinner.

Would have to work out the difference between effort involved etc compared to having that 30% deposit earning interest in an ISA or similar.
 
buying property to rent at a time when house prices are high, doesnt seem a great idea.
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Property prices aren't high, as a national average they're down 23K on 5 years ago.

MrMoonX said:
its not that easy, sounds very amateurish to me, the time for doing this would have been a few years ago
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Hardly amateurish, considering we are budgeting and costing for everything.

Biggest problem i see is what happens if you and your fiancee split up / fall out with sister? Why not all just buy 1-2 houses on your own?
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Not everyone splits up/falls out. If I didn't feel secure going into business with them I wouldn't.

worst 'i've loadsa money' thread tbh
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Troll looks hungry, wont bother feeding it.
 
I must confess I don't know much about BTL, but surely if you are totally new to this, it makes sense to buy one property to get started, rather than buying a whole portfolio and ending up over your head.
 
Lots of, could have, should have around, you don't need landlords insurance, you just need buildings and a small contents insurance from a company OK with rentals (Direct Line is mine), you don't need to pay management fees, if it's a real business do it yourself, management fees are 12% per month an introduction from an estate agent fee and vetting is usually 3 weeks rent.

Consider local authority lets, guaranteed cash every 4 weeks and they bond the deposit but they pay in arrears.

You only pay tax on the profits (obviously) so you could structure repairs and maintenance around tax years to write off any profit and also structure the company so that the directors with the lowest income get the highest share.
 
maccapacca said:
Lots of, could have, should have around, you don't need landlords insurance, you just need buildings and a small contents insurance from a company OK with rentals (Direct Line is mine), you don't need to pay management fees, if it's a real business do it yourself, management fees are 12% per month an introduction from an estate agent fee and vetting is usually 3 weeks rent.

Consider local authority lets, guaranteed cash every 4 weeks and they bond the deposit but they pay in arrears.

You only pay tax on the profits (obviously) so you could structure repairs and maintenance around tax years to write off any profit and also structure the company so that the directors with the lowest income get the highest share.
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Thanks Maccapacca for the first decent bit of advice. Yeah we would most likely go for a ltd company setup and the 'profits' would soley be used to raise deposits and develop the business. As for BTL mortgages a few clicks on the money supermarket clears up the 20-30% deposit myth....
 
I was going to say set up a limited company if there are a few of you in it, that will give you a better stand point in case anything did happen. It's all structured nicely.
 
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