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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Is Buy to Let a good use of a spare £100k?

85 replies

ChocolateWombat · 13/01/2018 10:25

So, mortgage paid off (house value approx £500k) and no debts. We have £100k in savings.

Considering a buy to let property. Round here, can't get anything for less than £200k so would need to borrow £100k. Is this a good idea, what with stamp duty on buy to let and other taxes. Would be an investment for at least 10 years.

Would it be better to do it somewhere where a property could be bought more cheaply, but probably less capital growth potential and less rental income? Or is there a better thing to do with £100k? Interested in the future rather than generating immediate income.

OP posts:

EdithViolet · 13/01/2018 17:44

I was relieved when we sold our flats (at a loss in the 90s) as they were a nuisance to manage and do up and that was about 5 minutes from our house. I would buy near where you are. Also some places up North just never go up much in value so even though they are cheap you probably won't ever make much money on them. What about shares? The stock market has been doing pretty well. May be put at least a third in shares.

expatinscotland · 13/01/2018 17:45

I wouldn't think it's a good idea if you have to get a mortgage.

Figgygal · 13/01/2018 17:46

I wouldn't you can get a much greater return if you invest the money properly.

SusannahL · 13/01/2018 17:50

Another tip would be to take out a Rent Protection and Legal cover policy. No matter how carefully the agent vets the tenants, the odd rogue one can slip through the net. Yes it costs, and eats into the monthly rental income, but we decided it was worth it.
Fingers crossed we shall never need it, but for the peace of mind it's worth going for.

Frequency · 13/01/2018 17:52

A lot of houses up north are going down in value because of high concentrations of LL's who rent to anyone and therefore high concentrations of addicts all in one area driving prices down.

We've always had issues with high unemployment and high dependency rates but until this phenomena of outside LL buying up cheap housing and renting them to anyone able to claim HB, the problem was spread out rather than concentrated to a few areas.

Hint: There's a reason the houses are so cheap...

Rachie1973 · 13/01/2018 17:54

I rent a house in Norfolk. It's not buy to let, we inherited some cash and invested in the home we will retire to whilst we live in a rental ourselves further South.

Its better return that the bank allowing for good tenants. I try to base my ways as a LL to match those of my own LL who is great!

bungaloid · 13/01/2018 17:55

Personally I'd take my chances with chucking it in stocks and shares ISAs.

Loonoonow · 13/01/2018 17:55

We considered a buy to let but eventually concluded we would be shit landlords (because we are no good at repairs and panic whenever anything breaks down) so decided against it. Instead we bought a 'lock up and leave ' flat in a holiday destination. We use it and also share it with friends and relations. We don't charge for this so aren't obliged to make a speedy repair if anything goes wrong (like the boiler breaking down last summer and two families having to have cold showers during their breaks) as we would be if we were charging rent. And sometimes, if we are lucky, kind friends take their toolkits on holiday with them and domthe repairs we aren't able to do.

The flat is a long term investment and is still a capital asset even without getting an income from it and we all get a great deal of pleasure from it.

MatildaTheCat · 13/01/2018 17:56

Ours has been great. It’s nearby so easy to manage ourselves and on the whole we’ve had good tenants. Ours is a modest property in a very good area and near good schools ( although I didn’t envisage families wanting it as it’s quite small but times have changed).

In ten years I’ve never had a void and never had a non paying tenant. At present I’m renting it to my dc and their dp so am helping them out with a reduced rent. In those ten years the property has almost doubled in value. It could now do with some money spent on the kitchen and bathroom so I will need to spend quite a lot soon. I have decorated between each tenant on the whole.

So yes, and although I’ve been pretty lucky, it can be an excellent investment and despite what some say on here, it’s not impossible to be a decent LL without specialist qualifications.

GardenGeek · 13/01/2018 17:58

This reply has been deleted

Message withdrawn at poster's request.

