Buying a second house

[enfieldspares]

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  

What he says. And an other dark cloud on the horizon is the annual lobbying of the energy companies to change the law so as to make the property owner liable for defaulted tenants' energy bills if they do a midnight dash and/or are running a cannabis farm 24/7 or just like the heating on 24/7.

Edited November 23, 2020 by enfieldspares

[JohnfromUK]

I had a rental 'cottage' for some years; Agree with the comments made.  I had two very good tenants, one a bit 'high maintenance' in that they were on the phone every time a light bulb failed etc, but the did pay on time in full.  Then finally - I had a tenant, who despite coming on personal recommendation and paying reliably for a period ........ stopped paying because the tenant's business folded and money ran out. 

It took me some time to get the tenant moved on (despite them co-operative).  I did take legal advice, but quick checks revealed that money was owed to various creditors including Inland Revenue, VAT, their bank etc.  Advice to me was to forget it as I was well down the 'queue' to get paid and there were in effect no assets.  Most of any profit I had made in previous years was 'used up' by that event.  Property was left in slightly 'well used' condition, though not abused.

Overall - I evaluated and various factors including need for rewiring and significant other work being needed - decided not to continue letting, having other 'family' usage for a period.  The other factor was that it was not the best type of property to let (it was a family property originally), being an old listed property and quite high maintenance, but relatively low rental.

[The Heron]

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  

This is what I like on here what absolutely brilliant advice from someone who is already in the business if you have any sense you will look elsewhere for an investment or bide your time. 

[rbrowning2]

Could always consider buying in a university area and renting to students, friend used to do that a few years back, no problem with them overstaying as they leave when the course is finished and would share a house, so three lots of rent and surprisingly he never had issues with them paying or damaging the property, guess bankrolled by bank of mum and dad.

 

[mel b3]

8 hours ago, loriusgarrulus said:

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.

Oh my god . I'm not normally the jealous type , but for the last year or so I've been getting mini digger envy . I might just be having a mid life crisis , you can keep the barbie girl bit on the side , or sports car , I just need a mini digger 😢.

[loriusgarrulus]

15 minutes ago, mel b3 said:

Oh my god . I'm not normally the jealous type , but for the last year or so I've been getting mini digger envy . I might just be having a mid life crisis , you can keep the barbie girl bit on the side , or sports car , I just need a mini digger 😢.

https://wspoweronline.com/xn08-mini-digger-excavator-for-sale/    We bought the log grabber and the ripper too. The ripper will be useful as there are quite a few stumps left from when there were spruce planted in the wood. This will help get them out.

They have very good reviews and are a good light use basic digger with surprisingly chunky metalwork.

The only thing we would have liked was the auger being suitable for 3" posts, but we can use the bucket to push them in after using a 2" hole borer to start it. The killer we found was using a manual post hammer.

We bought an Indespension 4x8 plant trailer off ebay to tow it on.

I even got a new land rover cover out of it as my Defender cover fitted it, so OH kept it for the digger and bought me a new one.

Edited November 23, 2020 by loriusgarrulus

[old'un]

10 minutes ago, mel b3 said:

Oh my god . I'm not normally the jealous type , but for the last year or so I've been getting mini digger envy . I might just be having a mid life crisis , you can keep the barbie girl bit on the side , or sports car , I just need a mini digger 😢.

A young fit specimen such as yourself should be able to dig one with a shovel in a day or so.

[Rim Fire]

I have just sold two with one to go things are getting more difficult with tax and tenants rights i also had to do a landlords Corse   

[mel b3]

54 minutes ago, loriusgarrulus said:

https://wspoweronline.com/xn08-mini-digger-excavator-for-sale/    We bought the log grabber and the ripper too. The ripper will be useful as there are quite a few stumps left from when there were spruce planted in the wood. This will help get them out.

They have very good reviews and are a good light use basic digger with surprisingly chunky metalwork.

