Buying a second property to rent out advice thoughts

[juless77]

We are lucky enough to not have a mortgage..but was wondering what people could advice or thoughts on if it would be a good idea to buy another small property to rent out we would need to get a mortgage for around 10 years to buy but wondering if its a good idea in these times ? thankyou

[duchy]

If you can predict what the market will do ,yes.
I think personally buy to let landlords will be a tax target in the next few years
Whether You believe the market will slump once the stamp duty removal ends (currently around here it’s stable) especially if unemployment increases . Negative equity for a while is possible.
We’ve never had a pandemic to influence the housing market before .
It isn’t usual times so there is going to be an unusual impact on the market.
Personally I think it’d be easier to predict when we can fly to the US again

[disney332]

If you get the right property in the right area with the right tenant then yes.

You need to be aware of the income tax implications, the capital gains tax implications upon sale during your lifetime and the inheritance tax implications upon death (if your wealth is sufficient upon death).

The way you choose to own the property, ie joint or 50/50 (70/30., 20/80 etc) will be important to mitigate both income tax and capital gains tax.

Ownership can be altered before a lifetime sale to 50/50 for husband and wife (without any immediate tax implication) to ensure Capital gains tax is kept to the bare minimum.

If necessary take advice from a good tax advisor.

Disney332

[mickey house]

I think the amount of deposit you have will make a difference, but buy to let mortgages are a higher interest rate and the goverment aren't particularly generous with buy to let owners. There are many other overheads than just the mortgage and I would want a chunk of money in reserve to repairs plus if the tenant doesn't pay (which is going to be more commonplace nowadays).

I did look into this when I retired from my proper job 4 years ago, but it wouldn't have worked for me financially and I would have had to rely on the rental to pay my pension so I decided against it.

[Moorlandman]

If you live near a large town or city you may be able to secure guaranteed income from your council for housing immigrants. This is where the money is now but you may have to pay higher insurance costs

[levtweeney]

I have a great mate who I play golf with. He lives just opposite me and he has rented his house from a great landlord for 7 years now. He is a plumber and dead handy. He has improved the house with decking, decoration throughout, new kitchen doors (with the OK from the landlord) he pays about £850 a month so that landlord has been very fortunate to have him as a tenant.

So in answer to your question it can work really well as an investment it all depends on your tenant. Get a bad one and well, we have all seen those programs...

[munmun]

We have rental properties. It is not a big money making excercise but with bank interest rates low it does provide us with an income. Our properties are mortgage free, in an affluent city and we let to professionals.

The key is to have a good buisness plan, a good managing agent (if you dont want the midnight calls) who charges a low rate and money in the bank for emergencies.

We treat out tenants well, the moment something goes wrong it is sorted out, we treat them how we would want our family treated but if that means a new boiler or a new washing machine then it is done today not in a few weeks.

Dont believe profits are enormous, they are not there is always something that needs doing or repairing. We get very little tenant turnover but we did have tenants moving out from one property in March and could not get new tenants until June because of the pandemic, we actually used the time to decorate and update but if we relied on rent it would have been a problem.

The beneficial tax regime for LL has all but ended, if you have a mortgage your tax relief will be minimal and items claimed against tax are being limited. You will need to consider it a longterm investment, my plan is to have properties to give to my grandchildren. They have gained I value since purchase but that is a paper gain and hard to realise. If you feel you need your money out quickly dont invest in property. Remember the extra stamp duty, all the insurance you need and the hassle.

[juless77]

Thankyou everyone its made me realise its not as simple as I first thought lots to think about

[megaflyer]

Originally Posted by juless77

Thankyou everyone its made me realise its not as simple as I first thought lots to think about

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I agree with another poster, I would expect to see them hit and probably hard at next budget for TAX as that’s low hanging fruit for the chancellor to recoup some expenditure - its what my FA has been telling us for a few weeks and so far his predictions have been spot on on other products and investments

[munmun]

Originally Posted by levtweeney

I have a great mate who I play golf with. He lives just opposite me and he has rented his house from a great landlord for 7 years now. He is a plumber and dead handy. He has improved the house with decking, decoration throughout, new kitchen doors (with the OK from the landlord) he pays about £850 a month so that landlord has been very fortunate to have him as a tenant.

So in answer to your question it can work really well as an investment it all depends on your tenant. Get a bad one and well, we have all seen those programs...

See more...

This is a really nice thing to do as a tenant but unless he has some security of tenure he will have lost all his investment with the LL decides to sell or increase the rent to an amount he cant pay because he has improved it!