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Property investment

Discussion in 'Personal' started by marymoocow, Apr 10, 2012.

  1. marymoocow

    marymoocow Star commenter

    We are in the lucky position of paying off our mortgage early within the next couple of years. My pension will be **** so I want to do something with the money we wont be spending on the mortgage. We will also have a lot of collateral in our house as it has trebled in price since we bought it.
    I think we should buy more property either to rent out or do up and sell on. Has anyone any experience of renting out property? What sort of issues are there and what do we have to do/provide legally inorder to rent out property? Thanks.
     
  2. I don't really do places up, but I have bought property to rent. It has proved excellent for me, better investments than anything else. It is not easy or everyone would be doing it. I always use agents, so that cuts your profit immediately. Always buy places you could live in yourself, you might find yourself doing so. An agent will advise what you need to do legally - gas safety checks, for example, smoke alarms, etc.
     
  3. That's just what I want to do? I should pay my mortgage off in 18months time. I keep watching homes under the hammer and looking at the local house auctions and thinking about how I get started.
     
  4. For an auction you would have to have finance in place immediately. It might be worth getting on repo lists. I would just contact an estate agent, say you have seen a number of properties they have on their lists and ask to see their mortgage advisor. Costs you nothing and is meant to be confidential. I have regular chats with a lad who gives me advice over the phone, although I think it is doubtful I will be having another mortgage. You never know, though.
     
  5. oldsomeman

    oldsomeman Star commenter

    Beware...many of the local estate agents im my area seem to just have the person for a property////usually a builder or investor..ready for the bargins( and dont tell me about the legallity of it....dont makea difference). One friend even had an indian turn up witha briefcase full of cash to buy it. at a very reduced price.....these are the folks your up against
     
  6. jubilee

    jubilee Star commenter

    My student rental property is the best investment I've ever made.
    You need to know the local market in the area where you intend to invest. Who will your client group be? Is there an over-supply of housing for that sector of the market? What are the ranges of rent charged.
    Check out local Estate Agents and look at Zoopla or other sites that give you the Land registry recorded sale prices for similar properties in the area in recent months.
    Financing the property is key. We started off with a Buy-To-let mortgae but they are charged at a higher interest to domestic mortgages. We now own the rental property outright and have a mortgage on our home.
    You get tax relief on any interest paid on any loan that finances a rental peoperty, so we re-mortgaged our home for the value of the Buy-TO-Let mortgage, paid of the commercial mortgage and now have a Tracker loan (from about 4 years ago) that only charges us 1.39% interest! We'd be foolish to release any savings, at higher rates, to pay off the mortgage more quickly.
    If you intend to do up property for re-sale and currently have a flexible mortgage that allows you to borrow extra funds with no fee, consider doing that to finance the venture rather than taking ot a new mortgage for the purchase, with all the costs involved.
    I once had a flexible mortgage and could ring up to get money transferred into my account immediately, which I'd pay back a.s..ap - it was the cheapest way to fund short-term spending and meant that I kept savings tied up in higher paying ISAs and fixed-term savings acounts.
     
  7. marymoocow

    marymoocow Star commenter

    Thanks. What sort of percentage does an agent take? Also what sort of returns are you getting with or without an agent? If we later sold the property do we get taxed on the proceeds if so how much? Renting is what appeals most as we dont have the time to turn around the property quickly and really I want something to help fund my retirement. How much time is taken up sorting out problems? Obviously a student let is going to be furnished and that is an option for me as we are near a large uni, but does an unfurnished have nothing in or does it have carpets and curtains?
    For student lets, what sort of needs do you have to think about and do you advertise through the uni? Thanks
     
  8. You can pay between 8 and 12%. 12% is too much I think. You would need to pay capital gains if you sold it before living in it but I don't know how much. Unfurnished - don't bother with curtains. Returns - look at the cost of the property and see how much rental value is in is (as Jubilee says, Zoopla is best bet). Student properties - maybe £75 a week per room. Students tend not to look after your property, be prepared for that.
     
  9. We have had rental properties for quite a few years now. We have gone for bottom end of the market, one bedroom ex-council flats near to the town centre. We never have any problem renting them out.
    One other thing to check out is not just what the best rental sector in your area is but what the housing benefit rates are on different sizes of property. This will influence the rent you charge enormously especially if you are going for the lower end of the market. Benefits have been reduced considerably in the last year or so and some are set to drop further.
    We don't use an agent. It isn't difficult to control them yourself especially if you get decent tenants. We let ours unfurnished but always have decent (not expensive) carpets and a cooker in. We get gas safety checks done annually which is required by law. Electricity safety certificates are recommended but are not required by law despite what many agents tell you. Smoke alarms are also required.
    Tenancy agreements can be bought at WH Smith or Staples etc. We started off buying those but then adapted them slightly and now write our own. You will need to register deposits with a deposit agency but those companies do not have to hold the deposit for you. This gives the tenant protection.
    Despite hearing many problem stories we have actually had very few problems over the years. Be a good landlord and you'll get tenants who take care.
     
  10. marymoocow

    marymoocow Star commenter

    Thanks. Student lets seem to average £70 pppw near me in a 3/4 bed terrace or semi. Seen one I am interested in that looks as though it is let to students or sharers. Other houses in street have gone for a good 10k less in street but present owner according to zoopla paid only 1K less 6 years ago, so cant see them accepting less. Only needs a lick of paint though and if they offer furniture it will be good nick/ almost new. Also on way to OH work so easy to visit if needed.
    Do student lets usually last a year. I've seen some offer 10/11m lets. Dont know if they offer holiday lets over summer though as it is a big tourist area as well. Also do you have to apply for planning to let to students as a multiple occupancy place?
    The tourist/holiday let market is also a consideration as it is a year round tourist area, but would involve a lot more hands on work and a bigger outlay.
     
  11. Lara mfl 05

    Lara mfl 05 Star commenter

    Other thing to mention,( as we're looking at renting out Mother's home to contribute towards Care Home fees) is to have a rental insurance policy, a house one won't do.
    If you own a property and rent it, capital gains is not incurred but if you purchase 'buy to let' capital gains will be payable when the property is later sold based on the 'increase in value (these days not much ).
     

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