The only thing we would have liked was the auger being suitable for 3" posts, but we can use the bucket to push them in after using a 2" hole borer to start it. The killer we found was using a manual post hammer.

We bought an Indespension 4x8 plant trailer off ebay to tow it on.

I even got a new land rover cover out of it as my Defender cover fitted it, so OH kept it for the digger and bought me a new one.

I'm getting more jealous by the minute , a mini digger must be the ultimate big boys toy , I remember when all I wanted was a chainsaw , and now look at me 😣 .

I've been very very tempted to buy one , the biggest obstacle is having somewhere to hide it where it wouldn't get stolen .

[mel b3]

1 hour ago, old'un said:

A young fit specimen such as yourself should be able to dig one with a shovel in a day or so.

I'm fit to drop 😅

[Mickeydredd]

Invest in forestry, great returns and forest capital value is increasing hugely. 

[old'un]

10 minutes ago, mel b3 said:

I'm fit to drop 😅

Know how you feel mate, and I’m retired.

[loriusgarrulus]

27 minutes ago, mel b3 said:

I'm getting more jealous by the minute , a mini digger must be the ultimate big boys toy , I remember when all I wanted was a chainsaw , and now look at me 😣 .

I've been very very tempted to buy one , the biggest obstacle is having somewhere to hide it where it wouldn't get stolen .

We won't  be leaving it down the wood. You can get a lock that jams the low blade into the ground. OH bought one.

[Jim Neal]

My opinions, from a modest amount of experience in the rental market:

When you rent out property, you get out what you put in, the same as most other things in life.  If you have the mindset that "it's only a rental" and you put a shabby property to market, you'll get shabby tenants and everything that comes with them.

If you make the effort to present your property to the market in a condition over and above any similar ones available, you'll get top dollar for it and will be less likely to end up with a bad tenant.  There are always exceptions to that rule, and usually those who've experienced an exception will shout the loudest about their woes but they'll be in the minority.

ALWAYS use an agent to find and vet a tenant.  NEVER let property to anyone who's simply been "vouched for" by word of mouth from someone you know.

I don't personally think there's going to be a long-lasting drop in house prices if covid does indeed cause one... but if that happens it could be to your advantage, if you're prepared to risk it and wait until some time next year.  You may well find yourself an opportunity to buy at a reduced price and watch the value rise significantly over the following 5-10 years.  However, at the moment you're not paying stamp duty on property purchases up to £500,000 so the saving on that would need factoring in.

The most important thing is to leave plenty of buffer between your rental income and expenses.  If you can't get a mortgage that's less than 75% of the expected rent I'd be very cautious at the moment.  Without knowing what amount of capital you've got available to put in, and what sort of price band you're looking at, it's difficult to say but I'd be initially cautious and go for a larger deposit with a smaller mortgage.  Presuming there isn't a catastrophic crash putting you in negative equity in the short term - and presuming you're not forced to sell up for some reason before the price recovers if there is a crash - you can always cash in your chips a few years along the line and bank the experience.

Whenever you invest in anything, try to keep your controllable risks as low as you can.

The tax implications of renting out property will work out differently for people with different situations, so renting might not be the best for you.  I'm self employed and currently rent out one property and it works OK for me, even if it's not quite as lucrative as it might have been a number of years ago in terms of short-term income.  Even having said that, the profit on my rental is almost exactly the same amount as the mortgage payment on the place I live in, so in effect my tenant is paying both mortgages for me.  Not a terrible deal.

Longer-term, I've owned the property 11 years and it has appreciated by an estimated 235% in that time, after me spending a modest amount of money tidying it up and putting in a new kitchen & bathroom.  OK I was lucky to pick it up as a repossession as a result of the 2008 recession, but the appreciation even after capital outlay can't be ignored even if the starting point wasn't quite as low.

Invest a modest amount of money on some professional advice, it will pay dividends!

