UK Landlord Forum / Life

Hi all, I am considering purchasing a buy to let property in the south east, namely redhill. Looking to buy a one bed flat and have a decent enough deposit to qualify for lower scale interest rates. I'm not looking to make immediate or quick returns or yields from the investment. Please can anyone with knowledge of the south east or this specific area advise whether now's a good time to buy, whether it's advisable to use a lettings agency, likely risk of losing money on my original investment etc....how long to set the Mortgage term and anything else I need to consider. I have a reasonable deposit , so would qualify for the better mortgage rates. Thank you!

Hi Kathy,

A lot of people say that the market is at a peak. But if you've found a reasonable deal, and you like the property, and you're in this for the longterm, I don't think you can make a bad investment, personally. Investment is ALWAYS a risk, so I'm not going to say you're not going to lose your original investment. However, history dictates that overtime your investment will grow in equity. But you may need to ride through some highs and lows. That's the nature of long-term investments.

I personally wouldn't use a high-street letting agent, that's just my preference though. They charge way too much. And if you find a good tenant to start with, you end up paying them for nothing, in my opinion.

In regards to a mortgage, anything between 20-25 years is pretty standard. If you get an interest-only mortgage that allows for overpayments without penalties, you can reduce your debt at your own pace (if that's what you want to do). It's the most flexible option.

Quote from: kathychick on September 29, 2014, 08:43:51 PMHi all, I am considering purchasing a buy to let property...

Why are you wanting to do this?

I'm not being facetious... I am genuinely interested in the level of thought you've given this, because your other questions seem incredibly naïve to me and I'd not want you to jump head-first into this crazy world of Landlording thinking it will be a bed of roses. Are you doing it for the money, the challenge, because you're bored? Is it a one-off long-term pension replacement or the first step in a property portfolio?

You're talking about chucking many thousands of Pounds, most of your savings I'd assume, at this investment - but you are asking about what kind of mortgage term you should go for... I take it you've decided what kind of mortgage you're going to go for? Which would seem the more important thing, to me. You're not asking about what your responsibilities as a Landlord are - do you know them? You're not asking how to protect a Tenant's deposit - do you know this? Have you thought about whether your savings will allow you to get the best mortgage deal and still have some remaining so you can then handle contingencies for things like void periods and maintenance? Why are you choosing a flat - does it come with a service charge and, I'd probably expect, is it leasehold? These are the interesting questions I'd be expecting... as opposed to "is now the right time to buy?"

 yes I've considered all those other things you mentioned. It's just a thought and I've joined the forum hoping for some advice, not to be told I'm being naive.

That's fine... you've thought about 'all those other things'... but not about the mortgage term which is best. 

My list of things wasn't comprehensive, you realise? Have you considered all the other things too?

Anyway, I just wanted to check and I did not call you naïve, I said your questions appeared naïve and I stand by that... I'll try to be helpful now... if I was you then I'd go for a 20 year mortgage term. Does that help you?

In terms of your other questions...

Is now a good time to buy? Sure, go for it.
Should you use a Letting Agent? No.
Likely risk of losing money on your original investment? 4%.
Anything else you need to consider? Nope, I think you're golden.

Quote from: kathychick on September 29, 2014, 08:43:51 PM
I'm not looking to make immediate or quick returns or yields from the investment.

What's your reasoning behind it then as the things you've listed seem like the main driver.

Just to clarify the background then, as people seem curious. My father very sadly and suddenly passed awAy a couple of years ago. Consequently I have a large sum of money that I don't want to depreciate over time. I also have two children for whom I'd like to invest the money wisely, hence my post here. Property seems like a sensible option, but I'm cautious by nature. So all helpful advice welcome. Thanks.

Can you, and do you want to decorate?

Do you enjoy it?

Given your position I would look at Over 50 apartments. My experience of them in Poole Dorset, ok not SE, is that for £80k you get a one bed that rents for £500 a month. They rent quickly and the tenants stay 5 plus years average, and you get the management company to do most of the work, and the tenant pays.

Given the aging population, this seems a low risk, low work, medium return proposition. You also fudge the capital and rent growth markets which can work in your favor,

It does however really depend on how much you personally want to invest in your time. Agents are not reliable. To get a decent return, and in come cases any return at all, you need to do it yourself. If you dont fancy they above then I would go for Ex local Authority housing, 3 beds, garden, parking. Only ever buy something you would be willing to live in yourself......It might come to it....

There, how is that for a bit of positive advice, beware the Soothsayers!!

Quote from: kathychick on September 30, 2014, 05:55:26 AMProperty seems like a sensible option...

People aren't curious for the sake of it... you are asking about the mortgage term... a key piece of information for that is your age, right? You've concluded that property seems a sensible option... I agree with you, but I'm not in this with just one property... why do you think it seems a sensible option... having a single property can end up being a hassle. It might not be the hands-off steady investment you're going for. This is exactly why you were asked whether you've thought about lots of other things... some of them good practice, some of them required by law (insurance, GSC, deposit, HMRC)... but you just said you'd already thought about all those other things. This claim, to me, seems unlikely if you're asking for advice on the mortgage term (which is not difficult, right?)... default is 25 years, allow over-paying and it can come down. I'm more curious about what was going on in your mind with the question... it might be interesting.

Is Redhill an expensive area?
What's the scope for a 1 bed apartment gaining in value over the years?
Rather than putting all your eggs in the 1 bed apartment basket have you looked at other parts of the country, using agents, potentially buying 2 properties instead of committing all your finances to one and using an agent to fully manage?  Only you can crunch the numbers on this.