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  • Buy-to-Let

    First time BTL - advice needed for strategy

    Hi there,

    I'm looking to buy my first buy to let. I'm based in Harrow but am tempted by Stockport & Manchester as it seems to be a great city and gives much more for your money and greater yields. I have £75k to invest, would ideally like to make that stretch to multiple properties if possible.

    I have my own day job and don't have much spare time. I'm therefore thinking of...

    • Finding somewhere that doesn't need much work to be rentable (or ideally somewhere ready to go)
    • Having the property fully managed by an agent
    • Aiming at the young professionals market rather than student to reduce tenant turnover
    • avoiding areas that require landlord licensing for initial properties ... something for future
    • avoiding flats / apartments (unless very low service charge and long lease remaining)

     I'd like to maximise yield in short term and capital growth for mid to long term.

     Based on that info, does anyone have any suggestions on which areas may be good to focus on?

    Any help or suggestions appreciated,

    Toohey

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    Hi Toohey and welcome to the tribe!

    It seems you have already undertaken some research and come up with a very sensible plan.  Bravo! to you for that.  It bodes well for your future successful landlord life.

    My only addition would be to consider buying a tenanted property, as that further reduces your risk, especially when buying remote from your local area and knowledge:

    Benefits of buying a tenanted property 

    ​I hope that helps for starters and good luck!

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    Thanks for quick response. Yes, I'll note that in preference.

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    If buying a tenanted property, you need to make sure the old landlord's paperwork is up to scratch - did they serve the gas safety certificate before the tenants moved in, has the deposit been protected correctly, what's the tenancy agreement like. Also make sure the tenant's aren't out of their fixed term and 'paying' inflated rents (i.e. friends of the landlord making the property look more valuable).

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    Hi Toohey,

    With your current budget - maybe straying further up north might be sensible, the only issue being as it is your first BTL you might want something a bit closer to home to help you get to grips with becoming a landlord.

    That being said, it does seem like you have a good strategy in place and it seems to make sense.

    The one word of caution I would have is making sure you know that the end liability, despite having a property fully managed by an agent, is with you. So make sure you brush up on all your responsibilities and are able to check up on your managing agents to ensure they are keeping to their end of the deal.

    Hope this helps!

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    ** All comments made from this account are not to be relied upon and you should always seek independent advice **

    Alex Kountourides MSc, MRICS

    Co-Founder and CEO

    http://www.joiningventures.com

    http://www.linkedin.com/in/alexkountourides


    Hello Akountourides,

    that's a great insight! I will brush up on responsibilities.

    cheers

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    Hi Toohey,

    Just on the back of Alex's post I thought I would share an additional bit of advice! I think you have a great strategy here and it is fantastic that you have put so much research and care into developing it. Just thought I would say that although going up north to invest is great, just make sure you know all about the micro-economy in which you are looking to invest eg. what drives it, what the market needs, and what areas are more desirable to live in than others.

    Also, £75K is a good amount of money to start with especially if you are looking to invest up north. Before you start I would say that you should research gearing & leveraging and investigate how you can use this to expand your portfolio tactically and quickly (of course in a safe and careful manner). Just be careful to account for worst case scenarios so you don't over-stretch yourself financially!

    Hope this helps as well!

    Rob

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    **All comments made from this account are not to be relied upon; you should always seek independent advice**

    Rob Davis BA (Hons) MSc MRICS

    Co-Founder

    Harben House, Finchley Road, London NW3 6LH

    Mobile: +447 92112 5161

    Email: Rob.davis@joiningventures.com

    Website: http://www.joiningventures.com

    thanks for the input.

    If you have any resources for micro-economy research, it would really help. I'm running around a number of places.

    I've investigated gearing and leveraging; and I'm comfortable with BTL mortgage with 25% deposit. That is as much leverage as I'm comfortable with.

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    To be honest Toohey, there is no template in researching micro-economies. Essentially you just need to try and get to grips with the local market trends, how much is being sold and what is being developed. First steps I would say visit the local area - what letting boards are up, what buildings are in construction, what do the local estate agents say (they will often give you very useful market insight into the local market!) You can also look at local redevelopment and regeneration projects by the local council as well. By doing this you should have an initial indication as to the local market and where the gaps are.

    This is one of the most difficult parts of property investment purely because it takes a fair bit of effort and skill to determine market trends (I wish there was a cheat sheet!),

    With regard to the gearing and leveraging the best thing to do is to do whatever you are comfortable with yourself, but I definitely commend you on investigating this and researching this yourself as well!

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    **All comments made from this account are not to be relied upon; you should always seek independent advice**

    Rob Davis BA (Hons) MSc MRICS

    Co-Founder

    Harben House, Finchley Road, London NW3 6LH

    Mobile: +447 92112 5161

    Email: Rob.davis@joiningventures.com

    Website: http://www.joiningventures.com


    Hi Toohey,

    Welcome and well done on your first steps into buying a BTL. You have thought about what you would like and have a good plan put together. You are right Stockport and Manchester are great cities and have a good potential Yield rate.

    Have you looked and any properties/ areas that are more local?

    Or as you are wanting the property to be fully managed by an agent do you not mind where the location is?

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    Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.

    There is always some preference for location to be closer to where I am (SE). In any case, I'd prefer the property to be fully managed so location is not the biggest factor. For now, Scotland is too far away for me.

    I'm hoping I can get yields in 7-8% range in area with good rental demand. If that seems unrealistic, I'm happy to change to realistic expectation. I dont want to compromise on strategy for yield. And I dont want to put so much emphasis on capital growth that I dont have good yield. Nor do I want to compromise on capital growth totally while chasing better yield. So decent return while waiting for capital to grow.

    Obviously, I'm open to changes and might change or adapt approach.

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