Having used everyone’s experience to make decision on financial products, I’m after more experienced advice…

I’ve found myself looking at dirty, dirty cheap properties in Halifax (not far from me)

You can buy a flat, ready to rent with about £30k, with worst case scenario rental income of £250; already pretty good yield.

I obviously will do all the research into insurance, unexpected costs etc myself….but my goal is to get a decent house for me and the missus; so I only want to help the situation, not just buy somewhere so I ‘own’ something.

Question is, will I?

Providing of course I get a surplus income from property; is this a sensible idea to help me, with a long term goal of capital value increase (5 years +) – the mortgage repayments from either a buy to let, or a normal mortgage are easily affordable. Of course I’d love to not use a BTL mortgage and keep cash for deposit on real house, but I’m sure that lenders are pretty savvy to that kind of trick.

Anyone experience of this; i.e renting, wanting to buy a nice house but playing with cheap properties to increase income, or even capital through sale?

Obviously; there’s the ‘do up and sell on’ approach, which is tempting, but without a car of my own, average at best maintenance skills and all the risk of the housing market as-is, it doesn’t seem very bright…

..but happy to be corrected.

Thanks, Rich

A family friends dad has these kind of rental properties. He makes a lot of money from it, but he has dozens and paid the mortgages down really quickly in order to live of the proceeds later, but he has to employ some pretty heavy handed tactics on his tenants from all accounts. The properties often need complete renovation following a tenancy and I think that recent changes in housing benefit mean that things are not as lucrative as they once were.

Not a segment of the business I’d be getting into personally, although I am toying with the idea of a buy to let investment myself

So are you looking for a way to make money without risk, effort or skill?

I can tell you how to do it, but there will be some administrative and reprographics costs. Send £1500 PayPal gift to my account and we can get started…

In today’s mortgage market a decent deposit will get you a lot further than a slightly increased wage.

The 250pcm would only boost your income by about £2.5k (assuming no mortgage to pay) so would get you an extra 10 or 12.5k on a mortgage (4 or 5 times earnings). Hardly worth it IMO. That and you’re proposing entering the very bottom of the property market. Hard work, higher risk etc dealing with the dregs of society.

Sorry to be a downer, but offering my opinion.

Ah, Prince of Nigera, good to hear from you again. PPG on it’s way.

To clarify, I’m not ultimately after money, I’m after a home; also I didn’t say I wasn’t prepared put any effort in. My skills are of no use in renovating a home, other than menial tasks but we all have to learn, just balancing out the cost of mistakes, tools etc with what this would be – a stepping stone.

No doubt I’ll half wreck the fist home, but that’s ok because it will be our home, not an investment.

Otherwise, thanks!

What sort of house do you want to buy as a first house And how long as you been saving ?

From your other thread i estimate you have about 5k deposit based on your getting 100quid in interest on a 2.5% return.

Have you looked where these houses in halifax are ? If you dont want to live there i suggest you dont buy it. If it was that lucrative they wouldnt be availible..

King, ta. It’s a valid point about potential dregs – I have a slightly romantic notion of being a decent landlord to those that cannot afford much, but that’s just cr*p Disney material.

As in income you’re right; as there would be a mortgage and costs, income would be extremely negligible….in fact, I’m not sure why I think it’s a considerable idea any more.

I suppose what’s swilling about it “the bank will see I can manage a mortgage, I’ve got some inferred security through ownership and there’s an extra (negligible) income and if I can maintain this and the ‘real’ house, it will eventually….eventually….rocket in value. It will; I know that, but it will probably take a very long time”

..and because it isn’t the primary residence, it doesn’t fall into the “oooh, my house has double in value”, without then having to buy another house that’s doubled in value & therefore never realising any capital gains..

Complicated business; I’m getting out on the bike tomorrow to ponder.

Mike skinner once said only way to double your money legitimately is to fold it in half and stick it in your pocket !

Hi TR

The £100 was based on the excess money I had to invest (that sounds really naff, anyone reading please refer to previous thread!)…

What I want to buy has no relevance on this purchase, but I do understand why you’re asking – the 2 are not linked in my mind, but maybe they should be?

I haven’t researched any areas, aside from Zoopla etc to understand trends and avg prices. This is just something that has occurred to me today and after a bit of googling, all seemed a bit ‘obvious’ (10% yield and longer term capital increase)..hence turning to you eclectic mix of individuals for more insightful/sarcastic/dangerous advice 🙂

Best bit of advice i got from here, colleagues and mates all at once was area counts for alot more than the property

. 10% yeild dealing with dregs of society if you cant do the renovations your self it only takes 1 bad tennent to wipe out your years turnover+more

Ive had a past life in doing cheap renovations of rentals ( my dads in that market) and it wasnt un common for an on the surface fok looking flat to need 1k of work before re renting – that is unfurnished .

