Singing Pig

Hello - this my first post - I hope it is in the right place.

I am about to start buying some buy to let properties and think I understand that some parts of the UK may be too expensive to work with standard buy to let mortgages.

Does anyone have any advice about which areas I should look in. I do travel a lot so am happy with the thought of buying in lots of different areas. I know several letting agents and think that I will be able to work with agents who live in whichever area I buy in.

Anyone got any tips?

Thanks

Jane Oliver

Hello Jane,

You're right that some areas are becoming hard to reach with standard finance, but then you must remember that there's more to investment than simple rental yield.

If you're buying now, London yield is atrocious, yet I'm London through and through.  Demand is high, and capital growth will remain strong in the city - but London is a market unto itself.  Elsewhere in the UK rental figures may stack up more to your advantage, but you're conversely at the mercy of national trends, and consequently risk stagnation of overall value and rental return.

In days gone by you could achieve excellent rental returns and respectable growth in value, but in the current economic climate, you're likely to have to choose between yield or capital gains.

It's no secret that I speculate for capital appreciation, so I'll always recommend London and the commuter belt.  But even so, this is a very broad generalisation, and meaningless if you're looking for specific investments.  In any area, you can walk a hundred yards down the road and enter a completely different environment.  Being essentially cashflow neutral is also a costly strategy that relies on a stream of independant income - but it does illustrate that there's more than one way to skin a cat.

I expect you already know the essentials - buy below market value, in an area of high demand, with rising values.  People must want to rent, and people must want to buy, both for very tangible reasons.  Do your reasearch exhaustively, know your market intimately, and pick your location very carefully.  Walk the ground, speak to people who know the area, assess local infrastructure and services.  Most importantly, look to the future - how will this place look in five years' time?  And in this climate of demand, you also have to find a bargain.  Put simply, don't aim to buy an asset, only to lumber yourself with a costly liability.

I'll also warn you to beware of the sharks - property is big business, and nobody's in it as a charity.  There are plenty that will assist you, but do your own ground work too.  If you leave yourself open to it, someone can and will fleece you - not only individuals, but apparently trustworthy companies are happy to make a fast buck from you too.

Do you have a particular sector in mind - high end or bargain basement, suburban houses or city apartments, new build or traditional period charm?

Regards

Hi Jane,

It has been said before - and no doubt it will again - but property is a serious business. Serious in that the amount of money you can make and thus also lose, is incredible.

Look at this thread of what happed to someone who went into property without RESEARCH.

http://www.singingpig.co.uk/forums/thread/232194.aspx

Your post shows that you have some fundamentals missing - Quote "think I understand that some parts of the UK may be too expensive to work with standard buy to let mortgages."

I suggest instead of getting a list of 'cities' or 'areas' you really do research what it is you are getting into. Read books from the librabry section. Read every post on this website. They you will know where you should buy as it is your tens/hundreds of thousands you are playing with.

Ask yourself - am I getting into something at the right time?

And dont sign up for one of these "become a property millionaire inside 5 mins" courses a-la Inside Tr@ck

Nigel.

mmm... a brave one!   Unless you have unlimited resources, certain areas will be too expensive because the mortgage deal will not stack.  You would then be stuck with a low rent mortgage product, or horror of horrors a mortgage shortfall.  I think the difficulty is knowing your market and knowing it in so many different areas is an impossibility.  You may need to narrow it down a little or work with the agents you know and trust.  South Wales has been great for us, but we have invested years in getting to know our market and there are wide divisions in market demand  and trends within even a mile or two.  What makes one development sought after and another a btl ghetto?,....Check out the Money Center's website and Hattan and Grand's ready reckoner, this will educate you as to purchase price in relation to rental income required.  Then you need to get researching prices and rents in your potential areas, this is your due dilligence and you must do it...don't just rely on agents recommendations, they have been known to offload their over priced dead stock onto the uninformed.  Not to put you off, we are still buying, but you gotta buy smart!

wow - that is amazing - such fast information and replies. Thank you so much.

I know a bit about below market value property and know several people who are buying houses, renting them back to the seller, getting the house for free AND getting some cash when they do an "instant remortgage". This is what I want to do, though I am prepared to put some money in if the property is right.

I guess this means that in general I am looking for properties below £130,000-£140,000. I had not thought of South Wales - thanks for that pugsy. I had heard that parts of Scotland and perhaps North West England might be good - I just wandered if there were any other areas I should look at first.

Jane

What can I say Jane - you're a girl, and we love the laydees here.

I won't bang on, since the business you're gravitating toward isn't my specific area of expertise.  But considering you have friends who are making a success of BMV and rent back, then you're in an ideal situation - there's no reason why you can't use their experience to your advantage, and make a go of it too.

Just remember that ultimately, it's your neck on the line, so heed all the words of warning, and look after number one.  Regardless of others' experience, do your own due diligence, and make your own decisions on your own terms.

Good luck, and don't give up.

Oops - now that was a mistake I never wanted to make again...

Apologies pugsy - such a sweet name!  Was going to say perhaps you should have called yourself Wednesday instead, but I realised that was Pugsley, wasn't it...