Buy to let - where in the U.K. to buy?

[BananaSpud]

I have 50k deposit that I intend to use to purchase a buy to let property in the U.K.

I have ties to both Manchester and Edinburgh so these feel like a good starting place but I am open to other areas.

If you were looking to purchase a BTL, where would you consider?

Thanks

@Mabelene @Bard6817 do those yields apply after expenses eg refurbishing once in a while, redecorating between tenants, statutory gas and electric checks etc?

Statutory checks and decorating, yes.

This year also some electrical work, and previous years some boiler repairs. They’re small 1 and 2 bed flats and I was very strict on the condition they were in before we bought them ie all had double glazing, central heating, ‘nice’ kitchens and bathrooms. I think we’ve replaced a couple of carpets too

And we haven’t increased the rent on any of them since we bought them

Thanks mabelene. Respect!

Edinburgh is very expensive, but you could look outside it but in commuting distance. These are always the places that are popular and increase in value. Avoid flats (based on my experience, leasehold plus block management fees are a complete pain). A 3 bed terrace near transport is always the best bet.

Just seen Mabelene's posts. I guess everyone's experiences are different.

Ours are freehold. One has a management company and we pay £15 per month. I also specifically chose purpose built flats in blocks of 4, not in huge blocks

Freehold properties in Scotland are very rare, as are management companies that charge £15 a month. You have been very very lucky @Mabelene

All the flats we looked at were freehold, I don’t think leasehold exists in Scotland any more

There never was any leasehold in Scotland . There was feuhold which was abolished in the Abolition of Feudal Tenure (Scotland) Act 2000.

And the Long Leases (Scotland) Act 2012 automatically converted remaining long leases over 175 years to outright ownership.

Nearly everything in Scotland is held under Outright And Absolute Ownership. Which is why I’m surprised that you own not one but three of these very rare freehold properties.

As well as your good luck in finding cheap property at auction with double glazing and nice kitchen and bathrooms. And the very cheap management company.

You certainly have the magic touch in investments and I’d be very happy to have your good luck.

Yes, we have been ‘lucky’ but it also took time and effort to get the ‘right’ properties. Sometimes you make your own luck

Only one was at auction, we made an offer in advance of the sale, which was accepted. The other two were via regular estate agents.

It wasn’t difficult to research where we could find affordable properties with good rental potential. Although prices have increased now and there are very few, in good condition, for the same price we paid then.

@IONA, I think it's an understandable "error" by @mabelene who said freehold. I think you are being a bit too pedantic.

Thanks @Skinnytailedsquirrel

I get the sarcasm and cynicism but am just ignoring it and giving the facts

OP, if you are abroad then you will have to deal with the wonders of international taxation and international tax treaties. You may have to hire an accountant who is familiar with the tax rules of both the UK and wherever you live; that will add a lot of cost and headache.

Also, a common mistake is to calculate yields and returns excluding all the costs.
Say you buy a property with a £50k deposit, but spend an extra £15k between stamp duty, legal fees, furniture etc. Your investment is £65k, not £50k. Let's say that, after tax costs mortgage etc you get £2000 net per year (I'm just making this up). The net yield is not 4% (=2/50) but 3.08% (=2/65).

Also, if/when you sell, the property must have appreciated enough to cover your stamp duty, upfront costs, agency fee and capital gains tax (if applicable) just for you to receive back what you put in.

Say you buy for £200k with a £150k interest-only mortgage.
You sell for £230k.
Your net proceeds will be something like:

230

• 150 (mortgage)

- 6 (between legal fees and agency fees)

• 20% * (30 - 15 - 6 ) [you can deduct stamp duty, legal fees and other costs that increased the property's value when calculating capital gains)

= 72.2

So you invested 65 and got back 72.2 (plus all the rental income in the meanwhile), which is fine but lower than it looks if you ignore the costs.

Why BTL? Do you have other savings and investments, so that the BTL is a small part of your overall portfolio? If not, then I wouldn`t do BTL, but would ensure I have cash savings for an emergency, had money in my pension, and then if any left over, put it in to low cost tracker funds. BTL isn’t always an easy option, have you thought about how much time and effort you want to devote to it?