BUY TO LET PROPERTY

Discussion in 'Finance, Property, Law' started by babiesarm, Aug 20, 2003.

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  1. FS I have inherited some cash and am considering getting into the property rental market.

    Obviously I need to do my homework regarding buying multiple properties and maximising returns etc.

    Do you know of any good books or websites which will help me with my homework?

    Thank you.
     
  2. I've got a few properties rented out and have been extremely fortunate in when and where i bought.

    PM me and I'll tell you what has worked for me.
     
  3. The rented market certainly isn't as good now as it was though of course location is critical. I know of many you are having problems letting.

    I suggest buy to let in an area where you are almost certain to let eg. university towns for students et al
     
  4. Money is very cheap at the moment and the banks are tripping each other over to give out mortgages with very low rates.

    Alot of people are gauging what they can afford on todays rates, rather than the inevitable hike in rates, whenever it may happen.

    Buy to let properties are a very good source of long term income, if you are looking for a quick quid, then try another game.

    Example, 60k mortgage 265 per month repayment, rent = 433 pcm (100 per week) throw the rest at the mortgage and pay it off ten years early, then someone else is giving you your retirement fund. Do this fifteen times and in fifteen years you are a millionaire.

    Granted its not the walk in the park that I have illustrated above, you have to consider being able to afford the finance on the property should it stand empty, repairs, damage done by not correctly vetted students.

    I have gone for the cheaper end of the scale for my investments, ie the two up two down or the very small three bedroom houses, not exceeding over 75K, these I have no problem filling and there is always a queue of people wanting to rent.

    If you walk into a mortgage brokers and ask about buy to let, he will say you need 15% deposit, if you are still serving, use it as your residential address purely on paper and only pay 5% if funds are tight. once its let out, right to our bank, tell them you have been posted and you are renting it out and they will amend the terms on your mortgage.

    Also be aware, you are liable for tax, for any rent recived. Forces Swetheart could possibly better advise on that, I show little profit on mine as I throw everything at levelling the finance, I could be doing it the wrong way, but it works for me.

    I have found that Property gives a far greater return over a lesser period than any savings, pension, endowment policy. It certainley gives me a buzz seeing half a dozen mortgage statements a year showing amounts owing reducing and the future looking rosier. And all it costs is your initial deposit.
     
  5. Does anyone know how to get into the MOD letting lark. I'm led to believe that, if they want it (and it's up to scratch), the MOD will take your property off you and pay rent 52 weeks a year. However, their rent may be a bit under the market value but at least it is guaranteed.

    Am I right?

    Am I wrong?

    Or am I just dreaming?
     
  6. You are right but if the letting agency cannot find anyone from the MOD to rent it, then no income ! The key point here is location.

    Find an area where the MOD are short of quarters though is becoming increasingly difficult to find due to major builds being undertaken in most garrisons.

    I suggest try a civilian letting agency and the MOD letting agency. Whoever gets your tenant first wins !
     
  7. Be very careful with this one...

    I baught two properties nr Warton ready for the first batch of Typhoon pilots from the RAF to move into.

    Timescales moves back and I found my self paying finance on tweo properties for longer than I had hoped, in the end I made the decison to rent to joe public as no firm dates could be given by Crabair.

    I could have ended up flat on my face as warton is slightly out of town in a reasonably affluent area. therefore not many that rent live there.
     
  8. What's the score if you want to rent out your gaff on posting? Do you have to tell your mortgage lender? I've had my own place for about 10 yrs now, during which time I've spent a good few years unaccompanied. This time, I'm taking the trout and the sprogs with me and as such we are undecided as to whether we should sell or rent. As a result of rising house prices, our gaff has increased substantially (about £90 - £100k). We'd consider coming back to this area in the future when I finish my time, but if we sell, will we be able to afford to buy on our return? A good few reckon that houses prices will dip, but there's been no evidence of that yet. Everything seems to be increasing in value. Should I sell, pay off the remaining mortgage and bank the profits? or rent? I live in a nice area and houses here never stay empty for long, whether rented out or sold on.

    I say sell (and get a new bike), the trout says rent.

    Anybody got any experience/advice here?
     
  9. ViroBono

    ViroBono LE Moderator

    Most mortgage lenders require you to tell them if you let the property, and it's usually a condition of the mortgage. Some mortgages preclude letting, whilst others will allow it but you have to undertake to fully insure against dramas caused by tenants, and continue to pay if the place is empty. Some will charge a fee as you are effectively changing the terms of the mortgage.

    I'm considering letting my house, if only so that someone else can pay teh grasping bastards at the local council several hundred pounds a year for services I can't/don't use.
     
  10. ViroBono

    ViroBono LE Moderator

    Most mortgage lenders require you to tell them if you let the property, and it's usually a condition of the mortgage. Some mortgages preclude letting, whilst others will allow it but you have to undertake to fully insure against dramas caused by tenants, and continue to pay if the place is empty. Some will charge a fee as you are effectively changing the terms of the mortgage.

    I'm considering letting my house, if only so that someone else can pay the grasping bastards at the local council several hundred pounds a year for services I can't/don't use.

    Anyone have any views on whether the way ahead is with a letting agent, or manage it yourself.
     
  11. I would keep the property and let some other mug pay your rent.

    You will probably be able to make a profit on your rent if you have a competetive high st mortgage, an idea would be to pay off more per month than your actual payment, considerably reducing the term on your mortgage.

    Another idea would be to sell the property and sink the equity into deposits on four other houses... rent them all out and allow the scmucks to pay your mortgage. then in 15-20 years, sell them all and this will considerably boost your retirement fund..
    Its not all plain sailing and tennants can be the biggewst bind there is, but where else can you make £100,000 cleared profit for so little work.

    Sink this into three four five properties and you are on easy street when the mortgage is payed off, the joy of it all its not you thats paying it
     
  12. Thanks fella. Much appreciated. I hate it when the trout is right. I was all for selling it and getting a ganz neu Bimota. Looks like another Kawasaki now.

    I'll let you know how it all goes anyway.

    Thanks again.
     
  13. NBothing stopping you remortgaging and pulling out a fraction of the equity, you could probably get a better rate if you have been with your current lender for quite sometime.

    ie pull out 15k and pay beck less per month than you are now.....

    Id still remortgage but keep the wonga where it is, its working for you then
     
  14. Chaps, you seem to be doing fine in mighty's expert hands. Let me know if you have any other Qs.

    Property is certainly a better bet than the stockmarket right now, providing you can leave the money where it is as a long term investment. There are some pretty good buy-to-let mortgages available (including fixed term if you want the peace of mind) although some lenders may want to check out your finances more generally as well as getting a valuation on the property to ensure it is likely to produce the required rent. One of the key differences with these loans is that the loan-to-value ratio (ie what percentage of the value of the property they are prepared to lend you) is lower than for standard mortgages - as mighty says, you are likely to need at least 15% deposit. But the good news is that you can get buy-to-let deals which allow you to buy more than one property. All this stuff varies between lenders so shop around or ask mighty for the benefit of his experience.

    The other thing to think about is how you vet/manage your tenants (esp if you are away) and perhaps factor in the need for a letting company to handle this. But, as mighty says, it is a relatively small amount of effort.

    On the tax front, you should keep records and receipts for absolutely everything. And you will need to delcare any income and this should be done via a self assessment form. If you think you need to make a delcaration but have never previously filled in a self assessment form (most of the army don't have to) then ring the Inland Revenue and get one. Saying you didn't know is not an excuse - they will fine you. If you miss their deadlines they will fine you. They are the bastards you imagine but if you do what you need to when you need to they will be easy to deal with.