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Is buy to let worth it? watch

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    Hey, I currently live at home and I've been saving for a deposit the past couple of years. I now have a pretty decent deposit of £75k, however living at home really isn't all that bad, we live in a fairly large house (6 bedrooms) so there is plenty of room and frankly I'm barely ever there. I wake up at 6am every morning and I don't get in until about 8/9pm. Because of this I am considering getting a buy to let mortgage instead and renting the property out for a few years whilst I build another deposit to buy a house for myself. I'm only 22 and have no reason to leave home other than for independence and privacy, which I have anyway tbh!

    I want to know whether getting a buy to let mortgage is even worth it though? I've heard that the government are making it harder and harder for people to pursue this route of income.


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    Not a clue about the specific mortgages for buy to let.

    But it's worth noting be a landlord is not easy and it can become a large investment of time. You have to be careful who you let to. It can be incredibly difficult, time consuming and costly to evict tenants who don't pay and it can be like getting blood out of a stone to get old tenants to pay for significant damages to the property.

    Don't go into being a landlord if you're looking for easy money, it can be a right headache.
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    First time buyers cannot take out buy to let mortgages
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    I'm 22 years old as well and have been heavily researching property investing and I think that Buy-to-Let is sustainable and a good investment - even with the new government restrictions - but overall is not as beneficial as other strategies. If you want a better ROI, then you can definitely look into flipping property, or doing a HMO (House of Multiple Occupancy).

    Or alternatively, if you're looking to really leverage your money and get an income, you can do a buy-refurb-refinance kinda thing, whereby your £75k deposit can be used to really leverage your money, allowing you to buy multiple homes on that same £75k, with the subsequent mortgage payments covered by having the properties rented out; so, instead of having one property bringing you in X amount of income/rent (after covering the mortgage costs), you could have several properties bringing you back that same X amount, all whilst still using that initial £75k. I'm not too interested in this myself as i'm not too focused on income-based strategies for property, but it is a very viable option. I'm also not interested in this because of the hassle it takes to be a landlord, whether its a vanilla buy-to-let, HMO or doing the buy/refurb/refinance way where you then have to do deal with multiple tenants. Either way though, you can always hire a letting agency who takes care of that for you, in return for a fee, which might be worth it at the end of the day for piece of mind. They can also deal with the hassle of finding tenants as well. Costs of repairs will nonetheless be forked out by you though.

    If you wanna know a bit more about my general findings and more specifically income-based strategies for property investing then definitely drop me a message.
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    yes it's a good idea. property is big money
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    (Original post by Venusian Visitor)
    yes it's a good idea. property is big money
    Unless you invested in one of the many areas where property quickly became small money and people saw property losing huge amounts of equity.
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    Research how the tax benefits for landlords have diminished recently, compounded by the recent addition of 3% stamp duty for second homes. The bottom line is that it's really only worthwhile if you buy in London, and seek to benefit from the longterm growth in property prices, rather than just the income derived from buy-to-let. I put £580k down on a new build in 2015. It's currently valued at £720k, and that's before it's even been completed/let out, when it will bring another £25kpa.
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    (Original post by Stk1010)
    Hey, I currently live at home and I've been saving for a deposit the past couple of years. I now have a pretty decent deposit of £75k, however living at home really isn't all that bad, we live in a fairly large house (6 bedrooms) so there is plenty of room and frankly I'm barely ever there. I wake up at 6am every morning and I don't get in until about 8/9pm. Because of this I am considering getting a buy to let mortgage instead and renting the property out for a few years whilst I build another deposit to buy a house for myself. I'm only 22 and have no reason to leave home other than for independence and privacy, which I have anyway tbh!

    I want to know whether getting a buy to let mortgage is even worth it though? I've heard that the government are making it harder and harder for people to pursue this route of income.


