One for the buy-to-let empirists!

Yeah, like a lot of folk i moved in with the gf, now wife, and rented mine out. Basically we want to keep it and pay off the mortgage, not too bothered about making profit from renting.
Once the mortgage is paid off, then we'll be a bit happier with the prospects of making some money out of it.
 
oulton said:
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GIVES



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This is where the cumulative effect comes in.

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This model roughly shows what I'm talking about.
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It seems to me like a lot of people are quick to point out that it can be hard to profit on a BTL when you compare your incoming rent against the outgoing mortgage+overheads. Is that really the end of the world? I think BTL should be looked at in the long-term.

After X amount of years your 20% deposit has turned into 100% of the house value which could easily be hundred's of thousands of pounds.

Say you put down a 20k deposit, you pay the mortgage off over 20 years on a house worth 100k. That's equivalent to 8% a year which I doubt is easy to sustain over a 20 year period in any other form of investment. AND in the long term I'm pretty sure most people will do more than break even each year.
 
mpledge52 said:
It seems to me like a lot of people are quick to point out that it can be hard to profit on a BTL when you compare your incoming rent against the outgoing mortgage+overheads. Is that really the end of the world? I think BTL should be looked at in the long-term.

After X amount of years your 20% deposit has turned into 100% of the house value which could easily be hundred's of thousands of pounds.

Say you put down a 20k deposit, you pay the mortgage off over 20 years on a house worth 100k. That's equivalent to 8% a year which I doubt is easy to sustain over a 20 year period in any other form of investment. AND in the long term I'm pretty sure most people will do more than break even each year.
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True,

plus seeing how you CAN get a BTL on a pretty low deposit I think this way of doing business has legs.
 
Maybe i'm wrong (probably am) but for all those saying that a roof needing replacing or a collapsed ceiling means a years profit is wiped out. Would this not be what buildings insurance is for?
 

Your model is slightly off banks will ask for more deposit the more btl's you have you might get 10% for the first one but it will go up with the more you own
 
Insurance doesn't cover general wear and tear and maintenance. Yes, if the entire roof collapsed insurance would cover it - not if it started leaking for example.

It won't cover failed appliances either (i.e. boiler, washing machine)
 
BTL strikes me as having 2 key points about it.

Firstly, its for people who have a sum of money they wish to invest, rather than being a scheme to make money.

And secondly, its not about profit from rent, its about owning a house that costs you zero to own over a long period that then increases in value.

Buying a house by borrowing almost all of it and then just looking for immediate profit from rent is the wrong attitude, imo.
 
Skeeter said:
BTL strikes me as having 2 key points about it.

Firstly, its for people who have a sum of money they wish to invest, rather than being a scheme to make money.

And secondly, its not about profit from rent, its about owning a house that costs you zero to own over a long period that then increases in value.

Buying a house by borrowing almost all of it and then just looking for immediate profit from rent is the wrong attitude, imo.
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This is it, really.
 
Banzai_Joe said:
Of course it would cover a roof if it leaked. That's EXACTLY what insurance is for.

Failed appliances? Wear and tear no, faulty, malfunctioned, damaged, of course!
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The value of the excess alone would make it pointless claiming for a leaking roof, as it wouldn't cost much more just to fix it (depending on the cause of course).
 
Skeeter said:
BTL strikes me as having 2 key points about it.

Firstly, its for people who have a sum of money they wish to invest, rather than being a scheme to make money.

And secondly, its not about profit from rent, its about owning a house that costs you zero to own over a long period that then increases in value.

Buying a house by borrowing almost all of it and then just looking for immediate profit from rent is the wrong attitude, imo.
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Its a good job that isn't the plan then!
 
An online quote for a mortgage is hardly an acceptance.

Delve a little deeper and come back to us with a mortgage offer

You'll also struggle to get a BTL if your rental doesn't cover at least 110% of the mortgage costs
 
It is possible and it is doable, but there are many things you need to consider.
Price of the properties, possible rent, repairs, cost, how easy it is to find a tenant, the risk to do it someone else, how will the interests move in the next 10-20 years, who will run the business, the problem of you being abroad, etc.

Start with one house and see how it goes. After 1 year you will learn a bit from the mistakes and get a new property eventually. maybe not in the same area or the same layout because you have found what the potential tenants are looking for.
 
Banzai_Joe said:
Question:
for those who are landlords and self-assess; if you let at a rate that is less than your mortgage payments, would you be liable for any tax payments/refunds? I'm clueless as to how it works really.
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Interesting. Any answer on this?

My understanding is that you are only taxed on the profit from the property, as in you offset any repairs management fees and the like against the income from the rent. After that you are allowed to make so much (capital gains!?) and then you are taxed.

I would expect that if you dont make money, the tax man wont give you anything, unless you have say, sold another property and that has given you a fair whack. Then combined you are still under the threshold and thus you don't pay the tax.

I guess what I am trying to say is that the capital gains tax would be accumulative across your property portfolio and any other investments you might have.
 
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