Property investment

[L.H.M]

Hi all, any members on here who have buy-let-properties? I'm looking to invest in my first buy-to-let. Potentially it could be a cash purchase - would it be worth taking a mortgage on a second property and using income from the first to pay the mortgage? I also wonder whether I should look at properties abroad rather than the UK? I'm researching everything but feeling a bit overwhelmed with all the information. Would be really interested in others experiences (is BTL still worth it?). Thanks in advance.

 

[Gordon - Commercial Finance]

I have multiple buy to let properties.
For me, it’s more hassle than it is worth personally and I’m in the process of liquidating my investments and I will then go in to development instead.
Depends on your goals, and what you want to get out of it.

 

[Mr D]

Hi all, any members on here who have buy-let-properties? I'm looking to invest in my first buy-to-let. Potentially it could be a cash purchase - would it be worth taking a mortgage on a second property and using income from the first to pay the mortgage? I also wonder whether I should look at properties abroad rather than the UK? I'm researching everything but feeling a bit overwhelmed with all the information. Would be really interested in others experiences (is BTL still worth it?). Thanks in advance.

I've worked with a BTL investor with several properties, some years she made a profit on the rent, some years she didn't (losses could be a few grand).
Damage, maintenance, interest payments (when it was allowed) and at least one tenant who had to be evicted for non payment of rent all impacted the profitability. Plus time spent empty while of course still paying for the property.
She purchased the properties when house prices were cheaper so plenty of equity in them - her investment return was considerable if she ever cashes in. Even a price crash would still see her sitting on considerable equity.

 

[Mark T Jones]

Where are you based?

What is your experience in property rental?

What are your goals (short, mud and long term)?

Property re the certainly isn’t a doddle nor a guaranteed money spinner. Long term, it should pay back unless the government continue to attack it.

 

[L.H.M]

Interesting comments to mull over here, thanks. The truth is I've received an inheritance and buy to let seemed the best option for it, but as I said, its all info overload. I also considerd buying a holiday home abroad. I think it would bring in less income but the benefit of having a holiday home I could use too.

 

[Socio South West]

I also considerd buying a holiday home abroad. I think it would bring in less income but the benefit of having a holiday home I could use too.

Tread carefully abroad - remember that you will need a local management team to run the place properly: Buy at the LOCAL rates not at the rate some sun tanned expat agent expects a British mug with a fat cheque book to pay.

 

[Gordon - Commercial Finance]

Interesting comments to mull over here, thanks. The truth is I've received an inheritance and buy to let seemed the best option for it, but as I said, its all info overload. I also considerd buying a holiday home abroad. I think it would bring in less income but the benefit of having a holiday home I could use too.

Buy to let isn't for everyone , but it may be good for you. Again it really depends on what you want from it. Are you looking for capital appreciation? Do you want a hassle free way to invest your money? Are you hoping to gain a monthly income from property?
Too many variables.

What I would say is that if you have a large amount of cash, it would not be a good use of it to plough the whole lot into a single property. While on the surface it may seem desirable and a good idea to not have a mortgage, debt can be a very useful tool when investing in property.

For example, if you have £100,000, you could buy a flat and rent it for say, £600pcm (Scottish market figures...), and yes that would be fun to not have a mortgage and have 1 property. However instead you could buy 4 places for £100,000 each with mortgages at 75%, rent all 4 for £600pcm each, cover all 4 mortgages easily and have plenty income left over if that's what you are looking for.
The effect this has is that your capital appreciation potential is multiplied, and also you spread your risk. Your 1 flat with no mortgage leaves you very exposed to empty periods, structural work costing you money, depreciation in the market. Buy your 4 properties sensibly and even if there's issues with 1 place, you get the capital appreciation and consistent income from the other 3.

 

[Stedurham]

Gordons way for me, why make £600 when you can make £1500.
Avoid abroad I know friends who have property in france and tenerife, that made them good returns, they used to go all time for first 2 years then never bother as seen it all.
Then maintenance issues pop up paying someone to give keys clean it etc
Now they are stuck and property prices have massively dropped add in pound drop and they are almost 50% out of pocket

 

[Root 66 Woodshop]

If it's something you're looking at doing seriously, contact your local National Landlord Association - they'll help you with so much once you become a member, you'll even have access to solicitors at discounted prices and they are a wealth of knowledge.

My landlord (And very good friend) is looking at how the government is reducing the ability to claim tax back on repairs etc etc he's worked out that on one of his properties he makes about £3000 a year on... which all sounds good and well, however cost for repairs last year was £4200 as the tenant refused access to the builders, wouldn't allow access to him himself to check on a "damp" issue that they claimed the house was suffering from...

