Does anyone rent a property out?

UKLL1981

Well-known member
With the current climate it seems inevitable I’m going to lose my job in aviation, this pandemic has taught me that I really don’t want to have to rely on a employer any more.

I owned a house with a previous partner, we purchased it during the financial crash and sold it 2 years later for £70k profit when we split, it was never the plan but that’s just how it worked out. I think there will be the opportunity to do that again with what I see the market doing but I’m looking for something a bit more sustainable like maybe the rental market.

Does anyone own property they rent out? Just looking for some general advice, pros and cons etc. I’m not expecting to earn what I do now but if I can pay the bills without getting out of bed that will give me more time to spend with my son.

I currently don’t own any property per se, I have a house owned in trust for me that my dad can live in until he dies. There seems to be some confusion over whether this constitutes owning a property to get a buy to let mortgage? I’ve heard different opinions from every mortgage advisor I’ve spoken to 😤

Me and my current partner could quite easily live in her flat and start our family there with me being a stay at home dad and my income coming from property. I have £265k in savings and £30k in shares in terms of a budget although I am in Sussex so it won’t go as far.

Would appreciate any advice, pros, cons, pitfalls or anything I need to be aware of as neither of us have a clue.

Thanks in advance.
 

ChrisTheRed

Active member
Do your research.

Most southerners see house prices in the North East and think oh I'll have a bit of that and then buy 4 houses on King St in South Bank and wonder why they keep getting destroyed and left with no boiler or copper piping.

Look into ceiling prices. Don't overpay. Always review a buyers pack. Always view the property. Bare in mind it might not always be tenanted.

It's not always a money spinner.
 

SmallTown

Well-known member
I can't afford a property but I would agree on the research bit. Its not about buying the cheapest place per se. It's about finding out where has a good return on investment. I.e. some areas have low house prices and high rental charges. Find out which ones. Also second the fact it won't always be tenanted. You can't rely on it for a steady income so ensure you can cope/set money aside for the gaps in tenancy.
 

Artie Fufkin

Well-known member
The key is getting a good tennant, but that's a crap shoot to be honest. We've been lucky with one tenant who has renewed a 6 month lease for 6 years. We use a letting agent who inspect the properties every 3 months and that tenant keeps it spotless. Another however lost his keys and put the door through and we're still in the middle of sorting who pays for it out. We're quite clear he should pay!

The mortgage is small on ours so we don't worry if there are any gaps. All the income from them goes into a separate account which we don't touch apart from upkeep and maintenance on the properties and to cover the mortgage if there is a gap. Location is crucial, if its in a desirable area, there's always demand

A big choice is whether you manage the properties yourself or not. We chose to have a letting agent which is 11% of rental income, but it means they find tenants and we don't get a call at 3am saying there a leak in the bathroom or whatever. We're looking to buy 1 or 2 more and if that happens we may decide to manage them ourself, or more accurately myself as a part time job sort of thing. We already have a network of tradesmen for maintenance issues.

I would also advise against apartments in blocks to avoid ground maintenance fees as that just eats into your yield, you can't always just add it to the monthly rate to recoup it, a 2 bed flat is a 2 bed flat, the tenant doesn't care if its in a maintained residential block or not

There's a lot to learn and we still are, but its generally a decent investment as long as you can put a good sum down to keep your mortgages to a minimum and then effectively let the tenant pay the mortgage off. Once that happens we would sell and reinvest the capital released from 1 into 2 new purchases to grow the portfolio that way, it does take time though, its definitely not a get rich quick scheme!
 

masquesmog

Active member
With the current climate it seems inevitable I’m going to lose my job in aviation, this pandemic has taught me that I really don’t want to have to rely on a employer any more.

I owned a house with a previous partner, we purchased it during the financial crash and sold it 2 years later for £70k profit when we split, it was never the plan but that’s just how it worked out. I think there will be the opportunity to do that again with what I see the market doing but I’m looking for something a bit more sustainable like maybe the rental market.

Does anyone own property they rent out? Just looking for some general advice, pros and cons etc. I’m not expecting to earn what I do now but if I can pay the bills without getting out of bed that will give me more time to spend with my son.

I currently don’t own any property per se, I have a house owned in trust for me that my dad can live in until he dies. There seems to be some confusion over whether this constitutes owning a property to get a buy to let mortgage? I’ve heard different opinions from every mortgage advisor I’ve spoken to 😤

Me and my current partner could quite easily live in her flat and start our family there with me being a stay at home dad and my income coming from property. I have £265k in savings and £30k in shares in terms of a budget although I am in Sussex so it won’t go as far.

Would appreciate any advice, pros, cons, pitfalls or anything I need to be aware of as neither of us have a clue.

Thanks in advance.
I have a 2nd property here in London that I rent out. I wasn't really a landlord by choice. I'm into the 5th year and it has been OK to organise w/o an agent. The flat is close by. I use Spare Room if I ever need a new tenant; Deposit Protection Scheme and the tenancy agreements are pretty standard. I really haven't had any problems and have always had really good tenants. Let's see. I dont have a mortgage so periods with no rental income (I've never had one) wouldn't be so painful, but you do need to budget for these. I wouldn't say don't use an agent. I did talk to a few but decided to try myself and it really hasn't been too difficult. I do have a really good network of contractors for any maintenance issues, include a guy who can do all of the small, difficult to source jobs.
 

buffaloboro

Well-known member
The key is getting a good tennant, but that's a crap shoot to be honest. We've been lucky with one tenant who has renewed a 6 month lease for 6 years. We use a letting agent who inspect the properties every 3 months and that tenant keeps it spotless. Another however lost his keys and put the door through and we're still in the middle of sorting who pays for it out. We're quite clear he should pay!

