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View Full Version : What are BTL pitfalls? How can I plan to avoid them?



lloydy
10-04-2008, 10:59 AM
Hello

New to this forum and new to Buy to Let. I have a spare few quid and am about to give this buy to let business a go.

What would you experts consider to be the main pitfalls and things to consider when purchasing a propoerty to rent and subsequently renting. Would you bother with a letting agent or go for it yourself?

Cheers in advance.

A millionaire in the making..not!!!

Colincbayley
10-04-2008, 11:02 AM
Plenty of pitfalls for the unwary. Before you do anything else read the WHOLE of this forum and website !!

jeffrey
10-04-2008, 11:12 AM
Hello

New to this forum and new to Buy to Let. I have a spare few quid and am about to give this buy to let business a go.

What would you experts consider to be the main pitfalls and things to consider when purchasing a propoerty to rent and subsequently renting. Would you bother with a letting agent or go for it yourself?

Cheers in advance.

A millionaire in the making..not!!!

Really, it's much too late to join the throng. Most of them are now:
a. cursing their foolhardiness; and
b. nursing unmanageable mortgage costs.

John J
10-04-2008, 16:33 PM
I am in a similar boat, but with the latest financial news / rumours I've decided to put my money in a high interest account and watch what happens.

It is my intention to get into Buy to Let but not in this climate. A quick cash-flow forecast that takes into consideration depreciation shows that even if I were to let a particular property for a year without voids, expensive maintenance problems and so - on, I would still be out of pocket. Always assuming that property DOES depreciate in the next year of course!

Better to bank the money, let it appreciate a little, and enjoy a headache-free year. I will however spend time following this forum and learning as much as I can so that when I eventually take the plunge I'm at least a little prepared for the maelstrom to come.

This is just my untutored opinion.

Good luck, I rather think we're both going to need it.

John

attilathelandlord
10-04-2008, 16:44 PM
Some of us are laughing all the way to the bank!

I can't buy them and bang them out for rent fast enough at the moment.

But then again, I never went in for the off plan 2 bed cobblers in Leeds, Manchester, Cardiff etc where the suposed rentals were more than any sane local would dream of paying.

Buy when there's blood on the streets!

Colincbayley
10-04-2008, 16:49 PM
I can't buy them and bang them out for rent fast enough at the moment.


Same here, other than I had one new purchase go 'tits-up' yesterday !!

Rents are on the increase around my patch as there is a major shortful of rental property.

attilathelandlord
10-04-2008, 16:54 PM
I know what you mean, I've had a couple of juicy deals fall through, but that's because of psycho vendors who don't really know what they want to do.

I just picked up the keys to a nice 4 bedder today and found that the council have had to break in and stop the leaking boiler, leaving the new keys with a new neighbour I might add! (Wahay just leave the keys with any old body!!!!)

Still, such is life.

Good stuff is getting a little more hard to find and the penny hasn't dropped with a lot of vendors that the good times are over!

PaulF
10-04-2008, 21:18 PM
The current market dictates that purchasing a property requires a lot more skill than normal. Let's face it putting as much as you can into a cash ISA at 6.5% and the rest in high interest account where you can get over 6% monthly is much better than current returns for new acquisitions.

Obviously a portfolio acquired over several years won't affect too many, but of course 18% CGT will mean some landlords will sell in a diminishing market.

attilathelandlord
11-04-2008, 07:38 AM
That's exactly it though, a lot of people don't give purchasing property much thought, which isn't so fatal in a rising market, but pretty stupid in a falling one.

For those who intend to buy and hold (I hold for at least 10 to 15 years) then it is still worthwhile.

It's just a personal thing, but I don't want to keep much money in a bank, even if my portfolio is valued at zero, it's still producing income.

I'm also not much of a one for yield calculations as they can be pretty meaningless with changing property prices. I want to be making £500 to £600 pcm on each property after mortgage costs etc.

Colincbayley
11-04-2008, 07:42 AM
I want to be making £500 to £600 pcm on each property after mortgage costs etc.

