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Buy To Let

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
I wondered whether anyone has experience of owning a buy-to-let property.

I am currently thinking about potentially helping my Mum invest in the housing market and am looking for some advice.

My understanding is that the market is currently at a low with the 'hope' it will not dip too much more but should ultimately start increasing as the financial situation improves. Is it a good time to get a bargain which could reap benefits within a few years?

Would appreciate thoughts on a specific example;

All the following are the same block of flats...

Flat A
Sold in 2006 for £155,000 - excellent condition

Flats increased as high as £167,000 in 2007 although unsure as to condition - average around £160,000

Flat B
On the market currently at £130,000, need of modernisation but good condition

I guess my main question is in 2007 we had a peak in the housing market and I am presuming it is unlikely to reach those kinds of prices again so it would be unrealistic to think of that as potential resale value; However what I am trying to understand is what is likely to be a sensible price when the market returns to normal, or perhaps, what year was the market at its most sensible?

Is there any thoughts about how long the housing market may take to recover after a fall like this?

Ach I don't even know if anyone knows the answers to my questions. I am excited about the potential investment but a little concerned about risk and want to ensure I have done my homework!

Has anyone got a buy-to-let? What advice would you give?

Anyone with housing experience that can answer (or understand!) my questions - your thoughts would be gratefully received!!

Thanks :)


  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I think to give you proper advice people have to be regulated by the FSA or something, because I could be the owner of that house and tell you its a great buy etc. so please do buy it.

    One thing someone said to me was never to catch a falling knife - that is when investing, dont buy when the prices still seem to be dropping on the speculation they might increase, rather better to wait for some good growth before committing yourself.

    Then again, if you look at property, whatever people say, it's always going to be a good buy pretty much as someone will always need a house. I don't think I'm really qualified to give you advice but I would say to tread carefully £130,000 is a lot of money to lose. But then, if it pays off...
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Unless you have £130k cash it's a moot point anyway, you won't get a mortgage. I wouldn't expect the market to improve for 1-2 years, it'll take that long for liquidity to return to the mortgage market.

    You should also remember that it's very hard to get properties let out to people at the minute, even in University towns there's about 20% spare capacity and all the agents are shitting themselves about it.

    As with any investment, you have to weigh up a) how long you'll keep the investment and b) how much of the investment can you afford to lose? Housing remains a good long-term investment (5-10 years) IMHO but not for the short-term.

    As with any investment, you need specialist advice from an independent financial adviser. This forum isn't appropriate for investment advice.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Just to clarify, I wouldn't go off and buy anything on the say so of a forum member but I thought it would be useful if someone had gone through the experience or had any handy hints!

    Kermit, it would be a 5-10 year investment and although we wouldn't have the whole amount in cash we would have the 25% required by most companies for a buy to let mortgage.

    Interesting about the spare capacity issue, my husband's niece works for a letting agent and I was going to bend her ear about the current market etc.

    Thanks for your input so far!
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I have a property I currently rent out, but didn't buy it to let it, I bought it with my ex and bought him out when we split up. Now the market has crashed, I can't sell it.

    There are a lot of considerations (e.g. have you considered that you may need to pay capital gains tax on the sale of the property, plus income tax on the rental income if it is much more than the mortgage?) so I definitely second the recommendation of speaking to a financial advisor.

    The rental market atm is pretty rubbish - everyone who can't sell their house is renting it out, so prices are lower and competition is fierce. I'm lucky cause I rent long-term to a family member - I'd be concerned about the state of the open market at the minute. Also I did used to let through an agency, but my tenants were an absolute nightmare - would you let privately or through an agency? Even on a fully managed contract they still managed to ring me nearly every week with something new they insisted I fix. And they withheld rent for 2 months until I fitted draught excluders to a door which already had them :banghead:
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Thanks for your advice Olive! Taking everything into consideration we will be treading very carefully, if at all :)
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