The mortgage is small on ours so we don't worry if there are any gaps. All the income from them goes into a separate account which we don't touch apart from upkeep and maintenance on the properties and to cover the mortgage if there is a gap. Location is crucial, if its in a desirable area, there's always demand

A big choice is whether you manage the properties yourself or not. We chose to have a letting agent which is 11% of rental income, but it means they find tenants and we don't get a call at 3am saying there a leak in the bathroom or whatever. We're looking to buy 1 or 2 more and if that happens we may decide to manage them ourself, or more accurately myself as a part time job sort of thing. We already have a network of tradesmen for maintenance issues.

I would also advise against apartments in blocks to avoid ground maintenance fees as that just eats into your yield, you can't always just add it to the monthly rate to recoup it, a 2 bed flat is a 2 bed flat, the tenant doesn't care if its in a maintained residential block or not

There's a lot to learn and we still are, but its generally a decent investment as long as you can put a good sum down to keep your mortgages to a minimum and then effectively let the tenant pay the mortgage off. Once that happens we would sell and reinvest the capital released from 1 into 2 new purchases to grow the portfolio that way, it does take time though, its definitely not a get rich quick scheme![/QUOTE
Question is, is it a better rate of return than the stock market?
I realise some will say yes because they were lucky enough to buy before the various booms we've had over the past few years, but I wonder if maintenance costs etc are often factored in.
You appear to have done that.
 

Corcaigh_the_Cat

Well-known member
I don't think you have enough capital to enable you to live off the properties you can afford to buy, unless your outgoings are at an absolute minimum.

Watching that property show where they buy old places to do up and rent out the returns they talk of are under 10%, so can you live in Sussex comfortably on a salary of around 25k with your current lifestyle?

You might be better off looking for another job, or is your skill limited to only working in one industry?
 

masquesmog

Active member
competely agree ... you need to be honest with yourself about ALL of the costs. I keep it all in a separate bank account, maintain a sizeable "float" for emergencies, and have a fairly clear set of accounts which I diligently maintain. Without the probable capital gain with this property, I'm pretty certain that would be a better ROI for my money in something else.
 

1finny

Well-known member
Estate agents will give you a good indication of rental yields (hovering around 4% I think)
You will pay tax on the income
We use a letting agency - not really worth it but less hassle

Good tenant is everything - mine was great for two years then it went a bit pear shaped
Been trying to get him out for over 8 months now (Covid got in the way)
I’m £12k down in rent
 

Humpty

Active member
Don't get stuck on buying somewhere near you as it's not always conducive to good returns.

I'll echo what those about have said about doing your research. I mean this in regard to the different types of rental strategy and the areas in which you want to buy.

Do your diligence and numbers before you buy!
 
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masquesmog

Active member
Estate agents will give you a good indication of rental yields (hovering around 4% I think)
You will pay tax on the income
We use a letting agency - not really worth it but less hassle

Good tenant is everything - mine was great for two years then it went a bit pear shaped
Been trying to get him out for over 8 months now (Covid got in the way)
I’m £12k down in rent

..... good point on the income tax (which some seem to forget about!) and, of course, now no tax relief on mortgage interest payments. If your rental income pushes you into a higher tax band, you really need to think about the marginal rate.

Sorry to hear about your tenant. This is THE problem with rentals. I got a new tenant 3 months ago and, until they actually pay the rent regularly, you don't really know how it will pan out.
 

Artie Fufkin

Well-known member
That's the main reason we use a letting agent: they guarantee the payment, so we get it every month, if the tenant defaults, we dont have to chase it, the agent does. As I say, that safety net costs 11% of monthly rental charge, but it gives us peace of mind knowing we wont get shafted for non-payment
 

Chris_Boro

Well-known member
I have a house I jointly own with my ex, its been a nightmare as each time a tenant has left, its cost a fortune to bring back to a rentable standard.

If you're lucky you will get the "perfect" tenant who treats your house like their home and are no bother.

Selling now at a loss just to get rid of the stress its caused. I would only ever do it again if I could dedicate more time to it or had a few properties so its enough to be a full time job.
 

Jonny Ingbar

Well-known member
Try the podcasts on propertyhub.net, there's some basics that you need to get your head around first.

Generally most people go for a 25% deposit on an interest only buy-to-let mortgage.
 

FatCat

Well-known member
It’s not as lucrative as it once was, another loophole the gvt closed. Mortgage interest used to be tax deductible, however that has been phased out over the last 4 years, I think this is the last year before you can no longer claim interest as an expense.

move always considered my property as my pension pot - by the time I’ve paid landlords insurance, British has gone care etc then it really isn’t profitable. Indeed with the changes it barely pays for itself.
Buy to let mortgages have higher interest rates as well.
I would suggest you get a spreadsheet and a hypothetical property and look at all your known costs, put some aside for unexpected and then you can see realistically if there is a return to be made that is worth you effort.


I always find .gov.uk is a good source of info on the rules around rental properties and the associated expenses. I know there are certain differences on whether you are renting furnished or not.
 

homesickblues

Active member
Agree with using at letting agent, much less hassle and property inspections useful. Remember that the rent you receive is classed as income by the inland revenue to its taxable. Don't forget your tax returns.
 

Artie Fufkin

Well-known member
You can also claim back some maintenance expenditure back as expenses, although I cant comment on the exact details, as I say Mrs Fufkin deals with that side of it
 
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