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buy to let property?(5 Posts)
Hi, we are thinking about investing in a buy to let property and wanting information about what's involved in this. For example you need landlord insurance and maintenance funds, what other things are there to consider? I understand that rental income is taxed also? It would be an apartment we are interested in and potentially let out to students. We would need an additional mortgage to buy the property which would be approximately £300 per month and rental would be charged at £550 per month or £70 per week per student (3bed). Has anyone done this and what else do I need to take into account? Thanks
there is much more to this than can be answered in a post on here. Start with landlord zone and your local agents to assess demand and costs.
student letting is a specialist area because you are likely to get a lot of
damage wear and tear. Also it will be a HMO so you need suitable licencing for that.
basically you are starting a business so it needs a LOT of research, record keeping, tax awareness etc etc.
not a 'don't', just a 'be aware'.
You would need to consider periods where the property is empty and you would be responsible for all expenses such as the mortgage, council tax and bills etc where rent would not cover them.
Also consider whether you would want an agent to manage it for you which can be really expensive and eat into your profit or you can manage it yourself which is cheaper but can result in calls at any time of the day or night with an emergency.
From my experience students don't really look after the properties and there can be a lot of wear and tear which sometimes the deposit doesn't even cover.
Are you self employed at the moment? If you are earning money from rental income you will need to do a tax return whereas you don't need to do a tax return if you are employed by someone else.
Difficult one this. I was a landlord with a buy to let. My best tenants were single ladies with little dogs. If you are going to do this then I would not bother with short term market like students, as there will be gaps when the property is empty and foreign students need a guarantor. There are plenty of single people with little well behaved dogs who can not get accommodation. By all means get the buy to let and then do what I did; let it to someone with a little dog who will make it their home and look after it. I always stuck to rino flooring in the kitchen and wood flooring everywhere else. We did quite well rental wise but had to sell the property for £10,000 less than we bought it and do tax returns which were a nightmare. I had three properties that I let out; two were a disaster, including one abroad. My big tip is location. Buy somewhere nice, modern and in a nice cul de sac where it can be overlooked if empty by neighbours. Leaflet the neighbours to say who you are and give them your number. Knock on doors even. I used a management company to find and vet tenants but it cost the earth and I still had to do a lot of running around myself. So if you can bypass this and find your own tenant you will save a great deal. I took out an insurance with Letsure, in case a tenant did not pay the rent. It paid off when one tenant did not and got me every penny I was owed. I've had eleven foreigners squatting in one house though, for six weeks, before court order became effective but the law has changed since then. What did I get out of it ? A lot of bother but an investment too which, minus the £10,000 we lost at the sale time still netted an income for seven years, and the equity went as deposit for my current home. Best property. A little modern 3 bed in Suffolk. Worst property, an apartment in Prague. Oh, take out the recession years and I would have probably done much better. One thought. If you have a nice home already and time on your hands you might enjoy it. If you have to get another mortgage then I would advise against it. My best property was bought in cash. The properties with mortgages did not make anything like the money of the paid for house. By the time you have taken out costs you will not be making enough because although you can offset repairs against your income on the tax return but you will not see anything like enough money for all your effort. Would I do it again ? Only the paid for nice little 3 bed in Suffolk.
We have two buy to let properties which are both very successfully let out, but a few useful things we've learnt:
-Buy to let mortgages are based on the potential rental income, not the loan to value as with residential ones, therefore you might not get as much mortgage as you anticipated
- upad is a low cost alternative to estate agents for renting out properties- definitely worth a look (they do floor plans, photos, contracts, advertise on right move for you, you just have to show the potential tenants around at a fraction of the price of estate agents)
- check out if the council is looking to introduce HMO licences- in most places they don't but if they do and there are more than 2 unrelated people in the property then it gets very costly to put in fire doors, pay for licences etc.. Brent in London have just introduced them and we were nearly stung for almost £1000 of extras we hadn't budgeted for.
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