The "Damp" issue ended up being due to condensation because they never opened the windows to let air in... but they'd decided it was the house, so started to rip all the plaster off all the walls! realised it was a "bigger job" that they could do themselves, so scarpered leaving him without 2 months rent and damaged walls where they'd buggered everything up... cheeky sods then tried to claim back the deposit from the DPS!

 

[Gordon - Commercial Finance]

The "Damp" issue ended up being due to condensation because they never opened the windows to let air in... but they'd decided it was the house, so started to rip all the plaster off all the walls! realised it was a "bigger job" that they could do themselves, so scarpered leaving him without 2 months rent and damaged walls where they'd buggered everything up... cheeky sods then tried to claim back the deposit from the DPS!

Unfortunately these kinds of things just come up far too often for my liking! Hence why I am now divesting. Will keep one BTL for another 2 years most likely, and the proceeds I get from sale of the rest will go into development instead.

 

[Mr D]

If it's something you're looking at doing seriously, contact your local National Landlord Association - they'll help you with so much once you become a member, you'll even have access to solicitors at discounted prices and they are a wealth of knowledge.

My landlord (And very good friend) is looking at how the government is reducing the ability to claim tax back on repairs etc etc he's worked out that on one of his properties he makes about £3000 a year on... which all sounds good and well, however cost for repairs last year was £4200 as the tenant refused access to the builders, wouldn't allow access to him himself to check on a "damp" issue that they claimed the house was suffering from...

The "Damp" issue ended up being due to condensation because they never opened the windows to let air in... but they'd decided it was the house, so started to rip all the plaster off all the walls! realised it was a "bigger job" that they could do themselves, so scarpered leaving him without 2 months rent and damaged walls where they'd buggered everything up... cheeky sods then tried to claim back the deposit from the DPS!

The "damp" issue is unfortunately far too common. Its like a generation has grown up with central heating and tumble dryers believing that windows should be closed 11 months of the year.

 

[Stedurham]

Everyone has horror stories, as do I. But overall as an investment I cant complain started with 1 now in double figures and buying 1/2 a year still. Depends on what are you are looking for really and very much dependant on the area where you live. Im lucky I can buy a house for 40/50k spend 10 have it worth 75K and rent for 450/550 a month

 

[NCapital]

I have multiple buy to let properties.
For me, it’s more hassle than it is worth personally and I’m in the process of liquidating my investments...

Can I ask, is there anything specific that helped you decide to throw in the towel? I've been contemplating the idea of buy-to-let for months now, but despite some family experience in the business, I'm still unsure whether the whole idea is worth it. It seems as though new laws tend to make it less profitable as time goes on, and I also have a full-time job to contend with as well. Overall I don't know if the BTL industry is as worthwhile now as it used to be, and I'm guessng you feel the same way?

 

[Gordon - Commercial Finance]

Can I ask, is there anything specific that helped you decide to throw in the towel? I've been contemplating the idea of buy-to-let for months now, but despite some family experience in the business, I'm still unsure whether the whole idea is worth it. It seems as though new laws tend to make it less profitable as time goes on, and I also have a full-time job to contend with as well. Overall I don't know if the BTL industry is as worthwhile now as it used to be, and I'm guessng you feel the same way?

There is nothing specific - just an accumulation of issues. I've never made a big income from it, and yet I've had to deal with more repairs, issues, empty spells, tenant disputes, broken boilers, new boilers, non-payers and late-payers than I would like.
I've almost always used a letting agent, and paid them 10% +VAT every month, but really all that does is make sure the tenants don't have my phone number. The letting agent doesn't solve your problems for you, nor do they pay for anything.

The government aren't helping either. With the new Stamp, changes in tax rules, and forcing lenders to change practices, it is not helping the market at all.

 

[NCapital]

There is nothing specific - just an accumulation of issues. I've never made a big income from it, and yet I've had to deal with more repairs, issues, empty spells, tenant disputes, broken boilers, new boilers, non-payers and late-payers than I would like.
I've almost always used a letting agent, and paid them 10% +VAT every month, but really all that does is make sure the tenants don't have my phone number. The letting agent doesn't solve your problems for you, nor do they pay for anything.

The government aren't helping either. With the new Stamp, changes in tax rules, and forcing lenders to change practices, it is not helping the market at all.

Yeah that's the impression I got. I'd be looking for some BTL properties that can essentially pay for themselves over the next 20-30 years, in the hopes of ending up with some kind of retirement income when I finally get to that age, although a lot of the problems you've mentioned seem rather time-consuming, and time isn't something I've got a lot of these days.

