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Deciding which house to get for buy to let

(3 Posts)
investor Sat 11-May-13 21:15:16

DH and I have some money to invest in property. He has experience of letting to students. We've both got lots of experience of doing up property, but we're not trained in any trades (plumbing, electrics etc).

We've got enough cash to get a 25% LTV buy to let mortgage. Mortgage agreed in principle.

Ideally we'd buy, do up, sell on. But the market is to lively near us to make it worthwhile on most properties.

We're trying to work out what's best to do. Options are:

- small 2 up 2 down in nice part of town. Do up, make 5% return on selling on. Rent out at 5% yield. Feels like a safe investment, would need work doing but nothing structural.

- small 2 up 2 down in cheaper part of town. Rent at 6% yield. Wouldn't make much at selling on so money would be tied up for a while.

- 3 bed 70s house. needs nothing more than a good clean, a bit of boxing in on wires, paint and fresh carpets. rental yield of 7%. £10k cheaper than next option. limited opportunity to sell on quickly at profit.

-3 bed 70s, marginally bigger than option above. £10k cheaper, but needs new windows, new kitchen and bathroom, downstairs loo, paint and carpets. Assuming £10k of work, gives yield of 7%. Hard to say how much we'd get at selling on, it's rental part of town and no similar properties sold since the crash.

I'm inclined to go for option 3, it feels like a safer option in the short term. DH inclined to do option 4, he's less put off by the work, it's a smaller mortgage and therefore better LTV and thinks we can add more value in the longer term.

We are still doing up our house we bought a last year, I'm about to start ivf. so lots going on!

What's the best option? We've give around it so many times I'm confused!

TIA smile

mamapants Sat 11-May-13 22:13:51

If option 4 is 10k cheaper but needs 10k spending on it (at least I would say) then surely you would be borrowing the same amount and not getting a better mortgage deal? Or have I not understood?
You also say the plan is to buy, do up and sell on but you also say they'd be limited chance to sell on for most of them? So I'm a bit confused what your intentions are.
I havemt been through IVF but I have done up a house and currently doing up a house it is very tiring and can be stressful maybe it would be best to go for the least work.

investor Sat 11-May-13 22:48:23

We would ideally but to do up and sell on, but we're happy to invest and get a rental return for a while.

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