Edited November 24, 2020 by Jim Neal

[henry d]

On 22/11/2020 at 21:01, Vince Green said:

Landlords are getting out of letting like rats deserting a sinking ship in their droves

That may be a location thing, we have had 2 neighbours sell and about 50% of viewers are buy to let. We are selling and the BTL viewers seem to want a doer upper or give low offers, very low.

[tonker]

The post above the post above is spot on.

I've been very lucky in my lettings. I spent seven months doing up our old cottage top to bottom stripped everything back to the stone walls.

New everything, but it was the best part of 300yrs old and needed it. I must add that I have been building for the last 50 yrs so I didn't have to pay builders to do the work, and also the mortgage was paid off. We decided to go through an agent and he had an open house period. we had eight couples look the first day and they all wanted it so it went down to who he/ and we liked the most. I went with him managing it as we have a few more securities than trying to do it ourselves' It went to a young professional  couple who wanted to live out in the country, and want to stay a long time on a rollover once their let is up.

Where we are at the moment is another 300 yr old place with an annexe which we ran as an air b&b. but with the present situation didn't want people coming in from all over, and with the strict cleaning rules made it very labour intensive. So got back in touch with the agent and he did the same again with another open day. It went to a single young lady who has just come up from down south to head up a company for a year.

I can't comprehend The amount of money people pay out in rent these days, If it were me I'd have to be paying for something that I was going to own one day, not putting it in someone else's account, I don't know their situation of course but then again I'm retired now and have no mortgages so am not in the real world. Thinking of the ops original post I suppose this hasn't helped a bit.

As stated before if it's done to a really good standard you'll hopefully get people who respect that and look after it. As they say it's your choice, ours worked out very well for us. Good luck in whatever you decide,

Edited November 24, 2020 by tonker

[JohnfromUK]

4 minutes ago, henry d said:

BTL viewers seem to want a doer upper or give low offers, very low.

To a prospective owner occupier - it's about getting something you really like 'fall for' even - but to a BTL landlord - it is purely about the economics - so the showhouse 'appeal' isn't top of the list (though does still count) - it is more about the costs and rental income potential.

2 minutes ago, tonker said:

I can't comprehend The amount of money people pay out in rent these days, If it were me I'd have to be paying for something that I was going to own one day, not putting it in someone else's account,

Sometimes people relocating get a generous relocation offer from their employer that pays rental (or a big part of it) for a period whilst they sort out their own property move.

[The Heron]

30 minutes ago, tonker said:

The post above the post above is spot on.

I've been very lucky in my lettings. I spent seven months doing up our old cottage top to bottom stripped everything back to the stone walls.

New everything, but it was the best part of 300yrs old and needed it. I must add that I have been building for the last 50 yrs so I didn't have to pay builders to do the work, and also the mortgage was paid off. We decided to go through an agent and he had an open house period. we had eight couples look the first day and they all wanted it so it went down to who he/ and we liked the most. I went with him managing it as we have a few more securities than trying to do it ourselves' It went to a young professional  couple who wanted to live out in the country, and want to stay a long time on a rollover once their let is up.

Where we are at the moment is another 300 yr old place with an annexe which we ran as an air b&b. but with the present situation didn't want people coming in from all over, and with the strict cleaning rules made it very labour intensive. So got back in touch with the agent and he did the same again with another open day. It went to a single young lady who has just come up from down south to head up a company for a year.

I can't comprehend The amount of money people pay out in rent these days, If it were me I'd have to be paying for something that I was going to own one day, not putting it in someone else's account, I don't know their situation of course but then again I'm retired now and have no mortgages so am not in the real world. Thinking of the ops original post I suppose this hasn't helped a bit.

As stated before if it's done to a really good standard you'll hopefully get people who respect that and look after it. As they say it's your choice, ours worked out very well for us. Good luck in whatever you decide,

One of the problems today is the deposit required anything between ten and twenty five percent so even a cheap terrace house is out of reach for a young couple. 