 

[Gordon - Commercial Finance]

Yeah that's the impression I got. I'd be looking for some BTL properties that can essentially pay for themselves over the next 20-30 years, in the hopes of ending up with some kind of retirement income when I finally get to that age, although a lot of the problems you've mentioned seem rather time-consuming, and time isn't something I've got a lot of these days.

Suppose it all depends on what you need to get from it. For me right now, I don't want all my cash tied up for the long term, but I still want it to work for me, so I'm looking at getting the gains across a shorter time frame by buying, renovating and selling rather than renting.

 

[Stedurham]

Depends on how you do it I suppose, I want another 2 this year, will be refurbed, boilers replaced get new 5year warranty on them, kitchen bathroom and rewired or new box etc
Pay an agent to look after them who have my tradesmans number to use, the tradesman then just bills me direct. I pay nearly half of what your agent charges.
On this basis I expect at least 5 years without any issues from them, tenants are key though, make sure you get the right tenant they are worth waiting for

 

[Gordon - Commercial Finance]

On this basis I expect at least 5 years without any issues from them, tenants are key though, make sure you get the right tenant they are worth waiting for

The only one I'm keeping is one which I managed to get for 83% of MV, so I have been able to pull almost all of my money back out of it on remortgage.

 

[Stedurham]

There’s properties out there where you can buy do some work and leave nothing in last one I did bought for 42k spent 13k full refurb valued at 79999 so got about 4K back and a rental free rents for 465 Mortgage is just under 150 agents fees 33.50 ish insurance 12 so 265 ish profit and no money on it and hopefully shouldn’t need to do any work on it fingers crossed for min 5 years
Have to agree though I’ve never sold houses till last 2 years and in and out in 8 weeks 20k profits more appealing but still need rentals
For longer term

 

[L.H.M]

Sorry for being elusive, thanks so much for the replies and sharing experiences, I feel spared of a whole world of pain and naivety. Essentially I am looking for investment whilst bringing in an income, I’ll sit and work through all of the response and have a rethink. Thanks again guys.

 

[Gordon - Commercial Finance]

There’s properties out there where you can buy do some work and leave nothing in

They are out there yes, but I find they are fewer now and further between, and with my second child due in two weeks and a business to run, I find myself with not the time nor the energy to find them!

 

[The Online Accountants]

There are many different ways to hold property eg. personally, in a company etc. and also various taxes which affect property investors eg. stamp duty, capital gains etc. It can become very complex.

You should consider carefully at the outset what vehicle you use to buy the property, what you intend to use the property for and how you plan to exit the property in the future, to ensure things works financially and from a tax point of view, for you.

Take care if borrowing, personally, to fund a buy to let as changes are currently being phased in to restrict the tax relief on mortgage interest relief.

 

[Redd]

just ventured into my first buy to let, only 6 months in but tenant has been great, no hassle at all, his rent pays mortgage and almost my mortgage on new place (not inc any tax deductions from rental) so far its been a no brainier. I may consider another smaller property next year but would be looking at a run down property to renovate and either sell or rent.

 

[Stedurham]

They are way fewer than ever, I’ve got a business that deals with landlords and sellers they have increased at guess 70 percent in last few years. Some are people coming to retirement that have their lump. Some are homes under hammer crew think can make fortunes with bit paint and new flooring
I do know 10/15 percent don’t make money and rent rather than sell as they’ve over spent

 

[Stedurham]

These people are pushing prices of houses up some I talk to are happy to make 5/10k on full refurb as they enjoy it and do it part time or are retired

 

[Jeff Nev]

I have a small portfolio in Brighton & Hove and little further along the coast; I was fortunate enough to enter the market at optimal time, I am not sure whether it is going to be a long-term strategy that is going to bring rewards in the short and long-term future.

I must admit that I have been considering whether or not to sell off my properties as the property prices down here continue to rise and it is getting more challenging for BTL owners.

With regards to investing abroad, where were you considering? A good friend of made a couple of investments over in Bulgaria just after they joined the EU and has been renting the property out as holiday lets as the destination has increased in popularity. However, the uncertainty surrounding Brexit and the implications this may have for UK property owners in EU countries means that I would be highly wary.

Regards
-Jeff

 

[Stedurham]

Wouldn’t touch anything abroad brother in law lived in France for 5/6 years and as the house they had old school with pool etc took forever to sell as French couldn’t afford it so needed English to buy it same with the barn conversion they did. I would look at something to use as hol Home and possibly rent it but suppose you would get bored of same place all time
Yeah Brexit who knows what will happen with anything just needs doing now and getting on with it

 

[Gordon - Commercial Finance]

You can buy good property in somewhere like the Lake District and put it out as Holiday lets - then you don't have to travel too far to sort out any issues, and actually the price that is charged per week down there and the demand is significantly better than a lot of places abroad.