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Renting property


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Something ive been looking into recently in anticipation of a future housing price slump. I live in central Scotland and there is a fair amount of flats available for 40k or sometimes less, alot of these properties could expect a return of £4500 a year if rented out.

I would look to pay the mortgage off first as i dont want a buy to let mortgage, i previously worked in the building trade and still know several tradesmen to this day so upkeep or maintenance costs dont concern me too much.

Ive been trying to research it but alot of information is with regards to buy to let mortgages so im just wondering if anyone on here has managed to pay off a mortgage and rent out a property, was it worth it in the long run or is it better to sell the house for a profit at a later date and reinvest into something else?

I see theres fee's that need paid to the council to become a landlord etc, also i know different law might apply in England and Wales but any input would be appreciated

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Ive seen a few people say this which is what puts me off, if i didnt have the finances to cover any bills whilst there was no tenant i would be in trouble.

The reason i ask is because ive found some extremely cheap flats in the central belt, i would only be interested in doing this if i owned the house out right, im not interested in buy to let mortgages, especially when i could buy 1 of these properties out right within the next year or two.

heres an example, its not a very well sought after area, but it has local links to motorways, shops and school are within walking distance too,

https://www.rightmove.co.uk/property-for-sale/property-87460961.html

Its up for auction tomorrow so might exceed the 21k but not by much. 

And heres another 2 

https://www.rightmove.co.uk/property-for-sale/property-75448936.html

https://www.rightmove.co.uk/property-for-sale/property-65370372.html

Ive never really looked into this before so im not entirely sure of what im getting into just yet. But right now im in a position where in the next 12-18 months i could afford to buy any one of those propeties above out right so im trying to figure out if its worth it. (obviously those ones will have probably sold by then, but you get my point)

I would just have the rent paid into a savings account which i would also contribute to every month, which then hopefully might be able to buy me another small flat for me to rent in the future.

The way im thinking is il hopefully have 50k roughly invested into property which i own out right, those two properties then give me a passive income of roughly £750-£800 a month. Any expense for repairs to the building should be fairly small, i spent alot of time in construction before training as a mechanic, i still have alot of people/skills that can help me out here, its just the financial and legal bits i need to try understand.

 

 

 

 

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Did not expect to come across this thread on this forum but I am in a similar mindset as you at the moment. I live up north east where the house prices are very cheap there’s a few people I know he was doing a currently and is making very good profit/income from it will be following this. 
 

 

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I would think there is a reason these are so cheap, if they were good investments the big landlords with large portfolios would be snapping them up left right and center pushing up prices from sub 30k

Seems to good to be true. and the odds of hassle free rent paid monthly is probably slim to none. 

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The key is who manages your properties. The rental properties I have are managed by a six foot ex-navy handy man with a van with some very interesting tattoos. He manages 150 properties for landlords in Manchester includes all of mine. Charges for repairs (reasonably priced) sources all tenants (charges reasonable fees) but no ongoing maintenance fee like a letting agent. Tenants pay rent direct to the landlord and one month in advance for DPS (https://www.depositprotection.com/) and one month advance for rent. He does the usual background checks but does not carry out credit checks (everybody missed a payment for something in the past six years). Sometimes get lucky and have tenants stay for couple years sometimes only six months. The initial tenancy always six months and the bloke that manages my properties friendly but you would not think that from first appearances (someone who the majority of people will not mess about with). As soon as a tenant misses rent payment he serves them 1 month notice period and even if tenant catches up with the rent payment the notice already been served for any future requirements. I have had all my properties rented out for above 48 weeks per year because property manager finds tenants and vets them fast.

Letting agents slow, useless and waste of time and money IMHO.

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I looked in to this as a possibility some time back and for me personally I found the risks of bad tenants to not be worth it. It was just too easy for any potential profit to go out the window due to one really bad tenant of which there are many, many out there. I imagine if you have enough money to have dozens or more properties then you can probably balance the good with the bad and still come out on top but with just one or a few properties it will just take one really bad tenant to cause you financial misery.

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They are sh1tholes indeed, but thats the whole idea in my eyes. I stay in a place that used to be classed the same, house prices were just as cheap as the links ive shown, but thats not the case now.

They just made big improvements to the Raith interchange and theres more expansion happening in that area, i used to work in East Kilbride and ive spent a bit of time in Motherwell too, theres alot of money going into these places at the moment and the population continues to grow.

