Buy-To-Let Properties

Does anyone have a buy-to-let/rent out a property?

Any thoughts, suggestions, tips, insights, warnings, encouragement to share with me?

Does it bring in cash or drain it?

Is it relatively easy to get someone in to rent or do they lie vacant for long periods?

Is it a better idea than a personal or stakeholder pension? Or something to have as well, if possible?

Is a flat or a house better for renting out?

Where is the best place to rent out - in a town or more remote area?

Just something we've talked about recently.

My mum has a flat which she has rented out in the past - she did make a little money but not a lot and had lots of problems with tenants. Another guy I know went travelling for a year and ended up with a houseful of squatters when he returned.

Another couple I know travelled and had no problems at all and some others seem to do really well out of renting out a property.

I did look into this about 3 or 4 years ago - during the 'boom time' - and it seemed like a goood thing to do. You can easily get 'buy to let' mortgages, where the income from the rent covers the mortgage so the lenders aren't interested in your own earnings, but you do need to put down quite large sum as a deposit. The idea being that the rent covers the mortgage and the property goes up in value - which is your investment.

However, having seen many programmes about it on tv recently it seems that it is now a very risky business. House prices are very unstable at the moment and its not a good time to be getting into it - according to the money experts on tv anyway.

Make sure you have a good tenancy agreement drawn up by a solicitor. Have any prospective tenants checked out thouroughly...ie references. There are firms/estate agents that for a fee will manage it all for you which is sometime worth thinking about.
To get a mortgage on the property isn't difficult, although most lenders will perhaps charge an extra percentage on top of their basic rate. Also property/contents insurance will not be straightforward as you ie the property owner will not be occupying the property.

However...if done properly it can be a very good way to make cash.

Hi there,

I think i agree with Sansorella - the market is too unstable right now there's no telling what would happen.

My parents bought a property just outside Birmingham about 4 years ago and my dad lived there while he was working there. He also shared the house with another collegue who rented off him. When he left that job, they rented out his room so still 2 seperate people sharing the house. It worked very well although i dont think they made a lot of money out of it.
When the 2 tennants decided to move on, they went through a letting agent and got a woman in who they thought was very nice. Turned out she is a pain in the bum, has upset their neighbours who are good friends, has been keeping a DOG in the house (against the rules of her tennancy) and is refusing to leave! She is also trying to take the letting agents to court for 'harrassment'. Dont know how she figures that one.
So that is currently not going great and i dont think they make a lot of money on it, even though it is a nice 2 bed mid terrace in a nice neighbourhood of Pelsall (not a bad town i believe).
Once they get the woman out they will continue to re rent the house but as unfurnished as its more hassle furnished and you dont seem to get any more money for it!

As a family we also own a 5 bed luxury villa in Florida near Disney. We have done much better with this. My father created a website and takes his own bookings on it as well as having a management company out in the states. We all try and advertise it so it get some exposure and more people look at it. We went out there last year to decorate and furnish it ourselves which was hard work but great shopping!!!! We have had it for 1 year (since building completed) and while we did not make much last year, we have just paid off the mortgage on it so now we will make money much easier.
I believe the villa is/was booked for all of feb, 3 weeks of march, all of april bar 2 days, half of may, all of june and july, 1 week in august, 2 weeks in september and 10 days in december. I forget how many weeks we need to have bookings for to break even but i think we have made a bit of money on it already so far this year. Also it is a beautiful place to holiday haha and 3 of the weeks in june are booked for us! The villa sleeps 10 but there are just 6 of us going so tonnes of room. REALLY look forward to it, just wish i would take the dogs as well they would sooo love the swimming pool

Anyway the villa has gone up in price by a fair bit since we had it built and the house in bham has also increased. However we certainly wouldnt buy any other property right now - the market is just too unstable and i would worry too much about getting into negative equity. But that is JMHO and i have only been watching house prices round here, may be different where you are or where you are thinking to buy.

I wish you lots of luck whatever you decide

x

Hi

My sisters and I rent out our late parents' bungalow, we have long term tenants in, but we still get "six month assured shorthold tenancy" agreements from them.

We have never had any trouble with our tenants and I think that it is because although we put it in the hands of an Estate Agent to find a prospective tenant, we do not let the estate agent view it with them, WE do it.

We make it quite clear to the Estate Agent that when anyone wants to see it, they must ring me or one of my sisters and arrange for us to meet the prospective tenant, we then size them up, so to speak and if we don't like them, we don't have them, even if they are interested.

We stipulate that we will not take DHSS tenants, but also say that if it is in the case of say, a Mum who has split with her hubby and is on housing benefit, that's different, we just don't want these layabouts that have never done a stroke of work and who think that the world owes them a living.

Regarding buy to let mortgages, my friend works in that sector and he said (I think I've got this right) that you have to stump up about a third of the price of the property as the deposit and then from there on, the rent pays the remaining money.

I might be slightly wrong on saying a third, but I do know that you have to stump up quite a bit.

Regards

Jill

Don't forget that you are liable to income tax on the rental income (less certain deductions) which may push you into the 40% tax band and Capital Gains Tax on any profit if you sell it

I think this is a bad time for a buy-to-let at the moment Lucky, as the property market is too unstable, unlike it was a couple of years ago. If you went for a flat, a good idea is in the student area, and you will always have it occupied, although I think they prefer houses don't they? I watch a lot of property programmes about this, and this seems to be the way to go. Don't spend too much on mod cons either for students, but at the end of the day, you're only investing in the property anyway for future resale aren't you. If you want to get the best price, then you have to get everything modern and spot on to rent to the higher bracket of business person, as they expect the best - apparently! Of course, you'd then get a top price rental too. Go for short term lets as well, or maybe put it in the hands of a letting agency, but you'll have to pay their fees. They have plenty of old programmes on Sky tv about all this, some old Location Locations etc. Take a look, it might help you, but I really think this is on hold at the moment with the current property market. Good luck in your quest! p.s. I would always go for Town, never rural, unless it was in the commuter belt and very expensive maybe?

Hi Deccy,

Thanks, I forgot to mention that, we've always declared everything from the start, also I forgot to say that you have to have a yearly "Gas safety check" and should have the electrical items, cooker, fridge, shower etc. "PAT" tested.

Regards

Jill

Thanks everyone. Things do seem a bit slowish but I thought the market was supposed to be picking up a bit? Maybe now's not the right time, although I wouldn't want to buy when prices go up.

I'm a Negotiator in an Estate Agents - the press always print stuff about prices going up etc, but it rarely reflects what is truly happening.

Certainly here in Cumbria, prices have remained stable since the end of 2004. We had the big boom prior to that where prices sky-rocketed but that all finished in 2004. Since then the prices have remained static.

So far this year we have seen a lot of properties coming onto the market, but not the same influx of buyers to match. If this carries on it will become a strong buyers market and sellers will be forced to be more competitively priced to sell and possibly we will see a drop?

We don't deal with Lettings, however I do know a few people who have done well out of it. Most people buying properties to let out in our area stick to the very low end of the market like the small terraces and do them up. Mostly they stick to areas within quick travelling time to the Town Centre and on good bus routes.