1 Bigger More Expensive Property or 2 Smaller Properties for Buy to Let?

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    1 Bigger More Expensive Property or 2 Smaller Properties for Buy to Let?

    If one lives in South London and can raise around £120k via private funds for property investment. Is it better to purchase 1 bigger more expensive property e.g. 3 bed house (£350k-£375k) or purchasing two smaller properties (1 bed flats each which £230k-£240k)?

    Which strategy is a wiser buy to let strategy to hold the property for the long term?

    All eggs in one basket or in two baskets?

    Purpose: good capital growth, no hassle, positive cashflow (mortgagable) and %4+ net yield after expenses.

    Thanks

    #2
    You need to do the number crunching and see which one works best.

    I live in the SE London and I don't touch leasehold anymore. There are too many hidden costs - Management fees, paying ground rent and inflated insurance costs.

    Would this be your first BTL? Do you already own a residential property?

    Comment


      #3
      Take a look at these:

      Zone 5 - all houses are walking distance to Train Station. These houses will rent for £1300 per calendar month in a good done up condition.

      http://www.rightmove.co.uk/property-...TC=on&index=10

      Comment


        #4
        Originally posted by Claymore View Post
        Would this be your first BTL? Do you already own a residential property?
        Yes, yes.

        If I could do the numbers, I wouldn't have asked, lol.

        Originally posted by Claymore View Post
        I live in the SE London and I don't touch leasehold anymore. There are too many hidden costs - Management fees, paying ground rent and inflated insurance costs.
        With Leasehold, you have service charge and ground rent as extra charges as well as the lease extension.

        With Freehold, you'll also have insurance costs and rental management fees and maintenance costs.

        Thanks but it's far from me. I live in Worcester Park area.

        Comment


          #5
          I have properties that are 35 and 40 miles away from me. Have been renting them out for 5 years and it hasn't caused me a problem.

          In order to get a BTL property, you need to already have a residential mortgage. All the best.

          Comment


            #6
            Originally posted by Claymore View Post
            I have properties that are 35 and 40 miles away from me. Have been renting them out for 5 years and it hasn't caused me a problem.
            Do you have someone there local to take care of the property if something goes wrong there e.g. washing machine, electricity? or when it's vacant and you'd need a new tenant?

            Comment


              #7
              Originally posted by NewAdventure
              With Leasehold, you have service charge and ground rent as extra charges as well as the lease extension.

              With Freehold, you'll also have insurance costs and rental management fees and maintenance costs.
              I have experience as do the majority of landlords on here. The maintenance fees are generally extortionate and don't reflect the work done. An example of insurance for a one bedroom flat through a management agent £350 per year. Arrange your own insurance £120 per year. The maintenance charges will be towards communal areas, maintain gardens etc and not the maintenance that is also required within your property. So, as I informed you - these would be additional costs as opposed to a Freehold property with no ground rent to pay.

              Comment


                #8
                On both properties I have a BG contract which covers the boiler for emergency breakdowns. Don't supply washing machines as tenants are fantastic at abusing them. If you do supply one, buy a brand new machine with a free 5 year parts guarantee. Charge any call out costs to the tenant which are not covered by mis-use. Replace the machine every 5 years or let tenant supply there own machine.

                In the SE, you will not have any voids trust me. I find my own tenants, and tenants for my friends who have property and therefore, because I do really thorough checks, our tenants seem to stay with us for years.

                Comment


                  #9
                  thanks for sharing. So my understanding is you definitely recommend getting a 2-3 bed house with the budget of around £280k.

                  For that I'd need to convince myself of long way traveling (10 miles around me) which is not easy.

                  Comment


                    #10
                    I would definitely recommend a 3 bedroom house, walking distance to BR - (not 2 bed), in zone 5 for around £300k nicely done up. With a deposit of around £120k you would do very well.

                    Comment


                      #11
                      The cheapest 3 bed house in 1 miles from me is £350k. As a BTL, it has to have a rental income of £1650 which is unlikely: http://www.rightmove.co.uk/property-...PartRent=false

                      The cheapest 3 bed house in 3 miles from me is £325k. As a BTL, it has to have a rental income of £1500 which is also unlikely:

                      http://www.rightmove.co.uk/property-...Channel=buying

                      And 5 miles from me is minimum £310k.

                      I'd have to go further beyond if I want to get a 3 bed house

                      Comment


                        #12
                        Leasehold is not always that bad.
                        This may not apply to the SE but in the NW leasehold houses are not uncommon. Often these are for 999 years and the old ones have minimal ground rents. I have one with a GR of £1.50 and my home has a GR of £20.

                        Comment


                          #13
                          My husband comes from the Bolton area and he is familiar with this, however, in South East London it is quite rare to have a leasehold house.

                          Comment


                            #14
                            @ Newadventure

                            In the area I showed you, you would be making a profit of around £750 to £850 per month. That is a great return with a layout of £100 - £120K. And if you was really put off by a 10 mile trip once in a blue moon you could have it managed for about £70 per month!

                            Comment


                              #15
                              NewAdventure,

                              Er, can't you drive? I'm definitely a fan of keeping property local to me, but a 5 miles limit is a bit restrictive to say the least.

                              To add perspective... my closest let property is 0.0 miles away from me. My furthest is 20.3 miles away from me (according to Google Maps).

                              Comment

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