UK Landlord Forum / Life

Hi
We are new to this, but are looking to buy a fairly budget home for buy to let with some redundancy money. My husband and I would like to spend up to 130,000 and could afford to put down a substantial deposit.
We have done a spreadsheet and have found that it is quite difficult to make any income on returns of less than 6% especially if you take out a repayment mortgage which we would prefer to do.
We have found some flats offered by a company called Assetz to give higher yields of 8-9% and give a monthly income. However, apart from student lets, which we are uneasy about, yields from houses seem to be less than incomes from flats for example a typical spend of 130,000 on a terraced house in a good area near to us would rent for £600 pcm.
Our question is which is better for a beginner - houses or flats? The yields on houses appear poorer, but we wonder if resale and increase in value over time might be better than with flats. We are concerned about resale of flats, especially in the larger blocks.
We would be really grateful for any advice
Many thanks
B

IDEAS!!

if you have the chance look for a house that could be converted to an upstairs and downstairs flat! two for the price of one.. you may have to look in the right area to get away with this ie one where this has been done before or where there are flats.  you will also have to make the sure the lender is up for this and that you have the funds to convert it prob about £20000.

another option is to buy a plot and self build then rent out. would create equity and higher return.

i have bedsits. they are a lot of work and not for the faint hearted i'm afraid but returns are a lot higher and housing benefit changes in april may make them even more attractive? up to 6 rooms with no planning needed at £75 pw less about 15-20% for the bills and repairs.

have other ideas if you want them

concrete properties are alot cheaper ie ex council and makes returns good but poor rresale value

Hello beauty2010

Lord Landy has given you some inseresting ang good advice.  I'm getting the impression you want a "quite life" as a landlord: One tenant (not bedsits or HMO).  Once they are in, not much contact.  Assming my assumption is safe...

I would advise you to look very carefully at how you intend to make profit.  My view of BTL mortgage rates is that they are very similar to the returns you will receive.  So after interest, you're on very thin margins from which you still have to find various costs like maintenance and safety inspections.

In the days of rampant house price inflation; earning almost no profit from rental income is not a problem.  Buy a place.  Bung a tenant in.  Wait.  Thow tenant out.  Sell.  Cash in the price difference.  Real property spiv dream.

Since 2008 we've had no nominal house price inflation, outside London.  If you think another property bonanza bubble is just round the corner, invest now.  If you think we're heading for a period of house price stability then I'd recommend you save you money.

You might think this odd advice, but I entered being a landlord by saving a lot of money first.  And it took me a long time.  I now benefit from my mortgage payments being under 20% of my rent income, which means I'm in a good cash-positive position.

Hope these thoughts help you.

Hi Jeremy,

I think when anyone is ready to make their first home purchase there are many decisions they need to make. The first thing they need to do is to hire a realtor and decide what type of property they are looking for, if you did not get any referral then click here. Every property type has advantages and disadvantages that one needs to be aware of before they decide to purchase.