Why doesn't everyone just buy to let?
Please do correct me if I'm wrong but my understanding is, you take out a mortgage, buy a place, put a tenant in that place and charge rent higher than the mortgage repayments.
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
(edited 8 years ago)
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Original post by TheGuyReturns
Please do correct me if I'm wrong but my understanding is, you take out a mortgage, buy a place, put a tenant in that place and charge rent higher than the mortgage repayments.
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
That sounds about right, even if the rent equals to mortgage repayments, you tenant would effectively be paying it off for you. But to do that you'd have to have enough money for the downpayment and not everyone have that much money around. Plus area popular for renting could be more expensive to buy...
Original post by TheGuyReturns
Please do correct me if I'm wrong but my understanding is, you take out a mortgage, buy a place, put a tenant in that place and charge rent higher than the mortgage repayments.
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
If everyone did that then everyone would own their own houses so no-one would rent houses from other people.
Someone's got to pay the rent.
Plus you don't know that house prices won't fall. Given the extraordinary return they've provided in the last decade or so, I wouldn't bet against them being overvalued.
Plus you don't know that house prices won't fall. Given the extraordinary return they've provided in the last decade or so, I wouldn't bet against them being overvalued.
Original post by Drewski
So where do you live?
How is this relevant?
Original post by TheGuyReturns
How is this relevant?
In this scenario it's very relevant.
Are you suggesting that everyone should own 2 houses, renting one out (in which case, where does the renter come from?) or are you saying that while you own one house and rent it out, you yourself are renting from elsewhere? While the income you earn from the rented out house may be bigger than the mortgage, it's not big enough to cover a rent as well.
The maths doesn't work on this.
Original post by Drewski
In this scenario it's very relevant.
Are you suggesting that everyone should own 2 houses, renting one out (in which case, where does the renter come from?) or are you saying that while you own one house and rent it out, you yourself are renting from elsewhere? While the income you earn from the rented out house may be bigger than the mortgage, it's not big enough to cover a rent as well.
The maths doesn't work on this.
Are you suggesting that everyone should own 2 houses, renting one out (in which case, where does the renter come from?) or are you saying that while you own one house and rent it out, you yourself are renting from elsewhere? While the income you earn from the rented out house may be bigger than the mortgage, it's not big enough to cover a rent as well.
The maths doesn't work on this.
Live in the same house lol. Houses usually have more than 1 bedroom.
Original post by morgan8002
If everyone did that then everyone would own their own houses so no-one would rent houses from other people.
Original post by Drewski
In this scenario it's very relevant.
Are you suggesting that everyone should own 2 houses, renting one out (in which case, where does the renter come from?) or are you saying that while you own one house and rent it out, you yourself are renting from elsewhere? While the income you earn from the rented out house may be bigger than the mortgage, it's not big enough to cover a rent as well.
The maths doesn't work on this.
Are you suggesting that everyone should own 2 houses, renting one out (in which case, where does the renter come from?) or are you saying that while you own one house and rent it out, you yourself are renting from elsewhere? While the income you earn from the rented out house may be bigger than the mortgage, it's not big enough to cover a rent as well.
The maths doesn't work on this.
I think you two are taking my question too literally.
I mean why doesn't the average middle-middle class Joe (or better) go ahead and get a BTL house and then make the tenant pay for it... there seems to be no downside assuming the housing market doesn't crash...
Original post by TheGuyReturns
I think you two are taking my question too literally.
I mean why doesn't the average middle-middle class Joe (or better) go ahead and get a BTL house and then make the tenant pay for it... there seems to be no downside assuming the housing market doesn't crash...
I mean why doesn't the average middle-middle class Joe (or better) go ahead and get a BTL house and then make the tenant pay for it... there seems to be no downside assuming the housing market doesn't crash...
Does that still qualify as buy-to-let if you're living in it?
My interpretation of 'buy-to-let' is you buy a house and then you rent it out completely - and I thought that was the legal definition of buy to let, too.
But yes, in that case, not a bad idea and something I am considering having just bought a house just outside Manchester.
Original post by Drewski
Does that still qualify as buy-to-let if you're living in it?
My interpretation of 'buy-to-let' is you buy a house and then you rent it out completely - and I thought that was the legal definition of buy to let, too.
But yes, in that case, not a bad idea and something I am considering having just bought a house just outside Manchester.
My interpretation of 'buy-to-let' is you buy a house and then you rent it out completely - and I thought that was the legal definition of buy to let, too.
But yes, in that case, not a bad idea and something I am considering having just bought a house just outside Manchester.
Was saving for a downpayment difficult personally? How long did it take you to save-up?
