Buy to Let Advice(10 Posts)
Dh and I are pondering a buy to let purchase. Has anyone got any general advice?
We are just at the beginning of the journey so lots to consider!
Unlike other investments BTL will require you to occasionally stump up chunks when you weren't expecting it. You can plan for this, of course, and put money aside but be ready to spend in the first couple of years before you've got much back. If tenants have a reasonable request or you need to smarten the place up to find new tenants things can get very costly.
If you've got spare cash you will find there are more predictable ways of building on it. OTOH, property is something that is tangible.
Whether it's a good investment depends on how long you are investing for and the type of property you are after. Lemon is right that there can be times when you need to stump up money unexpectedly and you have to allow for times when the property is empty in between tenancies, so you need to either have the money set aside for this or an overdraft facility.
At the moment I wouldn't expect to make a huge return in the short term, but depending on the area and demand, you should make a reasonable one in terms of rental income, once you're over the set-up period. You can cut costs by managing the property yourself but this usually only works well if you live nearby. Whether the property will appreciate over the longer term is another matter, and something to research, particularly if there's a lot of development of similar properties in the area.
Look online at the sorts of properties agencies are offering ie the standard, size, spec. Talk to the agents about what property is the most marketable and most likely to be tenanted ie furnished, unfurnished etc. Where I am there's a big demand for family size homes, but in another area, not so far away, it's 2 bed flats that rent more easily.
If furnished, you can make a place look very good at a reasonable price as long as you keep in mind it's a business proposition and not your own home!
I think property is a good investment and there are some good buys around at the moment. People always need somewhere to live!
Sorry this is all a bit random but hope it helps.
Thank you for the information - it's helpful. It would be a long term investment that we were looking to be involved in.
I saw a property a couple of weeks ago and before I viewed it, it had been snapped up so it does look like there are plenty of houses still around.
I know a couple of people who have had their fingers burnt by non paying / absconding tenants, so I may consider an agent,especially whilsy my dc are young and I have little spare time.
HM definitely have an agent if you're already busy. And it can be quite stressful when stuff is going down, an agent should take that strain. Get lots of recommendations, and from people who have more than one property with an agent and have had it with them for at least two tenancies.
lemon thanks again - have you got any btl properties? If so,what made your decision for you - iykwim.I looked at some properties eons ago (15 years +) and I was not brave enough to take the leap - I was on my own at that point, quite young and did not have any contacts.
Now I have plenty of contacts (ranging from great to not so great) and more of an idea of where I would like to be. Although bringing it to fruition is not so easy!
I sort of ended up a btl LL, although am lucky enough that I also manage two unmortgaged properties.
It all depends why you're doing it and how long you can afford to leave your money tied up for. If you're looking for something to mature in 15/20/25 years time then this is a great way of doing things. Also, the tax situation is such that with careful planning you can hand it over to a dc and when they sell, if they have registered it as their main address, they will have no tax to pay on it.
No other investments (currently) allow you to cash in without capital gains tax like that (or are as easy to borrow for).
If you think there's a chance you might need the money out fast then this probably isn't the game for you.
We are mainly thinking about using btl as our current pension projection is dismal. So a long term investment - need to check out the tax situation too as that sounds like a bonus I was not aware of!
... the golden rule as someone has mentioned it's a business - so no over decorating , expensive high end fixture/fittings (unless the area demands these) and make sure that you take out references for all your tenants..
We have two properties and we have had our share of "bad tenants" over the years....
My flat in London was let to a chap who paid the first months rent and then stopped paying....it took me 6 months to regain control of the property and when I walked round after he was evicted it was a tip.
He had broken most the internal doors, windows, the bathroom fixtures were hanging off the walls, the carpets were ruined with cigarette burns and the remants of joints everywhere, the walls were disgusting, the kitchen a Rats Fest etc etc etc etc - I guess that this one cost me about 5 grand in lost rent and costs to redecorate - it broke my heart as it was my first flat - I am much much much harder now.
Our other property has also caused some headaches - we had a "lady" with a small baby in there..... the second night she was there she phoned to say that the shed had been broken into and her boyfriend's tools had been stolen therefore she would like a dog (Staffie ??) to protect the house - NO NO NO... Her boyfriend then decides to start a car repair business on the two parking spaces outside - this pissed the neighbours off big time. She paid the rent when she felt like it and had an excuse for everthing - she was astounded that I wanted the property back at the end of her tenancy... She was the tenant from hell.
When I met her to discuss the return of her deposit - I remarked that the full length curtains in lounge were stained with what looked liked baby sick - she said don't be silly - "that's not baby sick it is white chocolate" obviously where he had wiped his hands all down the sides.. She also attempted to redecorate before moving out (in a vain attempt to get her deposit back) - by painting all the walls with gloss paint and leaving the curtains still up, She painted down the sides of curtains,poles and rings, the window frames closed and the doors and carpet .... and the list went on and on and on...
So I guess my view is - no-one will treat your property as their own (unless you are very lucky) - get yourself a good list of local tradespeople that can step in quickly and help with repairs etc, nuture some friendships with neighbours before you let (they can report back on the comings and goings) ,don't fall in love with your rental property, make sure that the figure stack up - and finally choose your tenants with care...
HM, tax situation is only if it's your main residence. You have to 'be there' for six months before the sale.
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