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Advice regarding Renting a Flat/2nd Mortgage!

Discussion in 'General Chat' started by LukeTDi, Jun 22, 2012.

  1. LukeTDi
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    LukeTDi New Member

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    [Jun 22, 2012]
    All,

    I'd like some advice from people who own a 2nd property (ideally a flat) and have a 2nd mortgage? I am looking at buying a 2nd property to rent out as an investment. I currently own my house in Ripon which we recently took out a mortgage for (upgraded from old house) and we have about £15k saved for a 2nd property. The flat in question is £62k (repo) and mortgage is pretty cheap.

    ANy advice you can offer me? It's that or invest it in a static caravan for weekends away/holiday lettings
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  3. StateOfPlay
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    StateOfPlay Well-Known Member

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    [Jun 23, 2012]
    It is a good long term investment.

    Things to consider:
    Get the right location. You need it to be rented year round, so make sure it is in a residential area or near a station, or town centre. Anywhere near a university is also good.
    You will need to spend time/money fixing it up, it needs a nice kitchen and bathroom.
    Shop around for best Buy To Let mortgage deal.
    Consider using an agent to rent the property for you. This is less hassle for you if your life gets busy.
    Shop around for best BTL property insurance.
    Part of your £15k is going to go in costs.
    Remember you will be liable to pay tax on rental income. You can offset a lot of this tax with costs, e.g mortgage payments, insurance, maintenance, agency fees.

    Overall, a better option than paying in to a pension. Although I recommend you do both.

    If you are in a good location, and it is nicely decorated, it will let itself. I spent £5k doing up my BTL, fitted a kitchen with help from mates and family, decorated the house top to bottom, laid laminate flooring on the whole of the downstairs, and the first tenant I got is still there 4 years later.
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  4. LukeTDi
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    LukeTDi New Member

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    [Jun 23, 2012]
    Thanks for your advice mate, really appreciate it.

    At the moment I am tempted my apartments close to Harrogate Town Centre - could be a good investment I reckon. What do you reckon? Pension I have two of them :)
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  5. jojo
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    jojo S3 Drift King! Staff Member Moderator

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    [Jun 23, 2012]
    £62k flat you need £15.5k to buy based on 75% buy to let morgage. Then you need to add associated costs like solicitor fees, surveyors fee and setup fee for the bank loan etc. Make sure you have enough and a bit more before you go into this, or it could all go horribly wrong. Borrowing money today is cheap because of the low interest rates, but factor in the possibility of it going up by 1% in the next 24 months(just incase) and I would personally have 6 months worth of repayments on the side to give yourself breathing space looking for tennants etc.
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  6. LukeTDi
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    LukeTDi New Member

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    [Jun 23, 2012]
    Thanks mate.

    There is more than £15k saved I was just talking in ball park figure. Yeah good point with rent etc...luckily we have enough disposable income each month.

    Wht kind of fees do agents charge?
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  7. jojo
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    jojo S3 Drift King! Staff Member Moderator

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    [Jun 23, 2012]
    Anything ranging from 6-15%, play them off each other to negotiate a better rate if possible. Obviously, there are going to be well established agents who can find tennants in a very short space of time, and these would be in the 9-12% range. Anything above 12% I'd go elsewhere, 6% is the lowest I've seen with an existing tenant in place, and the agent just taking over the management of it.
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