UK Landlord Forum / Life

Looking to invest in. BTL property..
Basically I have 2 options at the moment, 2 bed flat for 120K purchase price, 60k lump sum down so mortgage of 60 K, rental  income of 600 PCM, but I have to pay service and rent = £1000 - £1200  a year

Or

135K would possible get 2 bed house with no service or rent charges and 600 PCM rent  but higher mortgage of 75K to pay  with lump sum of 60K  down,

Which way would you do, as both would rent out in my area.

Thanks mike

House every time.

It's much easier to let a house than a flat in Cornwall.

It's much easier to resell a house in Cornwall.

Flats do well in London.

I've bought an apartment once... I'd not do it again. Those Service Charges can rise wildly and you have, effectively, no say. You can scream and shout and dance about... but they still go up. This, in turn, drives rents up, and makes the whole thing look a little less attractive. Of course, Service Charges can be offset against tax, which is nice.

Oh, with properties with a Service Charge, ensure there's a sinking fund defined... one less headache, maybe.

Quote from: Fischer on June 05, 2014, 09:49:33 AM
Looking to invest in. BTL property..
Basically I have 2 options at the moment, 2 bed flat for 120K purchase price, 60k lump sum down so mortgage of 60 K, rental  income of 600 PCM, but I have to pay service and rent = £1000 - £1200  a year

Or

135K would possible get 2 bed house with no service or rent charges and 600 PCM rent  but higher mortgage of 75K to pay  with lump sum of 60K  down,

Which way would you do, as both would rent out in my area.

Thanks mike

Hi Mike,
Its all about the sums.

The flats £60K mortgage @ 3.00% = £1800 per year + Service charges of £1200 make a total of £3000 in charges. Income is £600 x 12 = £7200

Gross profit = £7200 - £3000 = £4200

The house's £75K mortgage @ 3.00% = £2250 per year, no service charge, income is £600 x 12 = £7200

Gross profit = £7200 - £2250 = £4950

Added to that the previous comments regarding service charges and the house option wins for me.