Jump to content
House Price Crash Forum
Dave Beans

Btl Ramping By The Wail

Recommended Posts

http://www.dailymail.co.uk/money/article-3105128/MONEY-MAIL-SPECIAL-join-buy-let-boom.html

They then slip this bit in..

So, how does this affect your returns? Tot up the extra annual costs — mortgage (£6,000) and maintenance (£1,200) and your returns are down to £4,800. Your yield is now 2.4 pc. This is still better than a savings account, but it’s much less attractive.

Add in fees from a lettings agent — costing another 10 pc, so another £1,200 — and it slips even further to 1.8 pc. Of course, in one year you might spend hardly a bean. But it only takes a flooded kitchen, broken boiler or a tenant who goes missing owing you rent to scupper your financial plans.

Edited by Dave Beans

Share this post


Link to post
Share on other sites

BTL with borrowed money has always been a 'seat of your pants' game.

Its nice to see the article including maintenance although, at £100/month, thats the amount that needs putting aside to cover costs.

Flooded kitchen - not likely.

Broken boiler - easily avoided by spending few 100 more for a good make like Worsester/Bosch.

Voids and none paying tenants is where BTL goes wrong.

Going back to the article, you missed the investment bit:

'Let’s go back to the same £200,000 property. Say you buy it with a 25 pc deposit, so you put down £50,000 and take a £150,000 mortgage. At a reasonable fixed-rate of 4 pc on an interest-only rate, that works out at £500 a month, giving you annual costs of £6,000.'

Those mortgage figures are a bit optimistic.

A BTL deposit these days is more likely to be 40%

And they do not seem to allow IO mortgage.

4%. Put in 5-6%

Repayments will push the mortgage cost up towards 10k/year.

Looking at median rents, you are only likely to get LHA or maybe 20% if you have a desirable place.

Using those more likely figures, the BTL barely breaks even.

They'll get about 1-1.5k if they do not use an agent.

Put in 2 months avoid and -poof- nothing.

Put in a non-paying tenant, sat there for 6 months+ legal fees and the LLs OO will be repo'd.

Share this post


Link to post
Share on other sites

BTL with borrowed money has always been a 'seat of your pants' game.

Its nice to see the article including maintenance although, at £100/month, thats the amount that needs putting aside to cover costs.

Flooded kitchen - not likely.

Broken boiler - easily avoided by spending few 100 more for a good make like Worsester/Bosch.

Voids and none paying tenants is where BTL goes wrong.

Going back to the article, you missed the investment bit:

'Let’s go back to the same £200,000 property. Say you buy it with a 25 pc deposit, so you put down £50,000 and take a £150,000 mortgage. At a reasonable fixed-rate of 4 pc on an interest-only rate, that works out at £500 a month, giving you annual costs of £6,000.'

Those mortgage figures are a bit optimistic.

A BTL deposit these days is more likely to be 40%

And they do not seem to allow IO mortgage.

4%. Put in 5-6%

Repayments will push the mortgage cost up towards 10k/year.

Looking at median rents, you are only likely to get LHA or maybe 20% if you have a desirable place.

Using those more likely figures, the BTL barely breaks even.

They'll get about 1-1.5k if they do not use an agent.

Put in 2 months avoid and -poof- nothing.

Put in a non-paying tenant, sat there for 6 months+ legal fees and the LLs OO will be repo'd.

Points 1, 2, 3 and 4 are untrue

Share this post


Link to post
Share on other sites

In all the years of renting a property I honestly wish that my landlord would anywhere near 100 GBP/month on maintenance.

OK, so excluding the money spent between tenants (which I obviously can't measure) I think I have seen the landlords for the 4 properties I have rented over the last 12 years spend (collectively) about 350 GBP on maintenance. Even if I am way wrong on this, that is about 3 GBP per month (or the price of a cappuccino). Ah yes, sorry ... I forgot the building insurance they would (probably) have paid at about 15 GBP per month, too.

*sigh*

Aidanapword

Share this post


Link to post
Share on other sites

all mine have.

Carpets, windows, gas service, plumbers in, painters doing the outside, gardners doing their bits.

The article is worried about the tiny margin....A single void will wipe that out.

Edited by Bloo Loo

Share this post


Link to post
Share on other sites

I do maintenance for a letting agency,90% of the Landlords have no interest/skill in doing anything in a property,last week they asked me to remove a cooker from a property as the Landlord didnt want it,I pop in, the Tenant must have been a take away king this cooker was new !! I charged the Landlord £35.00 to remove and sold it on gumtree for £75.00, most are 60yrs plus and dont go near their rentals!!

Share this post


Link to post
Share on other sites

In all the years of renting a property I honestly wish that my landlord would anywhere near 100 GBP/month on maintenance.

OK, so excluding the money spent between tenants (which I obviously can't measure) I think I have seen the landlords for the 4 properties I have rented over the last 12 years spend (collectively) about 350 GBP on maintenance. Even if I am way wrong on this, that is about 3 GBP per month (or the price of a cappuccino). Ah yes, sorry ... I forgot the building insurance they would (probably) have paid at about 15 GBP per month, too.

*sigh*

Aidanapword

Yeah there was a thread on here about the lack of investment by BTL.

As an aside Have the Wilson's sold yet ?

Share this post


Link to post
Share on other sites

I would say their are two extremes of BTLers....one type who invest in their property at high cost in an expensive area and market it for a high price to attract people or their firms where price is incidental, often only renting for a relatively short time, possibly the renters looking for the right property to buy or on a fixed term work contract.

....another is one who cares little and spends little on the property, cares even less about their tenants,all they are interested is collecting as much rent as possible and do as little as possible, these BTLers will pull the price of the property down in surrounding area because they hold no stake in the area and sometimes their tenants don't either. ;)

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   93 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.