Buy to let... A good idea for my money?

Discussion in 'General Chat' started by Daddy k, Mar 7, 2013.

  1. Daddy k

    Daddy k

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    Ok so would it be wise to get say 3 buy to let properties, putting down around £25k on each property.
    I'd probably only go for cheap £100k houses and target the cheaper end of the market ie £500 PCM.

    Would this be a sensible way to use circa £75k, so in roughly 30 years should at least have 3 properties worth 100k each to sell for retirement?

    I'm not bothered about generating an income from them over the 30 years, just want the mortgage etc covered and maybe something to top up a repair fund.
     
  2. indianwells

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    If they are 100k each to buy now I would hope they would be worth more than 100k each in 30 years time.
     
  3. Daddy k

    Daddy k

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    Yeah but you get the idea.

    Am I being too simplistic to think that it's a good way of turning sub £100k into £300k?
     
  4. HouseTonyStark

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    the problem is i dont think you would get mortgages on all 3 properties at once.

    but its a decent strategy i guess as you have risk spread across 3 properties there may be less chance of all three A: lowering in value, B: having issues. therefore you reduce individual risk per capital input by 1/3rd or something.
     
  5. digitaldecks

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    we have a few like this.

    its basically the retirement fund.
    just make sure your the full costs are covered. what I mean is once you've made your initial investment, you do need to have some money aside to cover regular maintenance, health/safety etc.. initial referb costs for rental

    What I might recommend is you get 2 rather than 3.
    Yeah the end result could bag you more money but you may get a better deal on putting down more than 30% than the 25% your were looking to do and also youll have some money to prep the properties for rent to meet regs.

    Depending on what you get and location bricks and mortar has always been a sound investment for us.
     
  6. signs

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    i'm not sure how to put this , and still walk away intact from this thread :rolleyes:


    100k houses , they will get trashed unless you are very lucky with the people you rent them to , try to get them with little or no garden ,because in that price bracket the people who rent the house will not be bothered to mow anything .

    good luck with it.
     
  7. imightbewrong

    imightbewrong
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    That is the equivalent of a compounding rate of 4.7% for 30 years, if that's of any interest (pun not intended).

    BTL is something we often think about - can never quite make the numbers add up - we are either doing it wrong, or haven't got our costs right.
     
  8. digitaldecks

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    I see where your coming from on this, but again really depends on location, target audience etc.

    I have few in the midlands near the local uni and they have small tiny concrete gardens.

    the bigger properties in London a garden helps as many are young professionals, young families.
     
  9. KyleS1

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    I'm looking at a similar thing right now, although not buying 3 houses. We want to move, and I want a nest egg for retirement. I have been thinking of renting my house and buying another house for the family with a bigger mortgage, and leaving my current house to pay itself off over the next 25 years. The rent should easily cover that mortgage, with a little over each month to build up for repairs etc (but the house is only 4 years old anyway). I'm just not sure I want to take on a bigger mortgage for my own home.
    Alternatively, I could sell mine (hassle) and buy something else using some equity in the current property to get a bigger house and not drastically increasing the mortgage, then having a cheaper house, say £150k to rent out.
    My house would be worth more at retirement, have a better quality of renter but mean I struggle more for money now, OR buy a smaller one that will be worth less, rent for less, but make me more comfortable now until retirement.
     
  10. k.jacko

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    I do think it's better to BTL with the idea of having it as a pension rather than making profit each month. Too many people think they can make a killing every month. I'm just happy that someone is pretty much paying my mortgage for me.
    My house costs me £515 a month on a BTL mortgage. I can only rent it for £495. But the way i see it, is i'm only paying £20pcm for a mortgage.

    I'd go for 2 instead of 3, just to minimise the risk. You need to be able to afford the mortgage payments should the property(ies) become empty for a time as there's no guarantee you'll always have tenants. The deposit you'll save by NOT buying the 3rd property can be your safety net.
     
  11. blue max

    blue max
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    I haven't seen a property for 100k for quite some time, but I'm going to assume they are going to need work. Is that something you would do personally? How about managing day to day - washing machine not working, boiler playing up, rotton window won't open etc, etc etc.

    Plus the cost of insurance for non-professional lets. Don't you need to have short term lets so they don't have rights (just wondering).

    DHSS tenants? Sub letting. Agents fees. Left empty. Excuses why they don't have the rent this month. I can think of a thousand reasons why I'd run a mile.

    You really have to rely on the value increasing, but the best returns are for properties you would like to live in yourself.

    Just do your homework and go into it with your eyes wide open.
     