HOW MUCH!!
Bloody hell, i'm happy if I clear 150 quid on each!!

attilathelandlord
11-04-2008, 07:47 AM
All you've got to do is live right!

I have some cash cows which make a tidy sum and a few others which are good for a squeeze now and again to release capital and I don't make so much then. It all balances out.

I'd like to add that I do 2 or 3 hours research per day EVERY DAY on potential properties, I have favoured estate agents who offer me the stuff first, they know exactly what I like and I can get the mortgages.

If the numbers don't stack then I will NEVER buy it.

Then I work my guts out making sure the properties are nicely but moderately cheaply done up.

Colincbayley
11-04-2008, 07:54 AM
All you've got to do is live right!

I have some cash cows which make a tidy sum and a few others which are good for a squeeze now and again to release capital and I don't make so much then. It all balances out.

I'd like to add that I do 2 or 3 hours research per day EVERY DAY on potential properties, I have favoured estate agents who offer me the stuff first, they know exactly what I like and I can get the mortgages.

If the numbers don't stack then I will NEVER buy it.

Then I work my guts out making sure the properties are nicely but moderately cheaply done up.

Same here, other than a few issues over the last month with mortgages, however, on a rent of say £695pcm I will clear in the region of £100 after mortgage costs. How in the hell can you get £500 - 600 per property?

attilathelandlord
11-04-2008, 08:06 AM
I am in London, I buy ex local authority flats/houses mainly all of which have the capacity to put in an extra bedroom (generally 2 beds to 3 or 3 to 4) and it's the extra bedroom which makes me the money.

Like I say, it's a lot of work and it makes me laugh when I hear people talking about landlords who just sit back and let the money roll in. I'd like them to be there during my 12 hour days, or when a tenant calls in the middle of the night because they are drunk and can't get into the house, only to find that they are trying to get into the house next door!

Colincbayley
11-04-2008, 08:08 AM
I'd like them to be there during my 12 hour days

Part-timer !! :p

bagpuss
11-04-2008, 15:33 PM
attilathelandlord, would you say that 5 years is a reasonable time to hang on to a btl?

I'm hoping that if we want to sell in about 5 years time, we should have made some reasonable capital by then.

Colincbayley
11-04-2008, 15:35 PM
Would you say that 5 years is a reasonable time to hang on to a btl?

I'm hoping that if we want to sell in about 5 years time, we should have made some reasonable capital by then.

That is a 'how long is a peice of string' type question.
Who knows! I would never sell any, but 5 to 10 yrs as a min. would not be a bad start.

Ericthelobster
12-04-2008, 14:15 PM
I am in London, I buy ex local authority flats/houses mainly all of which have the capacity to put in an extra bedroom (generally 2 beds to 3 or 3 to 4) and it's the extra bedroom which makes me the money.Interesting to hear of someone still buying and letting at profit. If you don't mind me asking, what would be a typical current purchase for you in terms of purchase price and deposit/loan amounts and your monthly loan repayment, versus the monthly rent?

attilathelandlord
15-04-2008, 20:05 PM
In this market I would hold a recent purchase 10 to 15 years until it recovers.

I buy 3 bed flats for around £210k to £215k 15% deposit, mortgage payments, interest only around £880pcm. Lounge generally big enough to split into two rooms brings rental to £1600pcm (I don't rent by room) et voila £750 profit pcm (after mortgage, before other expenses).

Obviously factor in up front expenditure say £3 to £5k refurb £3k furniture and carpet and I won't actually make a real profit for a while but that cash flows and in this game, cash flow is king.

bagpuss
17-04-2008, 19:17 PM
That is a 'how long is a peice of string' type question.
Who knows! I would never sell any, but 5 to 10 yrs as a min. would not be a bad start.

I agree timeframes are difficult to guage but I was just wondering what term others regarded as a 'reasonable' period of time, when the 'medium term' was being refered to.

katrinahale
18-04-2008, 15:45 PM
Good god that amount of profit I agree with 150 I think we are letting in the wrong area !