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Floob
17-05-2005, 19:42 PM
Hi,

I'm looking to buy my first property to rent out. This is in the SW.
From what I have read it is easier to rent a home out to a family or professional couple, rather than multiple people, due to regulations etc...

But do I get a small 1 bed flat, or a 2bed+ house.

What do you think would be easier to rent?

Thanks

Floob.

Paul_f
17-05-2005, 19:53 PM
Don't buy anthing just for the sake of it! Your money can earn 5% gross hassle free in ING or similar.

You need professional advice not least from an accountant or similar; it's not a "romantics" industry, it's a hard, hard world fraught with danger. It's like trying to guess which car has the suicide bomber in it, in Baghdad!

Floob
17-05-2005, 20:04 PM
Thanks for your reply.

My cash is already earning 5% in a savings account, and have recently bought tax free products including premium bonds and ISA's to try to use up my allocation.
However, I have been advised by my accountants to begin a long term investment in property or a stock portfolio. (As over 10 years plus this is consistantly returning at least 8% an often much more).
I feel more comfortable with property as I have effectivly been subletting for 5 years.

I guess the answer to my question depends on the type of person who is looking to rent at the moment, but I am interested in others experiences.

Thanks

Floob.

MrWoof
17-05-2005, 20:21 PM
You have taken the first step by talking to your accountant, now take the second by talking to letting agents in your area. Learn as much as you can from them and this forum. Don't rush into it, BTL is a good long term investment but only if you get it right. Like anything else, do your homework and don't be dazzled by potential returns.You can double the value of your investment in three years if you are lucky but equally, you could be making only a small profit on rents, have expensive repairs and even find yourself in negative equity all at the same time. Don't even think about it unless you are prepared to lock your initial investment away for at least ten years and you either have or can get funds for maintenance if necessary. I'm not trying to paint a bleak picture, personally, its the best investment I've ever made but do be aware of the potential problems. Its not a game, its a business.

Floob
17-05-2005, 21:18 PM
Thanks for the advice.
I may well go and speak to some letting agents later this week then to try and get a better picture.

Although saying that, I was thinking of managing the property and tenants myself and hopefully saving more money. Perhaps that is a false economy?

I have lots to consider
- Type of property (Flat / House / Furnished / Unfurnished)
- Price of property
- Type of mortgage (if any)
- Type of tenant (Family / Couple / Multiple Occupancy)


Thanks

Floob.

MrWoof
17-05-2005, 21:24 PM
I was thinking of managing the property and tenants myself and hopefully saving more money. Perhaps that is a false economy?Given your present level of knowledge, definitely false economy.

JDO
17-05-2005, 21:33 PM
Floob, I was in a similar position to you last year.

Before commiting financially to a property I would advise you to read as much as you can regarding property investment. There is a load of information out there...libraries/google/landlords associations etc.

I would recommend you read 'The Buy To Let Bible' by Ajah Ahuja. The book contains some very useful information for someone like yourself who is just starting.

I would also recommend you open a business bank account, register with the Inland Revenue and if you haven't done so already speak to a good accountant and good solicitor.

I agree 100% with Mr Woof and Paul F, you have to consider property as a long term investment and run it as a business.

Good luck!

Regards

JDO

Floob
17-05-2005, 21:43 PM
Ok, books bought!
I'll read through these and hopefully learn what I need to know.

Is it a requirement to receive rental fees into a business account? I presumed I could just state the income in my current tax returns through my accountants.

I am registered with the Inland Revenue through my current business, do I need to specify to them that I may receive rental income?

I certainly will consider this as a long term investment, and am keen on getting it to pay for itself whilst I wait for it to mature.

Thanks

Floob.

Raggy
17-05-2005, 22:25 PM
No, there is no need to receive rental fees into a business account.

No, there is no need to "register" with the Inland Revenue, just declare the income and expenses via self assessment at the end of the tax year

An accountant may help you complete your tax return but will be unlikely to help you decide whether or not a property is a good investment.

The only good solicitor is a d..d solicitor.

Good hunting!

JDO
18-05-2005, 13:39 PM
Floob, I did not realise you already had other business interests.

Raggy is correct...simply include your rental business profit/loss on your annual tax return.

JDO

P.Pilcher
18-05-2005, 16:32 PM
Just one other point Floob: There is no reason why you shouldn't manage your own properties, particularly if you don't live too far away from them, have good DIY skills or building contacts, but if I were you I would use an agent to find you a tenant. Yes, the fee they charge is substantial, but they will advertise your property, conduct viewings and when they find a tenant will credit check and reference them for you. I also find that good agents seem to attract a better class of tenant although I could be wrong. Once the tenant is selected, the agents job is done, you collect rent and deposit and pay the agent his one-off fee.

P.P.