[Vince Green]

50 minutes ago, henry d said:

That may be a location thing, we have had 2 neighbours sell and about 50% of viewers are buy to let. We are selling and the BTL viewers seem to want a doer upper or give low offers, very low.

A lot of those low offers are just vultures. Many distressed sales (as they are called) are taking place because people are in difficulties. If you are really desperate you might just take a silly offer because you have no choice.

The problem is if the neighbours sell cheap it devalues your house as well because everybody checks the history of sales in that road now.

Edited November 24, 2020 by Vince Green

[AVB]

That’s how the valuation of property works though. What is somebody prepared to pay for it. If the only offers are ‘silly offers’ then that is the value at that time. 

[Vince Green]

On 23/11/2020 at 13:30, enfieldspares said:

What he says. And an other dark cloud on the horizon is the annual lobbying of the energy companies to change the law so as to make the property owner liable for defaulted tenants' energy bills if they do a midnight dash and/or are running a cannabis farm 24/7 or just like the heating on 24/7.

Effectively you have always been liable (by default) because if the tenant does a flit leaving unpaid utilities the gas water and electric want the outstanding debt paid before they will reconnect to allow you to re-let the property

[harrycatcat1]

2 hours ago, Vince Green said:

Effectively you have always been liable (by default) because if the tenant does a flit leaving unpaid utilities the gas water and electric want the outstanding debt paid before they will reconnect to allow you to re-let the property

To be honest I have never had any bother, once the tenant has gone I ring up the gas/electric supplier given the meter readings and given them their forwarding address. Never heard any more. That is over the last 30 odd years.

[Mungler]

On 22/11/2020 at 21:01, 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  

This.

We first started buying 8 years ago and since then prices have doubled - they won’t do that again and they are about to go down.

Our best buy was a side plot of land in a london borough for £80k, built a 3 bedroom end of terrace on it for £100k and that’s currently worth North of £500k. Even if property values drop 50% we’re still in front and still collecting £1800 a month in rent.

Long term though, the right property in the right area will always increase in value over the long term (supply and demand) and will rent out. Look for good schools and stations.

Our trick was we’d buy, refurb to the highest standard and then rent a clear £200 / month below the market, the result being we had the choice of tenants who have never left - yes 8 years on they are still there and they have paid on the button through Covid. They appreciate the properties and cannot get the same or better for less money. The maths is that we’re losing £2400 pa per property in under renting but by the time I take the tax off and split the rent with my business partner it’s £600 pa per property out of my pocket but we don’t pay agents fees and we have never had a dead spot / change of tenant.

One of our tenants is a painter and decorator and during lockdown he repainted the whole property - I’ll see if I can upload the photos because he did a cracking job.

Also, short of having our plumber carry out the annual boiler check they have never phoned me and I have never set foot back in the properties. In turn we returned all of our tenants’ deposits - they really appreciated that and we saved the never ending aggro of dealing with tenants deposits.

We are currently only looking at legally distressed properties because we can sort those out and add value.

Oh and on internet rates, 8 years ago £250k interest only was about £850 a month, now it’s about £350 a month and we’re fixing for 5 years wherever and whenever we can.

We can never sell these because of the CGT but we’re now looking at income on retirement etc so it’s no stress.

I could write a book on this and have a load of nightmare tenant stories come across my desk that I have had to resolve. The best one was the tenant that intentionally interfered with the boiler to claim carbon monoxide poisoning and sue the landlord for personal injury. Bottom line,  be very very careful who you let in in the first place and treat everything a letting agent ever says as total BS

 

EDIT

The biggest risk we factored was a rabid labour government but with Kier at the helm the bum smashing I predicted ought to be reduced.

Also, think about a commercial unit and stick it in a SAS or a SIPP. The pensioneer trustees are total bandits for charging fees for doing less than nothing and you might need a couple of projects in there to make it worthwhile.

Oh and if I didn’t do what I do do, I’d do property development full time.

 

Edited November 24, 2020 by Mungler