crossy 666 Posted November 22, 2020 Report Share Posted November 22, 2020 Hi, I’m currently looking into buying a second house to rent out as an investment for the future. Is there anything thing I should think about before spending my money ? Quote Link to comment Share on other sites More sharing options...
ShootingEgg Posted November 22, 2020 Report Share Posted November 22, 2020 The biggest issue you will ever get is tenants. Get the wrong ones and it will make you wish you hadn't. Apart from that and the initial cost of buying and fees. I have been renting out a place since 2009, biggest outlay for me was a new boiler a few years back Quote Link to comment Share on other sites More sharing options...
oowee Posted November 22, 2020 Report Share Posted November 22, 2020 Your priorities. Risk. CG tax and unearned income tax. Maintenance and professional fees. Alternatives and in particular pension tax relief you could get for putting your money elsewhere. Quote Link to comment Share on other sites More sharing options...
Munzy Posted November 22, 2020 Report Share Posted November 22, 2020 Best to speak to an accountant so you know how best to do this from a tax efficiency perspective. You could buy it yourself, you could setup a Ltd company and buy it; pros and cons to both but all dependent on your other income. I always buy something that needs work and has hidden value. Capital appreciation will see you right so long as you are able to sell or remortgage at the right time. If you need to get your cash out during a dip then the fact you added value with a refurb will cancel out any shortfall leaving your investment safe. That’s how I do it anyway. Quote Link to comment Share on other sites More sharing options...
Vince Green Posted November 22, 2020 Report Share Posted November 22, 2020 As a landlord with many years experience i can tell you a few things 1) The big long term earner was capital appreciation, Thats going to be at best dead and at worst property prices are forecast to drop 20% in next few years post covid. 2) Changes in tax laws have had a huge detrimental effect on profitablity 3) Much harder to evict bad tenants and so many tenants are losing jobs through no fault of their own 4) Landlords are getting out of letting like rats deserting a sinking ship in their droves its not a good time, that ship has sailed Quote Link to comment Share on other sites More sharing options...
Rob85 Posted November 22, 2020 Report Share Posted November 22, 2020 Save your money and buy yourself a wee plot on a good permission and build a little hunting cabin. That's my dream, a wee cabin close to a trout river with some optional shooting nearby Quote Link to comment Share on other sites More sharing options...
eddoakley Posted November 22, 2020 Report Share Posted November 22, 2020 2 hours ago, crossy 666 said: Hi, I’m currently looking into buying a second house to rent out as an investment for the future. Is there anything thing I should think about before spending my money ? Lots! Most mentioned above but lots not. A lot depends on your plan. Do you want to make income now or just looking at it as saving for the long term? Can you afford the mortgage if you have problem tenants? Not to mention repair costs if they're really bad ones. Will it be interest only or repayment? Pros and cons to both. Capital appreciation, whilst not looking good in the medium term, could well be your biggest profit long term. Not a great way to invest at the moment, says Someone who bought another BTL last week to add to my small portfolio and is looking at another next week. Edd Quote Link to comment Share on other sites More sharing options...
loriusgarrulus Posted November 22, 2020 Report Share Posted November 22, 2020 (edited) When I was retiring my Company sent us on a retiring preparation course. One of the talks was what to do with your lump sum and "buy to rent" was covered. At that time in 2012 they said if you could afford around 4 or more properties it was worth considering. Only one property was a risk as if you got bad tenants, they could do damage, not pay the rent and take legal costs to get them out. All the time this is costing money and you have lost your income. Over 4 or more properties the chances of getting more then 1 lot of bad tenants was reduced. A lot depends on the type of property and area too, but an expensive property in a good area is no guarantee of good tenants. Some landlords are lucky and some not so. Edited November 22, 2020 by loriusgarrulus Quote Link to comment Share on other sites More sharing options...
Gordon R Posted November 22, 2020 Report Share Posted November 22, 2020 My eldest is thinking of buying a few. I advised buying some land - where there are no noise complaints likely - trials, motocross and clay shooting grounds. Quote Link to comment Share on other sites More sharing options...
loriusgarrulus Posted November 22, 2020 Report Share Posted November 22, 2020 If you have some money and you just want to stash it in a long term investment, have a look at woodland. It is fun. Somewhere to shoot and they go up in value. Ours is worth about £8000 more than we bought it for in 2016. Most don't attract rates or water rates either and don't act as part of your estate for valuation for death duties. As long as you do your homework on what you want and what you will use it for and check for covenants It can be a good usable investment as Mel will tell you too. Quote Link to comment Share on other sites More sharing options...
