[HighQ]

Hi all,

Hope it is ok to post this in here. Im a first time buyer looking to buy a house purely to rent, im stuck in a dead end job and want a way of earning money (hopefully a quick way!)

Firstly i know nothing of buying property. Im a 21 year old with just an ambition here. I would still stay at home and rent the newly bought property out.

Basicly im after any infomation regarding costs, fees anything.

Is it a good idea to do this at this moment in time?

Has anyone done anything similar to this before? I would like to learn as much as possible as i cant find any good infomation on any of google searches.

Kind regards
Sam

[Dave Weystoner]

You need to do some research. Firstly, look at the rents for properties in your area, either online or in the local rag. Secondly, get advice on what you can get in the way of a mortgage, which will determine what you can buy, and what the monthly repayments will be. Match the expected rent against your repayments and see if you win or the bank wins. Take into account the cost of purchase, and over what period you want to pay that back to yourself.

As regards timing, probably not the best time, but it depends on the house prices in your area - you may be in a static or rising market, unlike the rest of us.

As regards quick money, forget it: unless you can add value by doing the place up, you'll be in it for the long haul.

Hope this helps,

Dave

[dan1979]

Bearing in mind you'll need a pretty decent deposit nowadays for a good rate:

Have a look at example rates (I picked this lender at random as I know they do BTL):

http://www.bmsolutions.co.uk/product...asp?m_type=btl

Use this to check whether you'll make enough money on rent to cover the mortgage payment (on interest only):

http://www.bbc.co.uk/homes/property/...lculator.shtml

You may find some companies won't lend to you as don't currently have a mortgage but it varies. You also need to consider whether it will be furnished, if you'll use an agency etc. etc. The boom time for this has definitely been and gone so don't expect big short term gains. Also, steer well clear of new build properties/conversions.

[la gran siete]

If you are one of the ruthless ones you could try http://propertysnake.co.uk/ and see if there are any properties going cheap in your area

[Hitby]

Don't forget to factor in the times when the property will be empty as well as you'll be covering the mortgage from your own pocket.

[PodLife]

As well as actually buying the house you'll have a few other costs to consider.

Like hitby said, there will be times when you might not have tenants but worse still you might get rubbish tenants who do more damage to your property than their deposits cover and do a runner.

You'll need some sort of insurance as well. There are so many providers it's probably best to get some professional advice for your situation but you can get some pretty decent discounts for buying online (I've seen up to 15% in some places) so it might be worth taking that advice and comparing it to your own search for homeowner insurance.

There's also things like furniture to consider, HMO licences (if applicable) and I'm sure there's other expenses as well.

[jonneymendoza]

check this out also http://www.mho.co.uk/ its a scheme where the government gives you a 70k loan that you only pay £100+ a month. it use to be that you had to be a key worker to apply but not anymore

[Pezerinno]

Don't buy a house to live in at the momemt let alone as an investment.

[Raoul_Duke]

This could possibly be the worst time to try the BTL market, you don't seem to have a good grasp on the situation here so maybe it's not for you.

House prices are depreciating, mortgages are hard to get in the current credit crunch, do you have suitable income to gain one at the present?

I'm sorry if it sounds a little harsh but unfortunately I regard people like yourself as parasites on society and a big cause of the problems we are facing right now, a 21 year old living at home with his mum and dad buying up a property that could have been purchased by a young family. I have one friend who bought up 3 properties like this ... right smarmy little a**e he is too.

I personally know of guys during the property boom who were putting bids in for every property that came on the market, sky-rocketing the price out of reach for genuine housebuyers, even if they weren't successful in the bid, someone else had to beat their ridiculous offers.

Now we are in a position where the bubble has burst badly, people going into neg-equity and all everyone wants to do is blame Brown and the banks for lending these guys the money.

