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General Chat Thread, Buying to Let in General; I've always had good sensible advice on here so this time I ask you people about 'buy to let'. Does ...
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    garethedmondson's Avatar
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    Buying to Let

    I've always had good sensible advice on here so this time I ask you people about 'buy to let'. Does anyone do it?

    I'm thinking of buying my parents house and renting it out. They are moving and have set a price for sale. I'd give them what they want knowing that somewhere along the line the money will come back to me (touch wood not for a long time yet).

    Does anyone out there let properties? Do they do it themselves or do they use a management company?

    What sort of mortgage?

    Besides non-paying tenants - what other pitfalls are there? What is on your yearly/monthly/weekly checklist?

    ANy advice or documents appreciated,

    Gareth

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    AMLightfoot's Avatar
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    I can't give you the advice you're asking for but I can throw my tuppenceworth into the ring. LeBoyfriend works with a guy who did this and who owns 3 houses. We'll call this guy 'Bob'. Bob swears by it. He says having properties to let is the best way of investing for your retirement years. LeBoyfriend and I have discussed this at great length re: our own futures. Both LeBoyfriend and I have 1 sibling each, therefore inheritance-wise we'll objectively own half a house each. LeBoyfriend's uncle has no children and so has left his property to his nephews in his will, meaning that LeBoyfriend will own another half a house. It is our plan to invest our inheritances in property and there are pros and cons all over the place. If you use a management company, your 'profit' from the venture drops, but at the same time you don't have to worry about sorting repairs, faffing about vetting tenants, collecting rents etc. Similarly if you do it yourself your 'profit' margin goes up but you are responsible for all the paperwork, repairs, etc BUT you have greater control over the tenants you choose to rent to.

    Personally, I'd favour the management company if only for the convenience of managing my Letting assets while I'm occupied with living my life and working for a living.

    If you are buying to let, you need a buy-to-let mortgage and I believe these ask for higher deposit values (I may be wrong though). Your best bet is to find a mortgage advisor as they will be able to explain all your options and handle the paperwork for you.

    I think there are some tax considerations too. https://www.gov.uk/browse/housing/landlords

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    garethedmondson (11th June 2014)

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    teejay's Avatar
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    If you're going to continue teaching then go for a management company to look after it all, too much hassle otherwise. The only other thing I would say is don't buy to let your parents house if you have any emotional attachment to it, you are better getting a different house, you'll understand why after your first set of tenants move out

  5. 2 Thanks to teejay:

    AMLightfoot (11th June 2014), garethedmondson (11th June 2014)

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    I've let a property, when I was made redundant and had to move south. It was a nightmare - I had tenants from hell, they trashed the place and the address was blacklisted by local merchants.

    More recently my Wife rented her property when we moved in together and we had a management company between us and the tenants. That was like having a dog and barking yourself. The agents must have been related to the last set of tenants - they certainly didn't seem to be working for us! Still they didn't trash the house and it did pay the mortgage while we found a buyer.

    I wouldn't particularly advising doing it with your parents house unless it is specifically suitable. If you want to do it, find a property that is suitably low maintenance and target a particular market. Work our beforehand exactly how little money you are going to make for all the time and effort you will be putting in. Remember a few months empty can wipe out a years profit and unlike when you live in a house, you can't delay fixing something till you have the cash.

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    zag
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    Yep its a brilliant investment really due to the tax advantages (the interest you pay on the mortgage can be written off with tax).

    Basically you will need a 25% deposit to get a BTL mortgage. Work out the yield per year and make sure its over 5%.

    Also factor in 1 month a year for vacancy and you should be good to go.
    Last edited by zag; 11th June 2014 at 02:58 PM.

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    garethedmondson (11th June 2014)

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    Not quite BTL, but my Dad saved / inherited to rest to purchase himself a 2up 2down terraced house in Surrey to let (He brought it outright). He goes through an estate agent to manage it - the only thing he doesn't use them for is maintenance, instead he goes round and fixes stuff. His current job comes with a live in house, so for the duration he's been working in his current job our family house has been let. Again same deal with estate agents managing it with him providing maintenance. Both sets of his tennants have been good and provided no issues. When he retires next year and only rents a single house out, he will be taking home almost double what I get per month! Only thing I can think of is stuff like boiler certs.

    From my perspective, if you can afford to BTL then I think you should invest in it.

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    Quote Originally Posted by teejay View Post
    If you're going to continue teaching then go for a management company to look after it all, too much hassle otherwise. The only other thing I would say is don't buy to let your parents house if you have any emotional attachment to it, you are better getting a different house, you'll understand why after your first set of tenants move out
    That's a rather sweeping statement isn't it?! Not everyone that rents a house trashes it. There are some of us who can't get onto the property ladder for one reason or another who live decent lives and don't feel the need to trash the landlord's property.
    Last edited by crc-ict; 11th June 2014 at 03:53 PM.

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    garethedmondson (11th June 2014)

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    SYNACK's Avatar
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    Quote Originally Posted by crc-ict View Post
    That's a rather sweeping statement isn't it?! Not everyone that rents a house trashes it. There are some of us who can't get onto the property ladder for one reason or another who live decent lives and don't feel the need to trash the landlord's property.
    There are plenty of good renters and plenty of bad ones, it makes sense to be prepared for the worst even if it does not happen. I'm sure it's not aimed at all renters just those which he seems to have had a bad experience with and their ilk.

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    garethedmondson (11th June 2014)

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    Deffo use an estate agents to manage the daily gubbins. Rent it out unfurnished. If you can factor in costs of 2 or 3 months a year uninhabited, plus a refurb every 5-7 years and still pay the mortgage off then your quids in jump on it, the house will pay for itself and you've got a lump sum sitting there for your retirement. If your young, and have a short mortgage, you could end up totally quids in with the mortgage paid of and your monthly rent coming in as spending money. I could have picked up 2 houses cheap 10 years ago - biggest mistake I ever made letting them slip by, I would have had the mortgage paid off in 15 years and then £500-600 a month per house pure profit, AND the houses have at least doubled in value. Oops!!!

  15. 2 Thanks to AButters:

    garethedmondson (11th June 2014), zag (12th June 2014)

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    Hefferzzzz's Avatar
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    Yep. I have let out my old house for 3 years now. First two years I did it through reeds rains and they take 11% of any rent you get but they take pretty much all of the hassle - chasing non payment, cover for non payment, inspections, gas / elec certs, call outs for problems etc.

    The last 12mths its been direct with someone I work with and apart from his aversion to gardening its all good.

    BTL mtgs are quite cheap and as long as you keep on top of it, its great. Trying to get the mrs to agree to another one......

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