Hi

Ive been wondering how to make buy to let work.

Theres a fair few landlords post here so maybe you can tell me.

Ive seen a 2 bed flat in one of the developments for sale and a pretty identical one for rent through the same agent. Same floor plan, same floor etc

Sale price is 160k
Rent for other is 600 a month or 7200 a year.

So assuming I can get a BTL mortgage (interest only) at 6.25% which is a good deal that means my payments are £833.33 a month which gives me a loss of 233.33 a month before considering voids, agants fees, maintenance etc etc etc

If I put my 160k in the bank I would actually gross 8640 a year at 5.4% which is available on a no notice account.

So whats the deal here landlords?

Is it:

1) My figures are rubbish? (Which is not the case)

2) Property in Sheffield is massively overvalued especially 2 bed flats and we are headed for a crash - sorry correction?

d

PS The BTL mortage rate of 6.25% represents what is achievable and although I admit you can get a cheaper discount dont forget horrendous tie ins and redemption penalties

PPS Im still a happy renter :)

hi dont buy a 160,000 property , buy one at £75,000 let it at£450 should give you £130 profit /month you only investing about £10,000 (15%) deposit the house goes up about £2000 a year in value (hopefully) this works out about £150/month so that makes £280 profit/month for £10,000 investment these figures are realistic and then if you multiply this by 16 (160,000) investment jobs a good un (well thats my plan )

Superblues, I just used the mortgage calculator from the BBC website at: http://www.bbc.co.uk/homes/property/mortgagecalculator.shtmland your figures don't add up!

If you were to buy a £75,000 property and had to pay 6.25% interest on the mortgage, this works out to a monthly mortgage bill of £500.59 (or interest only £390.62).

A property for £75, 000 is most likely to be a flat, so on top of the mortgage, you would also need to pay out for ground rent and manitenance fees each year.

This doesn't seem like much of a money spinner to me!

I agree with ukdavvy- how the Hell do landlords make a decent profit on buy to let properties without placing massive deposits on properties?

Lib1

I guess quite a few have spare cash to invest or have invested in and made a profit on other properties. As a result they may have put £60k down on one of these new flats, as a result their mortgates are much smaller..
Might be wrong tho!

But there must be a limited number of people who do the renting, people don't move from owning to renting more the other way, isn't there the danger that you might buy a property and then not not get anyone to rent it ?

The money centre was doing fixed rate BTL mortgages at 6% last time I looked.
As long as your rental is equivalent to around 125% - 130% of the mortgage repayment you can make it work. Usually requires a 10-15% deposit for a BTL mortgage, depending on situation.

right, a £65,000 mortgage at 6% = £325 (intrest only) you can get 2/3 bedroom house for £75,000 on city rd. family will pay £420- £460/month or 3-4 students pay £45 each for room/week but more probs there, but income then is £600+/month your investment is only £10,000 and your house is still going up in value, maybe £150/month short term its no good but in couple of years ?

To put it simply, you will not make any rental profit at todays prices and interest rates especially when you add costs (dont forget maintenance charges on new apartments!!) - and these are always higher than you anticipate.

When I bought my properties, 2/3 years ago, prices were low enough for me to make a fair monthly profit. Now interest rates have risen my gain is much reduced but I really bought for capital growth over the long term ie. 10 plus years, so I am happy enough with that.

I have considered buying a studio in Jet Centro but the figures will only work if I put down at least 15% capital and even then I would only break even.

Gone are the days when you can make a quick buck. I would advise you to go for it only if you can:
a. Put down a good deposit - you have to have 125 - 130% loan to rental value anyway to get a BTL mortgage.

b. Go into it for the long term and be in a position where you can subsidise it if necessary.

c. Buy one small unit (or two if you can afford it) then if you have void periods you will be spreading the risks - you can ask more money for a small unit relatively than for a bigger or more expensive one.