X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Buy-to-Let

    Using residence as stepping stone to BTL



    Hi all first time posting just after advise please

    I currently live in my own property that is valued at £90000 and have a mortage of £35000 left to pay on the property 3 bed. (Hull area)

    My thoughts are to rent my current property out at £450 month. I've looked at buy to let mortgages and I they are coming in at £60 month so with insurance, maintenance, void in rent. should be left with around £300 month.

    My next question I've seen a 2 bed semi for sale needs work. An should be able to purchase for £55000 the same price I purchased my first property for. when completed I would expect it to be around £85000.  I have £20000 in saving to purchase this property and make good. I'm a joiner by trade and have fitted many kitchens bathroom etc and can plaster I just don't touch gas and electricity. So cheap to inprove the property

    I would live in this property as I'm doing the works that are need. Then the plan would be to rent this one out and move onto the next property.

    Is this a good idea or do you think my head is in the clouds.  Be honest please many thanks

    0
    0

    Sounds very sensible and practical to me. You'll have to pay the extra 3% stamp duty and you'll need to keep an eye on S24 so you know when to start using a company model or pay more into your pension but it doesn't sound like that's an immediate concern.

    1
    0

    Thanks for your replay. I've taken into count the stamp duty I've put that in with the refurbishment costs as it will all go on the end cost for the property cheers

    0
    0

    Your residential mortgage on your current property will probably not allow it to be used as a BTL so you should certainly check and probably need to change it to a BTL......

    2
    0

    My mortgage renew term is in 3 month that's what has made me look at this situation of BTL and move on to the new property. The plan was to do this every two year. Thanks for your replay

    1
    0

    Every two years would work, because you can take out a 2-year discounted residential mortgage on the house you are doing up and then remortgage to BTL and move onto the next project when the discounted period expires. It all sounds quite low risk to me.

    2
    0

    If you are going to remortgage to BTL anyway, in your shoes I'd consider releasing some equity at the same time to give you either a cash buffer, or to enable you to start on project 3 before you've realised the gains on project 2.

    2
    0

    I have thought of this my first thought was to keep my savings and take £20000 out of the house and use that to purchase the second property. But i thought it would of been better to keep my mortgage payment as low as possible for cash flow. As this would pay for my residential mortgage on the second home. All advise is welcome I'm trying to learn and get ideas

    0
    0

    How are you with spreadsheets? You'll need to model the different scenarios and see which will give the best returns. Include expected appreciation in rent and values, but keep them modest to allow for nasty surprises.

    With interest rates so low and on mortgages as small as this I'd expect more properties to work out better; at least until you hit the 40% tax level. You also have the option to sell one after a few years and that may be worth modelling too.

    1
    0

    I have do a few different scenarios just in the event interest charges increasing just like you say. with the mortgages only been around the £35000 to £45000 doesn't have much impact on my rent cost.

    0
    0

    So if you were to release equity of say £25k how much extra a month would that cost compared to how much extra you'd make renting out a second property? Or in other words what would be the impact on overall profitability?

    The other thing is to think in terms of Return On Investment. After all the calculations have been done, how much will you have put in and how much will you get back with one property versus two?

    1
    0