Original post by kka25
Was saving for a downpayment difficult personally? How long did it take you to save-up?
I've had help from my parents, from inheritance and from the fact that Manchester house prices are nothing compared to other parts of the country, so I didn't need too much to build up a 10% deposit. So no, not that difficult and not that long, and I've only got an average paying job.
You'd have to be pretty dumb to get into buy-to-let at the moment in my opinion.
I thought the OP meant buy a place to live (so get a normal residential mortgage, as opposed to buy to let) and move someone in who you charge rent to. The alternative is buy a property specifically to let but for that you need a much bigger deposit and rates/fees are often higher. From what I know, most banks don't offer these to first time buyers.
In the main, I think most people would rather plough their money into a place they want to live in and perhaps see B2L as potentially a hassle, i.e trouble with tenants, unable to let it, etc.
In the main, I think most people would rather plough their money into a place they want to live in and perhaps see B2L as potentially a hassle, i.e trouble with tenants, unable to let it, etc.
Original post by The_Mighty_Bush
You'd have to be pretty dumb to get into buy-to-let at the moment in my opinion.
What makes you say that?
Original post by TheGuyReturns
Please do correct me if I'm wrong but my understanding is, you take out a mortgage, buy a place, put a tenant in that place and charge rent higher than the mortgage repayments.
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
It sounds like free money to me? Sure rent levels could fall below the mortgage repayment levels, but assuming you have a good enough job to cover the difference you'll be fine. And c'mon, house prices aren't going to plummet anytime soon...
not as simple as that, firstly you have to get the house,
you may then have to do work on it in order to bring to a rentable standard, youve also got to pay landlords insurance (well you dont have to but hey live on the edge)
There are other things as well. Also whats the point of having a house your not living in. Because then you have to live elsewhere most likely paying rent as well
Original post by Heliosphan
What makes you say that?
Housing prices didn't come down far enough after the end of the bubble.
They are not going to continue going up in value.
It will be harder and harder to find suitable tenants.
Interest rates can only go up so variable rates mortgages are not a good idea.
I definitely wouldn't do it leveraged or if I lived too far away from the property to inspect it myself.
If you can buy outright or close to outright then its not so bad.
Original post by silverbolt
not as simple as that, firstly you have to get the house,
you may then have to do work on it in order to bring to a rentable standard, youve also got to pay landlords insurance (well you dont have to but hey live on the edge)
There are other things as well. Also whats the point of having a house your not living in. Because then you have to live elsewhere most likely paying rent as well
you may then have to do work on it in order to bring to a rentable standard, youve also got to pay landlords insurance (well you dont have to but hey live on the edge)
There are other things as well. Also whats the point of having a house your not living in. Because then you have to live elsewhere most likely paying rent as well
As much as he's talked about buy-to-let, he doesn't actually mean buy-to-let. He means buying, living in and then renting out the spare room.
Original post by The_Mighty_Bush
Housing prices didn't come down far enough after the end of the bubble.
They are not going to continue going up in value.
It will be harder and harder to find suitable tenants.
Interest rates can only go up so variable rates mortgages are not a good idea.
I definitely wouldn't do it leveraged or if I lived too far away from the property to inspect it myself.
If you can buy outright or close to outright then its not so bad.
They are not going to continue going up in value.
It will be harder and harder to find suitable tenants.
Interest rates can only go up so variable rates mortgages are not a good idea.
I definitely wouldn't do it leveraged or if I lived too far away from the property to inspect it myself.
If you can buy outright or close to outright then its not so bad.
All fair points.
I don't see prices falling though, demand is still there esp if the so-called housing shortage is to be believed. I think the Tories have also proven their intention to support market growth with the two help to buy schemes. That can only help to keep things fluid and stimulate price inflation, both in terms of pulling in first timers and making moving home more viable.
I agree with the point about prices not going up so I think if anyone is going to do it they need to be settle for low growth, perhaps making a smallish sum each month (lower value property tends to produce better margins) and have the long-term strategy of owning a second property outright.
Original post by Drewski
Does that still qualify as buy-to-let if you're living in it?
My interpretation of 'buy-to-let' is you buy a house and then you rent it out completely - and I thought that was the legal definition of buy to let, too.
But yes, in that case, not a bad idea and something I am considering having just bought a house just outside Manchester.
My interpretation of 'buy-to-let' is you buy a house and then you rent it out completely - and I thought that was the legal definition of buy to let, too.
But yes, in that case, not a bad idea and something I am considering having just bought a house just outside Manchester.
No it doesn't qualify as buy-to-let, it qualifies as having a lodger.
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