rental properties

[sweetheart]

Dh and I are considering buying another property as an investment and renting it out. Is there anyone here who does this that can give me some advice?

1st question (of many!) is on the buy to let mortgage is it common to pay interest only as this is what we are being advised to do.

Because of the capital gains implications, most BTL mortgages are interest only.

Your profits therefore depend almost entirely on rising house prices!

This is one of the reasons we decided against investing in BTL, reliance on such a volatile sector.

One big question you need to ask yourself - could you afford the mortgage payments on a BTL property out of your existing income for 6 months or so if you can't find a tenant, or your tenant decides to stop paying the rent ?

None of my BTLs are interest only - I would not recommend it. What do you want the outcome of your investments to be? I think that is the question to ask before trying to find the solution. BTL is very much a LT option in my view, especially with a prolonged downturn in the housing market looming.

We have two different buy to lets. number 1 repayment mortgage standard buy to let with assured shorthold tenants. number 2 interest only mortgage holiday property let spend profit on imrpoving the property from average to truly gorgeous and then sell on. We hold our property in a trading partenership and are therefore entitled to entreprenears relief reducing CGT to 10%.
All of this is very time consuming and there i a lot of hassle with both types of property just in different ways.
You have got to think of this as high risk low return investment and don't think of getting any real return in the first 10 years.

Also, BTL mortgages are very expensive at the moment - high arrangement fees and interest rates.

Plus some industry experts think property is going to fall another 30% - so high risk.

However, if you can haggle a buying price down in an area with good rental potential (and the rental market is booming because first-time buyers can't afford mortgages), then it might be a good investment.

Not sure if I'd bother. I have BTL properties in a low-income area where properties are cheap and, relatively speaking, less likely to be be affected much by a further downturn. I wouldn't recommend investing in an area where 1. there are already many other properties available 2. where properties are likely to be affected by another downturn 3. where there are lots of young professional with high expectations of finish etc as these will be difficult maintain long term. You will also need to consider a possible rise in interest rates and think of any investment as long/medium term.