[jonneymendoza]

well said mate. i myself is looking to buy a house but because of the mess these BTL people have caused by the sounds of it. i am struggling to find a place to live and raise a family in

[Ultima]

Originally Posted by Raoul_Duke

I'm sorry if it sounds a little harsh but unfortunately I regard people like yourself as parasites on society and a big cause of the problems we are facing right now, a 21 year old living at home with his mum and dad buying up a property that could have been purchased by a young family. I have one friend who bought up 3 properties like this ... right smarmy little a**e he is too.

wow, say what you mean why don't you. Many people have purchased BTL properties to fund retirement as an alternative to the traditional pension route and tbh who can blame them. At the end of the day people look after No1, nobody else is going to look after you unless you have rich parents or relatives so if they feel the need to purchase BTL properties to give extra income or fund retirement I don't see how this makes them parasites at all.

Martin

[Synchronicity]

Originally Posted by Raoul_Duke

This could possibly be the worst time to try the BTL market, you don't seem to have a good grasp on the situation here so maybe it's not for you.

House prices are depreciating, mortgages are hard to get in the current credit crunch, do you have suitable income to gain one at the present?

I'm sorry if it sounds a little harsh but unfortunately I regard people like yourself as parasites on society and a big cause of the problems we are facing right now, a 21 year old living at home with his mum and dad buying up a property that could have been purchased by a young family. I have one friend who bought up 3 properties like this ... right smarmy little a**e he is too.

I personally know of guys during the property boom who were putting bids in for every property that came on the market, sky-rocketing the price out of reach for genuine housebuyers, even if they weren't successful in the bid, someone else had to beat their ridiculous offers.

Now we are in a position where the bubble has burst badly, people going into neg-equity and all everyone wants to do is blame Brown and the banks for lending these guys the money.

Totally agree

Im not disputing the fact that everyone has the right to try and make some money but the BTL market has destroyed the housing market and made it a complete joke for first time buyers.

It is a shame that the government no longer puts a limit on how much landlords can charge for rent.

[IronGiant]

If you can't afford a mortgage then presumably you rent. Where do people think houses to rent come from then?

[pixelpixel]

Have owned my first house for 3 months now. Yes a first time buyer

Nothing quick about buying a house. If your looking for a quick way to make money then buying a house is not it.

[mrtbag]

Originally Posted by Raoul_Duke

This could possibly be the worst time to try the BTL market, you don't seem to have a good grasp on the situation here so maybe it's not for you.

Errrr....very wrong. The current climate is more suited to BTL. Nobody is buying, so that means more people are renting.

It's simple : Low house sales = Good rental market, High house sales = Poor rental market.

[Loftusrd1980]

Originally Posted by mrtbag

Errrr....very wrong. The current climate is more suited to BTL. Nobody is buying, so that means more people are renting.

It's simple : Low house sales = Good rental market, High house sales = Poor rental market.

Why buy now when you could get the same house for 15% or so less next year.

[Ultima]

Originally Posted by Loftusrd1980

Why buy now when you could get the same house for 15% or so less next year.

or 10% more

[Bald Monkey]

IMHO..
Regardless of the right and wrong, if you want to purchase a house to rent, soley to make a income from the rental, you'll need a decent deposit, not just to get a mortgage but to ensure you are making something after paying all the taxes, fees, alterations, mortgage payments etc etc... I'd suggest you'd want to have at least 25% deposit..

If you are buying with the intention of keeping the house as a long term investment say 20 years or so, hoping over that time it'll increase in value. With as little deposit as possible, which is still going to be about 10% these days, then you must be able and prepared to be paying for at least part of the mortgage on this property for this long.. What's going to happen if in a few years you want to move out? Will you be able to get and pay for 2 mortgages?? Unlikely you will have made enough on the BTL to even cover your fees..

I agree with others, there is still money to be made from property, but the times of novices buying a place, 'doing it up' and then selling it on, for a healthy profit, entirely because of the rising market are long gone. I think you should only consider BTL at the moment if you really know your stuff, and no offence intended but I doubt you'd be asking the question if you did.

[Pezerinno]

Originally Posted by mrtbag

Errrr....very wrong. The current climate is more suited to BTL. Nobody is buying, so that means more people are renting.

It's simple : Low house sales = Good rental market, High house sales = Poor rental market.

There is a huge surplus of rental properties, rents are falling like house prices.

[dan1979]

Given that one of the biggest buy to let lenders (a Bradford & Bingley subsidiary) has just announced all the staff are getting the chop I'm thinking BTL is now looking even less attractive.

