Goonerdad Posted December 24, 2011 Report Share Posted December 24, 2011 Hi all, Just new to the forum and have a question which i would appreciate your views on. I have carried out a lot of research on areas and property and also have a good friend who has been in the BTL arena for 12 years. I have identified properties costing aound 55k which have a rental yield of 525 pcm. My strategy is to hold the properties for 20 years and take the rent (also hoping for long term capital growth). I have a full time job and any income will be a bonus. My question is should I buy the property outright and 'bank' the 525 pcm or put 30% deposit on the properties and mortgage the rest, allowing me to buy 3 properties and pay down the mortgages. The buying outright is I feel the least risky option but the returns are not as great. Any views? Mark Link to comment Share on other sites More sharing options...
Richlist Posted December 24, 2011 Report Share Posted December 24, 2011 You seem to have an overly simplistic view of rental property. I suggest you read some of the cautionary tales and posts on this and other forums before taking the plunge. Especially this one : Link to comment Share on other sites More sharing options...
Goonerdad Posted December 26, 2011 Author Report Share Posted December 26, 2011 You seem to have an overly simplistic view of rental property. I suggest you read some of the cautionary tales and posts on this and other forums before taking the plunge. Especially this one : Hi, Thanks for the reply. I do not think I have an overly simplistic view - I have carried out lots of research, including figures and as I say am being guided by a close friend who has 12 years experience of BTL and a portfolio of 36 properties. There are of course many unknowns in property ownership and we all hope that our properties (rental or otherwise) do not continually cost us money in repairs and upkeep. I am still interested in peoples views on whether to buy or mortgage. Thannk you Mark Link to comment Share on other sites More sharing options...
Richlist Posted December 27, 2011 Report Share Posted December 27, 2011 Any views? Lots..... Any answer to your question will be meaningless until you have a proper understanding of how a letting business works. My question is should I buy the property outright and 'bank' the 525 pcm..... You are unlikely to be able to bank £525. Even without a mortgage there will be lots of other expenses to cover. or put 30% deposit on the properties and mortgage the rest, allowing me to buy 3 properties and pay down the mortgages. High interest rates, exhorbitant arrangement fees and onerous terms and conditions are prevalent with BTL mortgages at this time. There are very few BTL mortgages that make sound business sense. The buying outright is I feel the least risky option I disagree. but the returns are not as great. Not necessarily the case. It depends on the mortgage terms. Link to comment Share on other sites More sharing options...
Goonerdad Posted December 27, 2011 Author Report Share Posted December 27, 2011 Jees Rich, Did you have a bad year? Bad Christmas? M Link to comment Share on other sites More sharing options...
Richlist Posted December 27, 2011 Report Share Posted December 27, 2011 Jees Rich, Did you have a bad year? Bad Christmas? M No, both were excellent thank you. But, I do try to give accurate answers. They may not always be the answer you want or expect but they are usually correct. If you want to provide a little more detail you'll get a more detailed answer. Many new landlords forget the loss of interest on the money they invest in the property.......its part of the cost of running your business. eg Say you invest £55K of your cash to buy a property and loose 3% net interest on that money ....thats a loss of £1650pa. Any net profits from renting will need to exceed that loss before it shows a real profit. Link to comment Share on other sites More sharing options...
Melboy Posted December 28, 2011 Report Share Posted December 28, 2011 Jees Rich, Did you have a bad year? Bad Christmas? M You will find Mark A that Richlist does provide posters like yourself a comprehensive and anyalytical answer to your questions. It may be not what you want to hear but nevertheless it is normally very accurate and more to the point Richlist will point out certain things that most newbie Landlord's will not even have considered when entering the buy to let market and becoming a landlord. There are pages of information on here whereby new landlord's have become disallusioned in becoming landlords and the problems and the costs of running a buy to let property with tenants in place. So with that in mind just read what he has to say and you can either agree with what is being advised or you can just dismiss it but you can't ignore the advice without at least thinking about what is being said. Many new landlords forget the loss of interest on the money they invest in the property I buy property for cash and renovate and either sell on or rent out and the statement above is very true. It's the first thing that goes down on my costings sheet....loss of interest on the capital investment. Many people forget this when buying property for whatever reason they are buying for. Mel. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.