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Anyone here into "Buy to Let" ?

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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 14 Jan 2017, 18:16

It's what happened to a very close friend of mine. Not quite the 'tenant from hell' but a 'tenant of special interest to MI5 and Special Branch' to the extent that she received a call late one night saying "Unless you're here within five minutes, we're breaking the door down". Found stuff under the floorboards.

Mind you she also had the 'Builder from Hell' who decided the best way to connect the kitchen sink waste pipe was to simply drill a 45mm hole through the outside wall and let it run out into the open air.
If opportunity doesn't knock, build a door.
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Re: Anyone here into "Buy to Let" ?

Postby RogerM » 15 Jan 2017, 19:53

You need to be careful of over investing in one asset class. If you are a home owner, then you already have a significant part of your wealth invested in residential property. Interest relief on buy to let has been reduced to basic rate only as a transition to it not being allowable at all, making it quite likely that whilst you may make a gross profit, you'll still make a net loss if you have a mortgage to pay. Then there is the additional 3% stamp duty that is now payable on 2nd and subsequent properties. BTL landlords normally buy those type of properties which would otherwise appeal to first time buyers, but as hitherto they have been able to offset costs including mortgage interest, it hasn't been a level playing field, and it is clear that government is out to make BTL less appealing.

Then there are the practicalities. A single property is either let or it isn't, making "voids" a serious potential problem, as is the risk of getting a bad tenant who doesn't pay his rent. It will take you 3 or 4 months at least to get possession during which time you have no income and the overheads are the same. Add in the costs of insurance, maintenance etc and the reality is often a lot less appealing than the theory. When you want to sell, how long will that take? Do you sell with a tenant to give continuity of income, but reducing the pool of potential buyers, or do you get vacant possession and sit on a non-income producing asset whilst you wait for a buyer?

If you want to invest in property, I would suggest doing it via REITs (Real Estate Investment Trusts). These are companies that invest in property which is run by professionals, and by buying their shares you are investing in a large portfolio of properties, with variety of both type and location, reducing the risk of a single property with a single tenant in a single location. Buy these inside a SIPP or ISA and the income and growth is tax free, and currently an average tax free income of 5%, rising each year, with no hassle or overheads is not difficult to find, in addition to any capital growth from increases in the value of the property portfolio. And if you want to sell, your cash is just a click of a mouse away.

Just my two penn'orth! :)
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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 19 Jan 2017, 05:37

If opportunity doesn't knock, build a door.
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 19 Jan 2017, 10:23



Thank Roger,

Helpful in that it is more information
Less helpful as it is more to consider and making the decision more difficult :lol:

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Re: Anyone here into "Buy to Let" ?

Postby RogerS » 19 Jan 2017, 10:46

The move to more commercial or mixed-use 'buy-to-let' was picked up by quite a few papers. Driven by the now less favourable tax regime of rental BtL
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Re: Anyone here into "Buy to Let" ?

Postby 9fingers » 19 Jan 2017, 12:55

One or two people on a BTL forum I'm lurking on have made comments about only adding commercial property to their portfolios from now on I guess for similar reasons.

If we do buy it will be in my son's name and he is a full time student for the next 3.5 years and even then a good way away from higher rate tax. Once/if he gets to that stage we can always form a limited Co to shelter the properties.

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