First Buy To Let

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    First Buy To Let

    Hi
    I wanted some advice when going for a buy to let investment. Tips, experiences anything would help.
    I’m looking to buy a house, 3 bed in the E13 area sometime in January 2010. I will give 25% of a 250,000 house to get a (hopefully) low mortgage rate.
    I do have some specific questions:
    1. Is the investment unsuccessful if i am topping up the rental payments to cover the mortgage?
    2. How do I go about getting tenants in, shall I use letting agents; and if so how much can they charge?
    3. What shall I look for in a property, I understand newly furbished will have premium but what else apart from structural, previous secured loans on the property etc


    MANY THANKS

    #2
    Originally posted by ace19887 View Post
    Hi
    I wanted some advice when going for a buy to let investment. Tips, experiences anything would help.
    I’m looking to buy a house, 3 bed in the E13 area sometime in January 2010. I will give 25% of a 250,000 house to get a (hopefully) low mortgage rate.
    I do have some specific questions:
    1. Is the investment unsuccessful if i am topping up the rental payments to cover the mortgage?
    2. How do I go about getting tenants in, shall I use letting agents; and if so how much can they charge?
    3. What shall I look for in a property, I understand newly furbished will have premium but what else apart from structural, previous secured loans on the property etc


    MANY THANKS
    1. Yes. Rental income needs to cover all costs of running the property (mortgage repayments, insurance, maintenance, etc.), and make a profit.
    2. Letting agents might be the best way to find a tenant unless you have contacts elsewhere (e.g. a large local employer), but shop around for the best 'find a tenant' fee and only engage them to manage the property if you enjoy giving your money away in large amounts.
    3. Far too vague a question to answer, really.
    'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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      #3
      On point 3, aim for:
      a. house (not flat); and
      b. freehold (not leasehold).
      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
        Just to add to what Mind the Gap has stated, it is also important to allow for voids. This is the term for the period between a tenant vacating a property and the new tenant moving in when no rent is obtained. Having been in the business for over 10 years with a number of properties, I know that it is rare for this period to be less than one month. You see, when a tenant tenders his notice, you cannot be certain that he will actually move out when he states he will, so unless he has actually moved out and handed over the keys, you cannot agree a date for a new tenant to move in. Furthermore, there is often work to be done on a property between tenants (redecocerating, carpet cleaning or replacement e.t.c.) which will also increase this void period.
        I also suggest that apart from thorough reading of this board, you seriously consider getting a good (ARLA or NEA registered) letting agent to find you a tenant. Although their fee to find, interview, credit check and reference a tenant is not insubstantial, it is a small sum in comparison to what you will loose if you get what we call a "professional" tenant. This is a tenant who knows how to stay in a property without paying the agreed rent and how to frustrate for as long as possible the legal mechanisms in place to evict him. Such a tenant can easily stay in place for at least 4 months from the date that they first fail to pay their rent. So you have 4 months mortgage payments to find, plus the legal costs of eviction (the court fee is £150 - then there is possibly the cost of the legal professional unless you DIY and then the court bailiff may be necessary as well). Then there is the cost of redecorating and making good the property for a new tenant and of course the extra time beyond the 4 months stated to do this!

        P.P.
        Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

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