Collection of questions from a new investor

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  • Collection of questions from a new investor

    Hi All,

    I have been reading these forums with enthusiasm and am looking for some answers(if possible) to my probably basic questions. I have £300000 to invest in property, we live in London and would like to buy a property near to our house and let and maintain it ourselves, working to maximise rental income. So the questions;

    Is it better to spend what we have on a property or get a mortgage and buy a more expensive property? I am cautious about taking out a mortgage but don't want to seriously reduce our returns due to being nervous!

    For 300000 we could get a 12year old 2 bed or a 1 year old 1 bed (considerably smaller), both seem to rent for about 1400, can you offer any guidance as to which may be better as the financials seem the same.

    Is it better to offer furnished or unfurnished?

    What sort of insurance would you recommend (if any?)

    Do you all market on rightmove via an agent? Would it be harder to rent out/achieve a reasonable rental price if we advertised on free rental websites only and not rightmove?

    In terms of tax, what happens if the preperty is owned jointly, does 40% tax level come into play when either or both the owners are over the income threshold?

    I would be interested to see what someone's typical monthly outgoings are for a similar rental.

    The managing agents fees seem very steep ~£3000, does this seem a lot to you? Presumably this is the landlords responsibility and include building insurance, but it will certainly dent our rental income.

    I think that is it for now, thanks so much for taking the time to read (and hopefully reply!) All insights are welcome, no matter how small.

    Best wishes

  • #2
    1. You should consult 3 local letting agents about buying BTL property - about the strength of the rental demand for 1 and 2 bed units , waiting time for a tenant , rental levels and whether furnished or unfurnished etc.

    2. Best to use a local letting agent for first year until you really understand the "rental business". The LA will charge fee for finding a tenant and extra for managing the tenancy agreement.

    3. For jointly owned property, each person must make annual tax return for 50% of the rental income, claim 50% rental expenses and pay tax on the 50% rental profit - calculated after deducting allowable expenses.

    4. If you buy a leasehold flat in a block of flats , there is usually annual ground rent and service charge for building maintenance to pay. If you choose a block with porter then you may well be paying over $3K for service charge.

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