Fisheruk Posted November 22, 2020 Report Share Posted November 22, 2020 Think hard about it. We’ve had buy to let for 14 Years, now getting out of it. 1 months bond is not going to go anywhere near covering the damage tenant’s can do. We’ve had good tenants we’ve had bad tenants, we’ve had good payers and bad payers. It’s a lottery. Quote Link to comment Share on other sites More sharing options...
Lloyd90 Posted November 22, 2020 Report Share Posted November 22, 2020 The changes to tax, meaning pay income tax on the income rather than the profits made a big impact and tipped a lot of people with a job and 1 property to rent into the 40% tax threshold. Massive cut backs on what you can claim as expenses and wear and tear added another hit. Landlords getting constant abuse from third sector organisations and made out to be money grabbing scum. Then the government clicking their fingers and changing the situation at the drop of a hat as they wish to raise extra funds. With Covid, predicted dip in house prices. Lots of people losing their jobs and other issues it’s not a great time to invest surely. The return seems to be fairly low (5% or less ish in most areas). Capital appreciation can be good (and probably the most profitable element). I have savings and was going to buy one and looked into it seriously. As my income has risen in work it not really worth it anymore. I didn’t think setting up a LTD company looked worth it either unless you’ have money for several properties. I would do what Oowee has said and look hard at other options that can give a decent return. Some of the finance guys I know at the moment are pulling everything out of the market. Quote Link to comment Share on other sites More sharing options...
ditchman Posted November 22, 2020 Report Share Posted November 22, 2020 lots of very sensible advice............ i think the only area you can buy to rent ..and would be reasonably safe with a small return on the rent as well as the property price uplift ...would be spersific as to who you would rent to...ie;....buy small 1/2 bedrooom bungalows and rent them to retired/over 65 people...... otherwise steer clear of the buy to rent market Quote Link to comment Share on other sites More sharing options...
Lloyd90 Posted November 23, 2020 Report Share Posted November 23, 2020 3 hours ago, ditchman said: lots of very sensible advice............ i think the only area you can buy to rent ..and would be reasonably safe with a small return on the rent as well as the property price uplift ...would be spersific as to who you would rent to...ie;....buy small 1/2 bedrooom bungalows and rent them to retired/over 65 people...... otherwise steer clear of the buy to rent market There are a LOT of elderly people who start losing their memory, live in squalid conditions without anyone noticing and then can’t pay their bills etc, even with plenty of money in the bank. I used to have to help them out in work. I couldn’t think of a worse age group I’d want to rent to to be really honest. Ive always said if I was going to do it, I would look for flats or 2 bed houses near a major hospital. I would look for newly qualified nurses, OT’s etc, people who work in the nearby hospital. Young professionals who want to buy their own houses on day. They’re on semi decent money, and don’t want a CCJ against their name for not paying the rent, as they hope to buy their own place one day. If they move on, then being near the hospital. You have a new influx of nurses and professionals coming in every year. Quote Link to comment Share on other sites More sharing options...
mel b3 Posted November 23, 2020 Report Share Posted November 23, 2020 7 hours ago, loriusgarrulus said: If you have some money and you just want to stash it in a long term investment, have a look at woodland. It is fun. Somewhere to shoot and they go up in value. Ours is worth about £8000 more than we bought it for in 2016. Most don't attract rates or water rates either and don't act as part of your estate for valuation for death duties. As long as you do your homework on what you want and what you will use it for and check for covenants It can be a good usable investment as Mel will tell you too. Bang on the money 👍. My only regret is that I didn't buy somewhere with a fishing lake or river , but , I'm still looking. I've got a few friends that are landlords , and they're having a very worrying time at the moment. It was something that I was very interested in a couple of years ago , but I was already too late to the party. Quote Link to comment Share on other sites More sharing options...