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    it's easier to get into international holiday property or international restorations even building abroad is better than uk buy to let as the government is making it harder by hiking up stamp duty amongst other things
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    (Original post by DrSocSciences)
    Research how the tax benefits for landlords have diminished recently, compounded by the recent addition of 3% stamp duty for second homes. The bottom line is that it's really only worthwhile if you buy in London, and seek to benefit from the longterm growth in property prices, rather than just the income derived from buy-to-let. I put £580k down on a new build in 2015. It's currently valued at £720k, and that's before it's even been completed/let out, when it will bring another £25kpa.
    Seeing as the new stamp duty works as a slab tax, buying in London wouldn't be efficient. I'd rather buy 2 houses elsewhere than 1 in London. By the time you've saved for the second London BTL, I'd already have 4 elsewhere. Divide and conquer. One of my BTL properties in Bristol brings in £19,2k rent and it's only valued at 350k+. Under half of yours yet 76% of your revenue. Value is also up £104k since I bought it 1 year ago. Imagine if I bought the house next door as well.
    Anyway, the point of this example is simply to say, London isn't the only place worthwhile investing in Property.

    (Original post by jamesthehustler)
    the government is making it harder by hiking up stamp duty amongst other things
    Existing landlords should be more afraid of the "other thing" i.e, tax relief cuts.




    Personally, I don't think this will affect landlords doing their trade correctly. That is to say, the ones who aren't over-leveraged will be fine. The barriers of entry to BTL are high enough to prevent reckless borrowing and the new cuts will only punish those trying to max out their LTV.
    To overcome the tax on mortgage interest, landlords simply need to borrow less. Focusing more on property equity profits rather than making a few hundred quid a month from rent. Say, they remortgage to a 60%LTV product from 75%, their mortgage interest will go down from say £520 to £220pm. Now the tax on mortgage interest isn't so bad now right? To get that loan down and the value up, they can make improvements and look after the house properly. Treating it more like a home than an asset. Good for the investor, good for the well-being of their tenants.

    The losers here are the greedy landlords with strategies such as mass buying properties on high leverage, being fixated on small rental income and often neglecting the conditions of properties. (Quantity instead of quality) Their numbers game will slow right down due to the increased asset acquisition costs and the added monthly upkeep on their high mortgages.
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    (Original post by Stk1010)
    Hey, I currently live at home and I've been saving for a deposit the past couple of years. I now have a pretty decent deposit of £75k, however living at home really isn't all that bad, we live in a fairly large house (6 bedrooms) so there is plenty of room and frankly I'm barely ever there. I wake up at 6am every morning and I don't get in until about 8/9pm. Because of this I am considering getting a buy to let mortgage instead and renting the property out for a few years whilst I build another deposit to buy a house for myself. I'm only 22 and have no reason to leave home other than for independence and privacy, which I have anyway tbh!

    I want to know whether getting a buy to let mortgage is even worth it though? I've heard that the government are making it harder and harder for people to pursue this route of income.


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    u have enough i think you should go for it
    get landlord insurance aswell around 350 a year so if u dont get rent for a month ur covered for ur mortgage payments
    and house prices are always increasing. bank give **** interest for 75k anyway so this is a good use.
    good luck
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    (Original post by NX172)
    Seeing as the new stamp duty works as a slab tax, buying in London wouldn't be efficient. I'd rather buy 2 houses elsewhere than 1 in London. By the time you've saved for the second London BTL, I'd already have 4 elsewhere. Divide and conquer. One of my BTL properties in Bristol brings in £19,2k rent and it's only valued at 350k+. Under half of yours yet 76% of your revenue. Value is also up £104k since I bought it 1 year ago. Imagine if I bought the house next door as well.
    Anyway, the point of this example is simply to say, London isn't the only place worthwhile investing in Property.


    Existing landlords should be more afraid of the "other thing" i.e, tax relief cuts.