Personwithhorse · 13/01/2018 18:02

BTL with cash is generally a good investment, but obviously you can get bad tenants, I have a nice flat let through a good agent. Borrowing for BTL now has problems so don’t go there without consulting an accountant.

derangedmermaid · 13/01/2018 18:04

Look at Wales, especially on the coast or Cardiff. You could easily pick up a nice 3 bed terraced for under £100k, rental can be anywhere from £400 -£800 depending on the area.

Rebeccaslicker · 13/01/2018 18:04

Something like this with a decent agent who'll do the hard work would be ok, as it will always let. I bought this exact flat over 20 years ago when I was 18 - it cost about £40k then! - and made about £600 a month and it was never empty:

www.rightmove.co.uk/property-for-sale/property-29954944.html

However, you have to think about expenses like service charge and tax on the rent to make sure it washes its face properly for you.

Rebeccaslicker · 13/01/2018 18:06

(I don't own it now, sold it to pay for a master's degree a few years later! But wish I could have kept it)

LokiBear · 13/01/2018 18:08

I rented a house out for a while. After the mortgage and agents fees I made about £30 a month. It wasnt worth it.

topcat2014 · 13/01/2018 18:09

Have a look at commercial property - more like a business to business arrangement. Tenant usually has to take more responsibility for day to day.

I have two factories on 5 year leases, which make good returns.

RebeccaWrongDaily · 13/01/2018 18:10

yeah, great idea- best thing is you get housing benefit to pay the mortgage for you so you get a free other one, Sounds great.

Rebeccaslicker · 13/01/2018 18:16

What do you suggest, Rebecca? That people shouldn't invest, so that there's a big drop in SDLT takings, and other BTL landlords should all sell up, so there's a real shortage in the housing market, and then prices can crash, so people with mortgages are screwed?

Rebeccaslicker · 13/01/2018 18:17

shortage in the rental housing market

quizqueen · 13/01/2018 18:18

I'd probably buy a holiday cottage rather than a long term buy to let as, if you have unsatisfactory renters, at least they are only there for a week or so and you need never see them again and learn from any mistakes made in the renting process. You could also use the property for yourselves and family too if you choose a different type of area to where you live. If I had the spare money, I'd definitely put it in another property. Lots of sour grapes replies here about this subject. Lucky you, I say, to have the spare cash. Go for it. Where else are you going to get such good returns for your investment.

kinkajoukid · 13/01/2018 18:25

BTL has obvious advantages for the owner but many, many significant disadvantages for wider society, so I think a really good use of a spare 100k would be investing in or starting a community charity organisation.

There is so much need out there and so many possibilites even if using just a fraction of your amount. Many charitable goals are a direct investment in the future and can give amazing and tangible rewards and as I am frustratedly relying on winning the lottery to bring any of my ideas to life, I will say that I think there is a much. much better use of your money than BTL!

Probably not what you meant tho.... ;)

millymaid · 13/01/2018 18:27

It really depends. We have one flat. We bought it with cash. On average it pays about 5% on the purchase price. There are times when it's a total hassle. Congratulations on paying off your mortgage!

Phineyj · 13/01/2018 18:35

Have a look at Funding Circle - I've had great returns from it (much better than savings accounts even allowing for some bad debts) and you're lending to small businesses. I've found it really easy to use. Disclaimer: other peer to peer lenders are available.

MonumentalAlabaster · 13/01/2018 18:39

Disadvantages of buy-to-let are that the tax rules have changed, yield is low and there are maintenance costs. A basket of shares across the stock market would probably perform better but it's important to take the long view and not to panic & sell when the market turns, which it will do from time to time. You must have the nerve to ride it out.

But whatever you do, don't keep your money in cash - it's the worst option long term.

GreyCloudsToday · 13/01/2018 18:47

Depends on your pensions - are they defined contribution all resting on the stock market or some amazing public sector average salary ones?

I'd love to get a BTL someday as both our savings and pensions are reliant on the stock market and it makes me massively uncomfortable. If I were in your shoes I'd spend £80k on a property and keep £20k aside for maintenance and refurb costs.

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