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Advice required re: starting a Buy To Let portfolio
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Trainee Landlord
Posted: 25 January 2011 18:48:23(UTC)
#1

Joined: 25/01/2011(UTC)
Posts: 1
Dear All, as my name suggests, I am considering entering into the buy-to-let market and would greatly welcome your advice. My father owns a portfolio of 11 BTL flats, and this provides his entire pension income. I am in my mid 30's and hope to build up a modest portfolio of my own with the same goal in mind. I wouldn't intend to trade or sell properties, rather to buy-and-hold. I would aim to pay down the mortgages over the years, and 20 years down the line, hope to own the properties outright, living off the rental income.

My area of focus would be south London or possibly Brighton. My question is it better to buy two-bed flats or one-bed? I read conflicting articles, and am not sure whether anyone has a strong view that one is preferable to another. I could (mortgage permitting) buy two 1-beds. However is it better to be less leveraged and buy one 2-bed with the aim of increasing this to more properties in the near future. Any strict "no-no's" when looking for properties? Any advice or views gratefully received! Thanks.
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tomrob
Posted: 26 January 2011 12:17:25(UTC)
#2

Joined: 26/01/2011(UTC)
Posts: 2

Was thanked: 1 time(s) in 1 post(s)
Notwithstanding that yesterday's GDP numbers will give the BoE ammunition to continue their ridiculously low interest rates for a while longer the principle advice that I would offer is :
1. Make sure you can cover your outgoings from expected rental income if the mortgage rate you're paying in 2 years time is double what it is now.
2.Don't overextend yourself. Excessive leverage gave all the BTL guys who started a decade or so ago a fantastic ride but I'd be very wary of taking that bet for the next decade. If it doesn't work out for you an 80% mortgage followed by a 20% fall in house prices and a forced sale because you got your rental income/mortgage payment projection for 2013 wrong wipes out your equity and you have to start your next retirement plan from scratch.
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pete the builder on 17/04/2012(UTC)
brian redpath
Posted: 26 January 2011 18:07:11(UTC)
#3

Joined: 12/11/2009(UTC)
Posts: 1
Good advice above follow it I'd suggest.
If you do get around to buying I'd suggest you buy properties with large kitchens, if the rental market sours, it means if you are stuck 2 sharers can occupy your 1 bed as a 2 bed unit eliminating the lounge, and similar in terms of a 2 bed unit. Don't fully believe estate-agents when they tell you where the market is, and buy close to good transport connections to improve your desirability. Location,Location, Location - the secret to a good Buy to Let purchase is keeping it tenanted, so consider carefully and don't repent at leisure.
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alan howley
Posted: 26 January 2011 19:18:53(UTC)
#4

Joined: 03/09/2009(UTC)
Posts: 2
2 bed houses are always better than any flat, more easily sold and you dont get ripped off with ever rising charges
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Anonymous Post
Posted: 26 January 2011 19:32:30(UTC)
#5
Anonymous 1 needed this 'Off the Record'

The whole concept of BTL sounds immoral to me. Hope your kids can afford a house when they are old enough, mine certainly can't.
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The Colonel
Posted: 26 January 2011 19:42:25(UTC)
#6

Joined: 19/09/2009(UTC)
Posts: 35

Thanks: 2 times
Was thanked: 20 time(s) in 10 post(s)
Both Tom Rob & brian redpath are correct. You must maintain your properties well. ( I have a saying " I might not choose to live there
but if push came to shove I could") dont expect people people to live in a slum. Vet your tenants thoroughly and get to know them . Its harder for a tenant not to pay you, or trash your property, if they consider you a friend.
Buy the Estates Gazette and check out the Auctions. You may well find suitable property being sold a little lower than the stuff being offered by local agents. Check the Auction results the prices paid at auction are almost an Acid test study the results that way you will learn the values.
Above all dont think or kid yourselves that it is easy, believe me after a lifetime (45 Years) in property it is still not easy.
Dont believe the Left Wing idiots who say on this blog that anyone can do it and it is disgraceful that people should be earning money from renting accommodation. If you do it properly, efficiently and with compassion you will be providing a Social Service.
Whatever you do dont get to big (The two school Teachers who thought that it was easy and lost their shirts).
Dont borrow more than 30% of the price that you pay for a property if possible borrow less.
Dont buy to far away from where you live or work, you cant look after residential lettings more than 45 Mins from your home or workplace. Managing agents do not look after or do things with the same concern as yourself,its a hands on business.
Learn to do small repairs yourself.
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pete the builder on 17/04/2012(UTC)
The Colonel
Posted: 26 January 2011 19:51:18(UTC)
#7

Joined: 19/09/2009(UTC)
Posts: 35

Thanks: 2 times
Was thanked: 20 time(s) in 10 post(s)
If Anonymous 1's Children wont be able to afford a house, does he think the State will provide them with a home?
If so he is deluding himself. They will more likely than not rent in the private sector.
The interesting thing is he says "His kids cant afford a house" Well let him downsize or make an extra effort to help them.
Thats what I and lots of others have done for their Children and in my case and others that I know for their Grandchildren
If he wants to make silly posts he should have the guts not to make them anonymous.
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D Wood
Posted: 26 January 2011 19:51:23(UTC)
#8

Joined: 10/01/2010(UTC)
Posts: 10

Was thanked: 1 time(s) in 1 post(s)
First consider your target market then look at suitable properties that fit within it. Take care if you are considering dss as the LHA rates are all going to fall nationally ! Don't expect any significant returns on equity in the near term. Good luck.
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pete the builder on 17/04/2012(UTC)
alan howley
Posted: 26 January 2011 20:24:02(UTC)
#9

Joined: 03/09/2009(UTC)
Posts: 2
mr anonymous what the hell has whether your kids can afford to buy a house got to do with buying to let?
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fatcat
Posted: 26 January 2011 20:25:02(UTC)
#10

Joined: 17/06/2010(UTC)
Posts: 6
AGREE H Kane..Typical of the me me oh woe is me the world owes me a living. Get off your backside and make a provision for your kids you bloody whinger. Good on the BTL I say. There is good and bad in any business.
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