How do I practically get 1st BTL property?

[user1461609321]

Hi

Need some practical guidance from the more money savvy. I am new to investments and feeling like there is a sense of secrecy regarding how people get into the next step of the property ladder.

I have a London 2 bed garden flat worth between 280-285, I would like to purchase a BTL in the West Midlands where I have seen flats for £50k plus

As an investment would like to know how to practically go about getting this.

I think I now own around 25% of my flat, but broker previously stated that I need more of a share to get any money out of this property

She also advised that deposit for a BTL is 20% so 10k on a 50k property

I earn 56k and likely to be purchasing alone, please wise ones tell me how to go about this as no other savings available at this moment, but would like to release some equity

I also just fixed current mortgage for 2yrs, I would need to pay a 1% exit fee if remortgaging but as outstanding mortgage on current property is around 216k, exit fee will only be 2k plus so may still be worth it.

Please tell me what to practically do as I am so unsure

Bump

I don’t know how you go about it but I know that the Property Podcast has lots of info on this. Good luck!
podcasts.apple.com/gb/podcast/the-property-podcast/id624127071#episodeGuid=http%3A%2F%2Fthepropertypodcast.com%2F%3Fp%3D150

Thank you so much for the link

If you need to take equity out of your home to drop it I wouldn’t in this market.

Theoretically, when you remortgaged you would get enough for deposit and fees on BTL. Find a property, apply for mortgage. Contact a broker see what deals they have.
Find out what the property let’s for.

Invest in the stock market.

Trust me, it's easier. 👍

Wouldn't even know where to start with that either I just want to invest as best as possible for my children, they already have the Isa's with 2,500 each but nothing else

Use your own isa allowance, being a landlord especially at a distance is a giant PITA by all accounts.

Vanguard, Hargreaves Lansdowne & SJP all good options depending on how much active management you want

Remember a btl means you pay 3% stamp duty on the purchase.
You need to look at the rental market in the area and see what the going rate is.
Btl at least 20% deposit.
You will only be able to claim the 25% of the interest portion you pay on the mortgage against the tax you pay. That means 75% and the capital part of the mortgage costs need to be absorbed by you.
Take into account maintenence fees and ground rent if you buy a flat and management fees.
Renting out means you need all gas and electricity certificates.
If you dont have the deposit i am not sure i would remortgage my home to buy a btl property.

Think about why you want it and what you want to achieve. Over paying your mortgage or saving tax free in your pension might be a better solution.

Speak to a good broker about your personal circumstances.

Cheap properties are cheap for a reason, and reflect the types of tenants you will get.

As a higher rate taxpayer you need to factor in section 24, on top of all the other costs and checks, plus increasing regs. The government are looking to make things as difficult as possible for landlords so go in with your eyes open. Will you make any profit monthly and/or are you in it for the long game , 10 years plus?! I would be wary of extending borrowing on my residential home for this investment esp if the only one.

Join the NRLA for advice and information but again, speak to your broker and think about your exit strategy now before even getting into it - this is all part of your planning and could save you money in the long run, should you decide to proceed.

[And you can only claim 20% of the interest , not 25%].

Where in the West Midlands have you seen flats for £56k???

You shouldn't be a landlord if you can't afford to save. This isn't fair on the tenants.

You need savings to fix any problems that they have and in case you have any void periods.

Being a BTL landlord is a lot of effort. Look at the Buying and Letting Property section of MSE:

forums.moneysavingexpert.com/categories/house-buying-renting-selling

You can ask for advice there. There are lots of experience landlords on the site.

At that sort of price, I would guess that the flat has a short lease or is affected cladding and/fire stopping issues, and is not mortgagable.
If not, then it's likely to be in a less than brilliant area or need a lot of work.
In your shoes, I wouldn't even think about it. So much can go wrong, especially at a distance. We've had rental properties for 20 plus years, but we stay local.

Are you sure you could get a property for 50k? Even your London flat seems undervalued.

I agree with others, pay down your mortgage first to get more equity. Interest rates are going up so that the best investment first.

Sorry, pressed send too soon, before I checked properly. I should have said either fire stopping/or cladding or even both.
It could also be affected by rapidly accelerating ground rents.
Another poster raised repairs as well We needed to replace a washing machine in one place and an oven in the same month this year.

I say trust me as I've been a landlord for a couple of decades and also estate mgt experience.

All my profit for the next 3 years has been spent on repairs and upgrades this year. I can do this as I'm properly capitalised. It's a business, not a savings plan.

On a 50k house, one boiler replacement would have you making a loss. You won't even make that much capital-wise as the areas will be shite. There's always a reason a property is cheap.

Not to mention the risk of government regulation...

Based on your post I'd avoid property entirely .

Read Meaningful Money Handbook and watch the YouTube channel .

Focus on saving and setting up ISA for yourself , children's pensions etc

Don't do it!!! We've had a btl for 10 years bought with inheritance as we were clueless and scared about investing.
It's done OK but....... we really need to sell up due to our own financial commitments and are now in a position of tenants refusing to both pay rent or leave so faced with the hassle and expense of the eviction process.
It's making me feel like a horrid human being having to evict and I've no doubt we'll be left with a mess that'll cost us more money when they eventually go.
I really wouldn't advise btl for someone looking to buy a single property - leave it to the big multi property players

Areas with cheap properties mean tenants on benefits because anyone who works will buy. If you're set on buying an asset rather than investing in funds there are other assets you can look at that require less work. But probably not a good idea if you're having to borrow to do it. Start by putting maximum into your own ISA and pension. Then look at other investments. Property is for people who've got all of that already and have surplus cash to invest.

@Henerlo what's wrong with that? As long as rent is being paid who cares?

There's talk that you won't be able to let property with poor epc ratings. There's a consultation on it, apparently.

First rule of investing is "don't put all your eggs in one basket".
Putting all your money in one property, that will have high transaction fees to buy, high fees to own and high transaction fees to sell (and the sale will take weeks, unlike other investments) is not a good idea.

Damn. It's a zombie.

Many landlords are selling. It's a thankless job, you're treated as the enemy, legislation means there are more and more obstacles in your way and you actually make very little, if any profit. Definitely don't do it.