loriusgarrulus Posted November 23, 2020 Report Share Posted November 23, 2020 (edited) 1 hour ago, mel b3 said: Bang on the money 👍. My only regret is that I didn't buy somewhere with a fishing lake or river , but , I'm still looking. I've got a few friends that are landlords , and they're having a very worrying time at the moment. It was something that I was very interested in a couple of years ago , but I was already too late to the party. You could always dig one and stock it with what you want. 👍👍 OH's new toy. Landscaping the garden at the moment. Lots of work down the wood later. He bought the log grabber too which is also great for shifting concrete posts and blocks etc. Edited November 23, 2020 by loriusgarrulus Quote Link to comment Share on other sites More sharing options...
crossy 666 Posted November 23, 2020 Author Report Share Posted November 23, 2020 This is were I’m at, I’m just about to finish paying my mortgage off on my house so trying to figure what to do next. I earn good money but I work really hard and it’s back braking work so trying to find something that I could do/invest with my money so I could possibly retire early (39 at the moment ) where my brother lives there is a nice 3 bed house come up for sale so was just thinking about things as they are building a very large industrial estate down the road so the houses in that area have already started to rise. Thanks for all the advice so far Quote Link to comment Share on other sites More sharing options...
oldypigeonpopper Posted November 23, 2020 Report Share Posted November 23, 2020 10 hours ago, Rob85 said: Save your money and buy yourself a wee plot on a good permission and build a little hunting cabin. That's my dream, a wee cabin close to a trout river with some optional shooting nearby Hello, what a nice thought 👍 Quote Link to comment Share on other sites More sharing options...
captainhastings Posted November 23, 2020 Report Share Posted November 23, 2020 I am not in a position to worry about it but if you have spare money is it not safest to just keep it or just throw into bonds? I have known a few people who have retired with a little nest egg and then thrown into a little business only to watch it go down the pan. Or have inherited and again started a little business and watched it go. Quote Link to comment Share on other sites More sharing options...
MirokuMK70 Posted November 23, 2020 Report Share Posted November 23, 2020 I looked into it a couple of years back and found that buying/running costs against potential rental income made it not worth bothering. Obviously you have the appreciation in value (hopefully) to give you a payday in the future... but I was interested more as a way out of my current career... the people who make real money buy houses and set them up as HMO's for scumbags, but i was not interested in the least in doing that. Quote Link to comment Share on other sites More sharing options...
Vince Green Posted November 23, 2020 Report Share Posted November 23, 2020 You need to look at something along these lines Investor magazine (yodelar.com) Quote Link to comment Share on other sites More sharing options...
yates Posted November 23, 2020 Report Share Posted November 23, 2020 Are there any differences between renting out a second home and having a second home as a holiday rental? Quote Link to comment Share on other sites More sharing options...
amateur Posted November 23, 2020 Report Share Posted November 23, 2020 9 minutes ago, yates said: Are there any differences between renting out a second home and having a second home as a holiday rental? There are differences in the tax treatment of furnished and unfurnished accomodation. Quote Link to comment Share on other sites More sharing options...
harrycatcat1 Posted November 23, 2020 Report Share Posted November 23, 2020 16 hours ago, Vince Green said: As a landlord with many years experience i can tell you a few things 1) The big long term earner was capital appreciation, Thats going to be at best dead and at worst property prices are forecast to drop 20% in next few years post covid. 2) Changes in tax laws have had a huge detrimental effect on profitablity 3) Much harder to evict bad tenants and so many tenants are losing jobs through no fault of their own 4) Landlords are getting out of letting like rats deserting a sinking ship in their droves its not a good time, that ship has sailed I agree wholeheartedly, it used to be ok but not any more. I sell them when mine become empty. I can't be bothered with the hassle any more. Quote Link to comment Share on other sites More sharing options...
udderlyoffroad Posted November 23, 2020 Report Share Posted November 23, 2020 18 hours ago, oowee said: Your priorities. Risk. CG tax and unearned income tax. Maintenance and professional fees. Alternatives and in particular pension tax relief you could get for putting your money elsewhere. This. Pay for some professional advice with an FA/Accountant who specialises in these things. The advice you get on PW can be worth exactly what you paid for it, namely £0. A good professional will earn his fee with what he saves you in tax and time (remember your time is not free). https://www.telegraph.co.uk/property/renting/landlords-snap-flats-yields-soar-record-high-coronavirus/ Quote Link to comment Share on other sites More sharing options...
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