Thinking of Buy - to - let

[ChicagoBears]

We have some savings which we’re unsure how to invest. I like the thought of a buy to let so that we could use it for our pension.

I’ve anecdotally heard that renting property is more hassle than the worth of it. We wouldn’t expect to make a pound of profit on a monthly basis, we don’t want to overcharge etc. so would want to make it affordable for the person renting but long-term I think this could be a good investment for us.

Any properly tycoons amongst us who’d be willing to give me some guidance?

Lot people are selling off buy to let's atm in my landlords UK group

Not great atm with tax changes and new legislation

We got rid of ours last year

you'd be better off joining the FIRE UK / meaningful money community fb pages ( oh and buy the book it's life changing "meaningful money handbook" to educate yourself on the best way to invest towards pensions because property right now IMO is not it .

Personally I wouldn't spend on an adviser unless you have several hundred grand + or complex tax situations

Oh and avoid st James place / SJP like the plague if any of their advisers approach :D

Depends…
I have several rental properties, all paid for. I’d be careful you can afford your investment.
My husband and I are very good landlords and genuinely go above and beyond for our tenants; however this is a business and you have to understand that and be able to take tough decisions, you’re not a charity.
Have you considered Vanguard? So much easier. Good luck. X

Additional property is very visible, and very tangible. It's 'real'. This makes it seem a bigger asset class than it really is. But you should look at what other sources of wealth people have and not assume that the wealth you can see is all that they have. Far and away the biggest investment class is a private pension. Bigger even than property - and that includes the homes people live in. So the proportion of total wealth that is made up of additional properties is actually miniscule.

If you've already reached your lifetime allowance for pension contributions and still have more cash that you want to invest ... knock yourself out. Having additional property in this scenario can't hurt and it's good to diversify.

But if you are contemplating an 'instead' rather than 'as well' decision, you should ask yourself why you think entering a market that most people are leaving, just as the mood is starting to swing towards house price falls, is a good idea.

Thanks for all of your helpful advice, lots to think about. I’m not at my lifetime award for my pension but in a few years as I will be as I’ve had a very generous employer and have ploughed money in.

will certainly join that FB group!

Most people are getting out of that racket now. Too many rule changes and making it uneconomical especially when there’s leverage involved.

It’s going to be the domain of the professional landlord eventually - but i’ve heard of quite a few of them giving that up too.

Do a Sipp

Buy to Let has so many variables its difficult to advise, as its all so dependent on the tenants / the quality of the house / how much the mortgage is / what your attitude to risk is etc. It's not always hassle, but it is "work" and has to be approached that way. Like a job.

Perhaps in the first year or so any renovation work you need to do to get the house up to rentable standard would eat up the majority of your profits, but once the house is in a good state of repair and you have stable tenants, you'd almost certainly make profit (though of course you do have to keep some back in savings in case any big repairs crop up).

I bought a house in 2018. It needed a new bathroom, a new rear roof, some pointing work, decorating throughout, damp proofing work, full rewire, carpets throughout and a tidy up of the yard. I bought it in the December and it took until May for it to be ready, so you need to budget to be able to pay the mortgage whilst renovating it. You need to ensure you cover all the legal requirements (safety certificates and so on, and EPC rules are changing too so need to look into that).

I've been very lucky and have had the same tenants in ever since. They take good care of the property and I am charging below market value but I still make about £360 in profit every month, which is very useful as I work part time around my young DD. I see it as being the tennant's home for as long as they want it (they have kids in the local school) and I wouldn't sell it from under them. I promptly fix everything that needs doing. I think you can be a good landlord and make a profit - the two things aren't mutually exclusive. Just got to do your research and be clear about the costs involved and what your expectations are.

I wouldn't do it. It is a lot of hassle. We have a couple of BTL and the only reason we're not selling is because we'd have an enormous CGT bill.

However we bought them over 25 years ago so little/no mortgage and with rents going up we're making a good income.

I think it's good to have a diverse portfolio of assets so if you have got a pension invested in equities and bonds, then a small BTL might be worth considering.

Hey @stevalnamechanger please could I ask why? I have money invested with SJP purely because it was inherited and that’s how my grandparents looked after their money

High fees and sub par performance

I'm wondering whether the soaring borrowing costs, and subsequent crash of house prices which will surely follow, makes this a particularly good time to invest in BTLs?

We've previously baulked at the thought of BTLs because of the current relatively poor returns 'v' risk/hassle, but the current situation has me wondering whether there might be good opportunities to buy up BTL worthy properties?

I'm thinking: buy up a few (3-5) decent rental properties at a knockdown price, take the rent just to provide a return of some sort while the market recovers, then sell them?

We wouldn't be borrowing money to do this and our current investments are making nowhere enough to cover inflation as things currently are.

Yes, I know it's profiting from someone else's hardship but someone is going to make a tidy profit and may as well be us. 🤷🏻‍♀️

Oh and avoid st James place / SJP like the plague if any of their advisers approach :D
Why? We have some investment with them, and are reasonably happy (although for subsequent investment we've used another company after personal recommendation).

NB we have a BTL but we bought it solely for a family member rather than for profit. We did consider purchasing others but were advised that best case scenario we could expect only about 5% return. It doesn't seem worth it to me!

Read about their charges and their performance. I wouldn't touch them with a shitty stick I'm afraid

@doingthehokeykokey I wouldn't touch them with your shitty stick either. Hidden charges. Wrappers, Bows. More hidden charges. Getting into tax schemes that do not work. 'Tax specialists' with no experience. Frightening.