  12. njdbaxter

    njdbaxter
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    as someone said in an earlier post, it depends on location. I have seen houses well under 100K in belfast that need no work done and rent for £550 or there abouts.

    you could pick up a 2/3 bedroom terrace needing little to no work done for between 60-80k in certain parts of belfast that easily rent for £450 pcm minimum. There are also those selling for well under 60k that might need 10-20k spend on them which could also get rent of £450 minimum when refurbished.
     
  13. FZR400RRSP

    FZR400RRSP
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    My BIL bought an ex council house for £130k, spent a bit converting the loft into a 4th bedroom and rents it out to 4 x students.
    He gets around £1350 per month rent, and could have filled it 10 times over.
     
  14. foz2000

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    Just a quick thing to think about is the capital gains tax you would be liable for if all three houses were in your name and you sold each of them.

    Also the income generated will be taxed upon minus the repair expenses and loan interest (not to be confused with the whole amount of loan repayment per month).
     
  15. imightbewrong

    imightbewrong
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    In this respect it would be good to own more houses - you can spread the sales out further. If a couple sold three houses in three tax years, they would enjoy the benefit of 6x a person's capital gains allowance.
     
  16. foz2000

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    Good point, I thought any house that was classed as a second home (not main residence of the seller at any time) would be subject to c.g.t?

    Edit: sorry re-read your post.
     
  17. imightbewrong

    imightbewrong
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    Yes, the full gain would be taxed (minus allowance)
     
  18. Boozehound

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    100k would get you a lovely 3 bed semi with back and front garden or a cracking big flat in a nice area where I live.
     
  19. DrPhil

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    That's what I did. Moved house but had enough cash to pay deposit on the new one and keep the old one.

    Because we bought our old house while prices were nearing peak, and the new house in the middle of the slump, the difference is insane. We have managed to move from a 30 year old terraced house in town, to a 7 year old bungalow in the country (see the renovation thread in my sig) and the new house actually cost less than the old one.

    Old house is now rented out which just about covers the mortgage. It was a long mortgage, still 28 years left on it, but I'm hoping to clear it before then and then it's either a regular income from rent, or an asset to we can sell. Depends on the house values I suppose. Will probably keep it unless we found ourselves reaching a peak like a few years back, then flog it.

    Rent can be a pain in the arse though, had a few issues with the tenant. Basically I think she's just crap with money. Paying a full month a time was a hassle because I think it would be burning a hole in her pocket so she'd spend it! Now it's on a regular weekly standing order so all is fine.
     
    Last edited: Mar 7, 2013
  20. DrPhil

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    A mate of mine however bought a load of properties before the previous peak. I think he had 6 at one stage. He was short sighted though and didn't plan for a crash. Bought them when the banks were giving out mortgages like they were going out of style. Very small deposits, and interest only mortgages.

    Ended up with half a dozen houses in negative equity and not worth the hassle.
     
  21. RMCF

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    I did the opposite,

    I had a 2nd property rented out, but I was a reluctant landlord after buying a new family home and being unable to get my 1st home sold.

    I had a good tenant, but didn't want the hassle of constantly worrying about the house, always having income to pay the mortgage, do a tax return every year etc etc. Plus Ireland is not the place to own a 2nd property at the minute imho, too many taxes being introduced and the feeling that landlords are loaded and ripe for taking money off.

    So I priced to sell, got rid of it and still made a profit which I was able to take a big lump off my current mortgage.

    I may live to regret it, but doubt it.
     
  22. DrPhil

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    I'm lucky enough that I can at a push pay both mortgages. In fact I did for the first 6 months because I was too laid back to get the old place cleaned out, tidied, painted etc.

    Tax isn't that bad on it, and the property tax won't be too bad (for now) because the current value of the house is probably only about €75k.
     
  23. SBT

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    After buying a new house,we've decided(well my wife has) to let our 2 bed bungalow.

    Seems a right mission sorting it all out,so i'm glad my misses is doing it all :thumbsup:
     
  24. Jules

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    I can see why it's good way to make money, but my personal view is that it should be illegal to buy more than 1 residential property.

    There is a housing shortage, and first time buyers are being squeezed out of the market by people who already have money making more money out of them.

    It's clearly a good thing if you have capital, but the government should legislate to help protect the long term security of hard working young people.
     
  25. imightbewrong

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    Why force everyone to buy?
     
  26. everett_psycho

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    Interesting reading the opinions, we are currently living in a flat that comes with my girlfriends job, at the moment we are just putting money in to isas and savings but I keep thinking could we buy to let and then rebuild our savings while we are here to buy for ourselves. Seems wasteful not to buy now and let a tenant pay our mortgage for a bit but it's a commitment we aren't rushing in to, I don't fancy buying then finding out the hard way we haven't done things we should have
     

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