Couldnt you even get in touch with the council and do something along the lines of renting it out to familys on benefits whos rent is covered by the council? Or even convert it for wheel chair access as a house for people with disability and the disability money would cover it?

I genuinely dont know so im just throwing things out there.

In all honesty though, does anyone on here believe that if one of those properties was bought out right today, that in 10-15 years time it will still be worth the same amount? Even if renting it out was tricky, how much would you need to outlay considering the property is paid in full? In my eyes its not much different from holding your money in a savings account, although this has several ways to potentially make a return.

Keep the replies comming, would like as much input as possible.

 

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I wouldnt be suprised if the prices went up, im sure theres a few folk south of the border who would consider moving here if that did happen.

That being said, i dont want this turning into a political discussion, but who knows how it might turn out.

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  • 3 weeks later...

I am doing research in similar subject right now. Yearly rent is not what you will have after all expenses, most of people there say you will end up with half the money after tax (-20%), vacancies, maintenance and other expenses (licences, checks).

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I just do Tourist oriented stuff... With the last apartment purchase i am looking at 5 years payout time for the flat itself, cost of renovation another two-ish... I think i'll try and buy an old house on an Island in Croatia or get one of them 1€ houses in Italy to put some lipstick on and get them on the market as holiday rentals.

Seems to me kind of a better deal as i don't need to chase rent, there is a bit more work with guest satisfaction and check in/out process  but two of my properties are 9.9 rated on Booking.com and I am really not a people person in any way.

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Excellent thread this one so thanks for starting it up, in my experience of investing in all sorts of stuff property has manifest problems in the UK anyway, probably much better tax advantages in the states. Take a property you can buy up north for say 120000 - rent might be 500/month - 6000/year. You would need a management company to deal with it as you have to live your life and don't want the hassle of dealing with issues - this costs 15.6%, then you have the other usual costs, then 3000 extra stamp duty tax for buy to let - then the tories are about to get rid of entrepreneurs relief so no more 10% capital gains when you sell. Then mortgage on top - 25% deposit for most so you are now down 33000 or call it an investment if you wish. Best rate you'll get if you are lucky will be 2.15% or something like that so if everything goes smoothly you'll net 2500/3000/year per every 33000 you plow in if all your properties cost 12000 and that is if you 1) plow 0 money into the property to make it rentable 2) have zero void periods, living in cloud nutjob land this one 3) have consistent decent tenants, also never happens 4) absolutely nothing breaks down and needs fixing and price of labour always goes up whilst your rent stays the same 5) interest rates are at the lowest they have ever been so the only way is up which will increase the pool of tenants but destroy property prices when the rates finally have to go up - all in all i'll give it a miss - you can easily get 5% on other investments with 0 risk, property gives the illusion of low risk because you can touch the bricks but given all the above why bother?

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I like investing in property, my main piece of advice is to understand that there is 1000001 ways of doing it and you need to understand which route you want to take.

Low rate properties attract low rate tenants which attracts more work and expenses. 

My personal approach is to buy a good solid house with good curb appeal in an ok area that is in need of a full refurb, usually from a deceased estate. I put all the time, money and effort in at the beginning, fully renovate to a high standard (standard can be high without spec being high). There’s a gap in the market for GOOD houses on the rental market.

I pay agent a finders fee only, and market the property at above others in the area due to the standard. This also filters out tyre kickers or undesirables - although you still get dreamers. I’m the VERY fussy about which tenant i accept. Families with full time jobs are the best - they tend to want to stay a long time and since you’ve filled a gap in the market these are the ideal tenants who really settle in, finding a tenant doesn’t take long either this way. Because I’m very involved in the renovations and know the properties inside and out there is no need to get anyone (other than myself) to manage the properties as there is generally no maintenance or problems in that respect.

This gives me PASSIVE income which is my goal, let and forget it how i want my properties to run. There are many other approaches, or HMO or Holiday Let but there is more ongoing work/management  with these. Not ruling it out at all they can be much more profitable but you have to work for it rather than easily being able to focus on the next project.

 
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  • 4 weeks later...

I bought a buy to let two bedroom semi detached in Hull just last month.

I bought it with tenant in situ, she is a single mum and has been living there for two years  and been paying her rents on time, £450 per calendar month.

The property is freehold, has a nice garden, driveway, side passageway and I bought it for £65000, initially it was priced £75000 .