[jonneymendoza]

Originally Posted by Ultima

or 10% more

more like 10% more mate. prices of houses wont go down for long. i give a year max and after end of 2009 prices will sky rocket again if not sooner. you never know when the credit crunch will end but always remember that it WILL eventually end

[Phil57]

Originally Posted by dan1979

Given that one of the biggest buy to let lenders (a Bradford & Bingley subsidiary) has just announced all the staff are getting the chop I'm thinking BTL is now looking even less attractive.

Slight exaggeration me thinks.........................

[timothyw]

Originally Posted by jonneymendoza

more like 10% more mate. prices of houses wont go down for long. i give a year max and after end of 2009 prices will sky rocket again if not sooner. you never know when the credit crunch will end but always remember that it WILL eventually end

Wishful thinking. Do you really think that in just a year or two the banks (well, those that are left!!) are going to be doling out 125% mortgages again? Not going to happen. The market always overshoots on the way down, the same as on the way up, and we will see years of falls before this market starts to turn up again.

[Raoul_Duke]

Originally Posted by mrtbag

Errrr....very wrong. The current climate is more suited to BTL. Nobody is buying, so that means more people are renting.

It's simple : Low house sales = Good rental market, High house sales = Poor rental market.

So how do you explain the boom of BTLers during the housing bubble?

House sales were going through the roof and the BTL market followed it, now you have certain landlords who may hold 6, 7, 8 properties, often flats and all of them losing value. Doesn't make good business sense.

[Pezerinno]

I don't know why people say in X number of years mortgages will go back to normal? Mortgages are back to normal now the last few years they have been abnormal. I wouldn't be suprised to see another 50% fall in house prices.

[jonneymendoza]

Originally Posted by timothyw

Wishful thinking. Do you really think that in just a year or two the banks (well, those that are left!!) are going to be doling out 125% mortgages again? Not going to happen. The market always overshoots on the way down, the same as on the way up, and we will see years of falls before this market starts to turn up again.

i dont think i was born/young enough when this sort of thing happened but when it did happen before, how long did it take for things to get back to normal?

[dan1979]

Originally Posted by Phil57

Slight exaggeration me thinks.........................

No isure what you mean. What's being referred to as a 'processing centre' is actually a subsidiary that's closing down, they are called Mortgage Express and were one of the biggest players in the buy to let market lending billions per year.

[GBDG1]

Originally Posted by jonneymendoza

more like 10% more mate. prices of houses wont go down for long. i give a year max and after end of 2009 prices will sky rocket again if not sooner. you never know when the credit crunch will end but always remember that it WILL eventually end

It is obvious by this statement that you have a lack of understanding of the current market. House prices reached the point they were at through artificial market conditions - money was being irresponsibly lent to people who couldn't afford to repay it, in turn this was shoveled into the housing market.

These conditions may never be replicated again, therefore house prices will return to a proportion of salaries. There is virtually no way they can go up in the near future as the money is simply not available to feed the market.

BTL investments should be dead for the moment unless you bought in some time ago. Interest only mortgages arn't viable on a depreciating asset and rent needs to be proportional to what people who (by default) can't afford to buy a house are able to pay.

Originally Posted by jonneymendoza

i dont think i was born/young enough when this sort of thing happened but when it did happen before, how long did it take for things to get back to normal?

The current situation is incomparable with the past. We have been in an economic bubble for the past 7 years. I am sure than in 1638 there were Dutch people saying that Tulips would go back up in value

http://en.wikipedia.org/wiki/Economic_bubble

[mrtbag]

Originally Posted by Raoul_Duke

So how do you explain the boom of BTLers during the housing bubble?

House sales were going through the roof and the BTL market followed it, now you have certain landlords who may hold 6, 7, 8 properties, often flats and all of them losing value. Doesn't make good business sense.

Sorry, I should have been clearer, I'm not talking about the actaul purchase, just the renting. It's easier to rent a property when sales are down, than rent a property when sales are booming.

[Pezerinno]

I personally think we're heading for a Japan deflationary recession. I believe houses in Japan cost half of what they did at their peak which was 17 years ago!