What are BTL pitfalls? How can I plan to avoid them?

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  • What are BTL pitfalls? How can I plan to avoid them?

    Hello

    New to this forum and new to Buy to Let. I have a spare few quid and am about to give this buy to let business a go.

    What would you experts consider to be the main pitfalls and things to consider when purchasing a propoerty to rent and subsequently renting. Would you bother with a letting agent or go for it yourself?

    Cheers in advance.

    A millionaire in the making..not!!!

  • #2
    Plenty of pitfalls for the unwary. Before you do anything else read the WHOLE of this forum and website !!

    Comment


    • #3
      Originally posted by lloydy View Post
      Hello

      New to this forum and new to Buy to Let. I have a spare few quid and am about to give this buy to let business a go.

      What would you experts consider to be the main pitfalls and things to consider when purchasing a propoerty to rent and subsequently renting. Would you bother with a letting agent or go for it yourself?

      Cheers in advance.

      A millionaire in the making..not!!!
      Really, it's much too late to join the throng. Most of them are now:
      a. cursing their foolhardiness; and
      b. nursing unmanageable mortgage costs.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


      • #4
        I am in a similar boat, but with the latest financial news / rumours I've decided to put my money in a high interest account and watch what happens.

        It is my intention to get into Buy to Let but not in this climate. A quick cash-flow forecast that takes into consideration depreciation shows that even if I were to let a particular property for a year without voids, expensive maintenance problems and so - on, I would still be out of pocket. Always assuming that property DOES depreciate in the next year of course!

        Better to bank the money, let it appreciate a little, and enjoy a headache-free year. I will however spend time following this forum and learning as much as I can so that when I eventually take the plunge I'm at least a little prepared for the maelstrom to come.

        This is just my untutored opinion.

        Good luck, I rather think we're both going to need it.

        John

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        • #5
          Some of us are laughing all the way to the bank!

          I can't buy them and bang them out for rent fast enough at the moment.

          But then again, I never went in for the off plan 2 bed cobblers in Leeds, Manchester, Cardiff etc where the suposed rentals were more than any sane local would dream of paying.

          Buy when there's blood on the streets!

          Comment


          • #6
            Originally posted by attilathelandlord View Post
            I can't buy them and bang them out for rent fast enough at the moment.
            Same here, other than I had one new purchase go 'tits-up' yesterday !!

            Rents are on the increase around my patch as there is a major shortful of rental property.

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            • #7
              I know what you mean, I've had a couple of juicy deals fall through, but that's because of psycho vendors who don't really know what they want to do.

              I just picked up the keys to a nice 4 bedder today and found that the council have had to break in and stop the leaking boiler, leaving the new keys with a new neighbour I might add! (Wahay just leave the keys with any old body!!!!)

              Still, such is life.

              Good stuff is getting a little more hard to find and the penny hasn't dropped with a lot of vendors that the good times are over!

              Comment


              • #8
                The current market dictates that purchasing a property requires a lot more skill than normal. Let's face it putting as much as you can into a cash ISA at 6.5% and the rest in high interest account where you can get over 6% monthly is much better than current returns for new acquisitions.

                Obviously a portfolio acquired over several years won't affect too many, but of course 18% CGT will mean some landlords will sell in a diminishing market.
                The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                Comment


                • #9
                  That's exactly it though, a lot of people don't give purchasing property much thought, which isn't so fatal in a rising market, but pretty stupid in a falling one.

                  For those who intend to buy and hold (I hold for at least 10 to 15 years) then it is still worthwhile.

                  It's just a personal thing, but I don't want to keep much money in a bank, even if my portfolio is valued at zero, it's still producing income.

                  I'm also not much of a one for yield calculations as they can be pretty meaningless with changing property prices. I want to be making £500 to £600 pcm on each property after mortgage costs etc.

                  Comment


                  • #10
                    Originally posted by attilathelandlord View Post
                    I want to be making £500 to £600 pcm on each property after mortgage costs etc.
                    HOW MUCH!!
                    Bloody hell, i'm happy if I clear 150 quid on each!!

                    Comment


                    • #11
                      All you've got to do is live right!

                      I have some cash cows which make a tidy sum and a few others which are good for a squeeze now and again to release capital and I don't make so much then. It all balances out.

                      I'd like to add that I do 2 or 3 hours research per day EVERY DAY on potential properties, I have favoured estate agents who offer me the stuff first, they know exactly what I like and I can get the mortgages.

                      If the numbers don't stack then I will NEVER buy it.

                      Then I work my guts out making sure the properties are nicely but moderately cheaply done up.

                      Comment


                      • #12
                        Originally posted by attilathelandlord View Post
                        All you've got to do is live right!

                        I have some cash cows which make a tidy sum and a few others which are good for a squeeze now and again to release capital and I don't make so much then. It all balances out.

                        I'd like to add that I do 2 or 3 hours research per day EVERY DAY on potential properties, I have favoured estate agents who offer me the stuff first, they know exactly what I like and I can get the mortgages.

                        If the numbers don't stack then I will NEVER buy it.

                        Then I work my guts out making sure the properties are nicely but moderately cheaply done up.
                        Same here, other than a few issues over the last month with mortgages, however, on a rent of say £695pcm I will clear in the region of £100 after mortgage costs. How in the hell can you get £500 - 600 per property?

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                        • #13
                          I am in London, I buy ex local authority flats/houses mainly all of which have the capacity to put in an extra bedroom (generally 2 beds to 3 or 3 to 4) and it's the extra bedroom which makes me the money.

                          Like I say, it's a lot of work and it makes me laugh when I hear people talking about landlords who just sit back and let the money roll in. I'd like them to be there during my 12 hour days, or when a tenant calls in the middle of the night because they are drunk and can't get into the house, only to find that they are trying to get into the house next door!

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                          • #14
                            Originally posted by attilathelandlord View Post
                            I'd like them to be there during my 12 hour days
                            Part-timer !!

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                            • #15
                              attilathelandlord, would you say that 5 years is a reasonable time to hang on to a btl?

                              I'm hoping that if we want to sell in about 5 years time, we should have made some reasonable capital by then.

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