Buy to Let-where do i start?

[dave222]

Hi everyone,
Im thinking of buying my first investment property with the aim of building up a portfolio over the next few years or more, i want to start a soon as possible, However im un sure where to look any ideas!!!!!!. I have been reading loads of books many by ajay ahuja, but he states many times in his book its all about yield (10-12%) and price rather than location!, iv noticed a few areas near me (kendal) such as barrow in furness and some places in lancashire (accrington etc..) the reason for looking here is price (30k-50k), as many people are going to these expensive seminars and buying in city centre locations at 120k a time, but unfortunatly there are that many it drives down yield and rental demand? am i wrong?, so iv been looking at these lower end ones, unfortunatly this has its problems aswell, such as dss etc.., but seems more attractive as they are lower priced, and much room for price increases, SO IN A NUT SHELL IM I BARKING UP THE RIGHT TREE?, im keen to hear from any people with advice and knowledge! thank you

[Ericthelobster]

You could do worse than buying yourself a copy of "Renting out your property for dummies", for a start.

[Tweedle Dum]

Ajays books are the last place I'd look for info as most of his info is a little unstable now, i.e. 10% yields, borrowing on credit cards and being able to magic 30k out of the air simply by overvaluing a property to be remortgaged.
What will the yields be on your 30 - 50k properties? Not 10% plus I suspect.

[Steve C]

[QUOTE=Tweedle Dum]Ajays books are the last place I'd look for info QUOTE]

I must say that I agree and in particular I would say that his renting to students book is a total waste of money.

[dave222]

thanks for the replies, in addition to what you said about yields not been 10%+ on rental properties, yes it is harder to find them, and the ones that are, seem to be on bad streets, i.e druggie streets. Where and what should i be looking at? im 23 and iv got around 10k in savings, iv managed to buy my first property to live in my self, through a 70% ownership deal with my council, iv been told by my IFA i can use equity off this already which would be around £20k-30k. I want to buy a investment property soon,and im after a property that will be cashflow positive for long term! that i can create equity so where and what are people investing in?and what should i be looking at doing for my first deal?, any ideas would be great, what about commercial property? are the yeilds any good and what price can you buy in at? also anybody know any good investment books i should look at buying?. Thanks

[P.Pilcher]

Yields are in the region of 6.5% at the moment on a BTL property but you can get above 10% by buying a property and converting it into a house of multiple occupation. There is much more hassle in doing this though. Those entering BTL at the moment are merely looking at their property running at a break even level and hoping to take their profit as a capital gain in the future. Of course if rents rise then profits will start to come in. I started 6 years ago and made a profit from day 1 because rental returns were then 10%. Since that time property prices have leapt up but market rents have not followed suit, hence the situation we have today. However as property prices are not racing away at present you have plenty of time to continue your research, saving and honing your strategy. Just don't make any move unless you have thoroughly researched it and are totally satisfied that it will work.
I use a very well established estate/property agent to find me tenants. New potential buy to let landlords are calling in all the time. He asks them if they could afford to pay the mortgage payments on a potential BTL property for at least three months in a year and then explains why with worst case scenarios. Loads of hopefuls leave his premises with sad expressions on their faces. You must face facts. Oh - by the way, one of my properties had a damp problem. Tenant out, plaster off walls, inject and replaster then re-decorate. I am now out of pocket by the cost of the work and so far have lost three months rent. That property won't be back in profit for a year or three, but has nearly doubled in value since I bought it.

P.P.

[dave222]

thanks for your advice!, the yields you were stating, were they gross or net?, i was told recently there are to be some new changes to HMO's regarding the law so i will have to take a look, as i wouldnt mind converting a place for multiple occupation, as i have seen a lot of ex-student lets on the market now, LANCASTER for instance for around 90k you can pick up a 4 bedroomed terrace, and barrow you can pick up 4 bed terraces for around 60-70k, so it might be worth alook, although im a joiner by trade its still going to cost me a fair bit for conversion for plumbers and sparkys as they are all regulated now or i would have had a go!!. What about commercial property, iv seen some commercial lots on the market for around 60k-100k in preston etc.. and yielding in excess of 12% with leases as long as 25 years, are these worth a look, or is commercial property a complete different ball game?, thanks again for your advice!!

[Yong Yeng]

You can find great yields in Scotland at the moment. There are obviously bad areas, but if you speak to local agents, they are quite willing to tell you where you should or should not buy, as they have problem areas that don't rent.

I have found that properties rent out really well in some areas outside Glasgow.

[P.Pilcher]

Dave222: I was talking gross annual return on capital invested.

P.P.