I should add he has a number of said properties and has got great tennents in some and has had some problematics over the years in others ….. Hes made a net profit for sure but had he just one im pretty sure he wouldnt have.

“area counts for alot more than the property”…

..Funny, that’s what I re-iterate to the missus for not only quality of life, but re-sale value; I just detached that priority when considering a rental property….probably incorrectly.

It’s the quality of tenant I guess is the issue; because if you never live there, it doesn’t matter where the property is in the main….unless of course you only find the door-punchers renting in that area.

Ok, starting to think this is a p*ss poor idea…

No seriously, renting isn’t an easy game, tons of stuff to go wrong and ultimately you’re responsible for people’s home when you take their rent. Buy a cheap place yourself first, learn to decorate, bit of basic fixing up. Build capital value by fixing a rough place up, expecting big property value to rise is just another gamble. I rent houses, decent family houses in cheap but not horrible areas in an even less fashionable town than Halifax.

They pay their costs and not much more, so we’re treating them as a pension, ultimately all of the startup costs on the first couple came from income, and having equity in our family home. Definitely not a get rich quick or easy money scheme. Buy properties with best yield potential that you can look after. For me that’s family houses in ok areas. Buy as fixer uppers, make em decent, find a stable family who want to rent it. There’s always a job to be done though, stuff doesn’t fix itself, and wear and tear is normal. I’m not looking to resell anything, ever. My pension till I die, then someone else’s problem/windfall.

So im wanting to rent a property in halifax

Why would i rent yours?

First thing i did when renting was work out my budget

Then i worked out what i wanted

Then i looked at areas to find a decent one

Then i looked at what i really needed till i had made the two meet at a happy medium.

I cant think of an area id wantbto live in you could buyna flat in for 30k ….if you wouldnt want to live there chances as no one else will ….meaning youll get folk who have no choice in where they live only the price – dss tennents.

You might get lucky but the poster above is right , my dad also has a number of 3 beds and he lets the, to familys – has significantly less turn over of tennents and relitively few issues – although the polish folk destroyed their house.turns out they had about 15 folk living in the 3 bed

Also, as I understand it: if you are able to borrow say £200k mortgage, and you spend £50k on a “rental property”, despite the rental costs “covering themselves” you may find the bank will not lend you “another” £200k for you own house….

DrP

Ive also seen houses where the tennent has taken the boiler , kitchen sink and all pipe work to the scrappys

Has put holes in every wall

Has thrown faeces all over the walls and left the toilet full of poop

Left a huge amount of crap

Removed a window frame

lucky that wasnt one of my dads we were doing that up for another land lord

ultimately all of the startup costs on the first couple came from income, and having equity in our family home

That’s an insight…ta.

DrP, that’s one of my main questions; the answer to which is what I’d like to know.

Yup, sold. Rubbish, naive idea. I’ll keep focus on looking for a run down first home, in a half decent area, with a garden (I’ll roll over before I give up on a garden).

Just to add though, for all the horror stories, I lived in Abbey Road, Torquay growing up, not a nice area but I was a decent tenant….but all a bit Disney again..

A lot of good advice/experience though..thanks.

TR – that’s hard to believe; taken the boiler?????!

Sold the lot .

I fell through the floor in the kitchen too.

Walked in without thinking. He had lifted the floor to nab the copper and just rested them back….

Iirc it was brown street or brown road dundee

we got our first house off an old couple who smoked . Whole place needed gutting and the bodging removed, replastered and refloored. . Old chap loved no more nails . His blatently self fitted none reliable boiler system scared me. Just had a new heating system fitted.

It was cheap though for what it was and its location and works for me. Ex council house in the country. Bang for buck.

“Ex council house in the country”

= perfect.

boilers ‘missing’ is not uncommon. we service/ maintain about 150 properties for local landlords and ‘lose’ about 3 boilers a year. worst case scenario was i moved a middle aged couple into a house at 11am and at 3pm landlord called as nieghbours could smell gas..
every inch of copper pipe was gone floorboards uptaps ripped off the sinks/basins boiler gone gas fire stripped of brass.. they used a chainsaw to cut up floorboards..

The better the area and the better the property, the better the tenant.

We bought houses that need slightly doing up, for ourselves only. It really has added value to each property we owned. Have you thought of just buying a cheap house and working your way up for yourself rather than to rent? It really is hard graft though!

Advice from me would be, that location is everything.