    Personally, I don't think this will affect landlords doing their trade correctly. That is to say, the ones who aren't over-leveraged will be fine. The barriers of entry to BTL are high enough to prevent reckless borrowing and the new cuts will only punish those trying to max out their LTV.
    To overcome the tax on mortgage interest, landlords simply need to borrow less. Focusing more on property equity profits rather than making a few hundred quid a month from rent. Say, they remortgage to a 60%LTV product from 75%, their mortgage interest will go down from say £520 to £220pm. Now the tax on mortgage interest isn't so bad now right? To get that loan down and the value up, they can make improvements and look after the house properly. Treating it more like a home than an asset. Good for the investor, good for the well-being of their tenants.

    The losers here are the greedy landlords with strategies such as mass buying properties on high leverage, being fixated on small rental income and often neglecting the conditions of properties. (Quantity instead of quality) Their numbers game will slow right down due to the increased asset acquisition costs and the added monthly upkeep on their high mortgages.
    What deposit would I need to buy a £150k flat?
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    My dad does buy-to-let properties a lot.

    I can tell you firsthand it is hard work and takes years to pay off. However, it is a great investment especially for a businessmen but very difficult as tenants can take you to court for the smallest things (obv its just bs so nothing EVER happens) but you have to go and a big waste of money.

    I would say that it isn't worth it if you are a student as it requires ALOT OF ATTENTION. I MEAN ALOT. You have to pay so much for repairs etc and constant calls etc.

    If you had any more specific questions I am sure I could get back to you I help my dad out a lot and he is a fulltime business men. He has many buy-to-let properties of his own, he owns a business and also in the business, he owns more buy-to-let properties with a partner. I am very grateful of my dad's job as it gives me a good insight into the real world. Also, it really depends on the city you buy in.
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    (Original post by Venusian Visitor)
    What deposit would I need to buy a £150k flat?
    Maximum loan on BTL is 75%. Therefore you need £37500. Which as mentioned in my previous post, is a bad idea to max out your loan to value ratio. The more interest you pay, the more the tax relief cuts will sting.
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    (Original post by NX172)
    Maximum loan on BTL is 75%. Therefore you need £37500. Which as mentioned in my previous post, is a bad idea to max out your loan to value ratio. The more interest you pay, the more the tax relief cuts will sting.
    It would take me 10 years to save £50k this game is rigged.
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    (Original post by Venusian Visitor)
    It would take me 10 years to save £50k this game is rigged.
    You should probably aspire to save more than £400/mo
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    (Original post by NX172)
    You should probably aspire to save more than £400/mo
    If I make 25k, council tax is 1k, rent is 6k, income tax and national insurance is around 5k so thats 13k left to live off. Need 3k to get to work and 5k to eat and stay warm so that's 5k a year left for the savings
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    (Original post by Venusian Visitor)
    Need 3k to get to work and 5k to eat
    Seems a bit much, what's going on here?
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    (Original post by Venusian Visitor)
    If I make 25k, council tax is 1k, rent is 6k, income tax and national insurance is around 5k so thats 13k left to live off. Need 3k to get to work and 5k to eat and stay warm so that's 5k a year left for the savings
    5k a year on food is £96 a week...you planning to eat caviar every day?
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    (Original post by NX172)
    One of my BTL properties in Bristol brings in £19,2k rent and it's only valued at 350k+. Under half of yours yet 76% of your revenue. Value is also up £104k since I bought it 1 year ago.London isn't the only place worthwhile investing in Property.
    Yes, that's fair enough: it's always down to the return on investment and robustness of the market. London is insane though, as the market value of our latest acquisition has risen 24% in just 4 months since purchase. It's not a sustainable rate of growth, but, as with the last property crash, the long term view flattens the risk.
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    (Original post by Venusian Visitor)
    If I make 25k, council tax is 1k, rent is 6k, income tax and national insurance is around 5k so thats 13k left to live off. Need 3k to get to work and 5k to eat and stay warm so that's 5k a year left for the savings
    What happened to tax, NI, pension, student loan, etc? Or is this £25k net?


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