 

the same state agents who have been managing the property for the last few years will continue managing it for me too and I’ll give them %10 of the rent per month.

To be honest I don’t care if I don’t make any money out of the rent, as long as the rent covers the expenses of the property  I’m happy, I’m Just hoping For a Brexit that helps Hull’s fishing industry and helps property prices to go up so I can sell in two or three years time and make a good profit. 
 

It all makes sense and totally possible, right ? 😆🤣

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On 13/01/2020 at 15:07, scotland210590 said:

Ive seen a few people say this which is what puts me off, if i didnt have the finances to cover any bills whilst there was no tenant i would be in trouble.

The reason i ask is because ive found some extremely cheap flats in the central belt, i would only be interested in doing this if i owned the house out right, im not interested in buy to let mortgages, especially when i could buy 1 of these properties out right within the next year or two.

heres an example, its not a very well sought after area, but it has local links to motorways, shops and school are within walking distance too,

https://www.rightmove.co.uk/property-for-sale/property-87460961.html

Its up for auction tomorrow so might exceed the 21k but not by much. 

And heres another 2 

https://www.rightmove.co.uk/property-for-sale/property-75448936.html

https://www.rightmove.co.uk/property-for-sale/property-65370372.html

Ive never really looked into this before so im not entirely sure of what im getting into just yet. But right now im in a position where in the next 12-18 months i could afford to buy any one of those propeties above out right so im trying to figure out if its worth it. (obviously those ones will have probably sold by then, but you get my point)

I would just have the rent paid into a savings account which i would also contribute to every month, which then hopefully might be able to buy me another small flat for me to rent in the future.

The way im thinking is il hopefully have 50k roughly invested into property which i own out right, those two properties then give me a passive income of roughly £750-£800 a month. Any expense for repairs to the building should be fairly small, i spent alot of time in construction before training as a mechanic, i still have alot of people/skills that can help me out here, its just the financial and legal bits i need to try understand.

 

 

 

 

 

Hi there mate. I live in Scotland as well, but these properties look like they will attract junkies which puts collecting rent at risk. I used to work in the cleaning sector in central Scotland for residential and commercial properties and many residential clients similar to they properties which being priced there would refuse to pay us.  

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  • 2 months later...

Will the rent free holiday be extended when the three months is up soon?

my guess is they will have to extend it, the amount of people struggling to pay rents and bills will only exasperate as the avalanche of bankruptcy and job losses accelerate.

 

 

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I’d expect the same. However a quick excursion to b and q today and the huge car park was rammed! Trolleys loaded with stuff. Ok I guess everyone including me are filling their time with diy but plenty of spend going on there

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Just now, Elements said:

I’d expect the same. However a quick excursion to b and q today and the huge car park was rammed! Trolleys loaded with stuff. Ok I guess everyone including me are filling their time with diy but plenty of spend going on there

 

a friend of mine who was self employed used to pay £1700month rent, now he hasn’t paid during the rent holiday due to not being able to work and not having any income at all.

he asked his LL if he could pay only £500 month as that’s about what he has left available from government benefits and the LL was delighted, they didn’t think they would get anything 

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8 hours ago, MrGeorge said:

My friend who rents out properties in now really worried about this, said most of his properties are just not paying now. He's also saying if stuff don't go back to normal soon this could finish him. 

I suspect it will go on ,longer and yes it will finish most of the rental market for good

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45 minutes ago, vand said:

Can't really say I have any sympathy for underwater landlords. Leverage works both ways. 

LLs along with most business owners are going to be experiencing huge losses this year

All those workers self employed and employees being laid off

this situation is unprecedented 

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house prices depend so much on the banks. If the banks remain solvent when all is said and done their lending abilities and offers are what house prices depend on

 

they are cutting all 90% LTV mortgages and in truth you need huge deposits to get a mortgage and this is going to increase 

 

the number of potential buyers will only decrease which will put even more downward pressure on the house price crash in the coming months and years

 

if the banks don’t stay solvent then the property market will crash hard

 

word is most banks in the world are now insolvent after first quarter results and the second quarter is going to be even more dreadful.

 

people are living paycheque to paycheque the banks are living bailout to bailout  

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  • 3 weeks later...
On 18/05/2020 at 17:01, vand said:

Can't really say I have any sympathy for underwater landlords. Leverage works both ways. 

Exactly some LLs kept borrowing more and more highly leveraged believing property can only ever go up and rents will never stop coming in

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