[Closed] Buy to let

The return on capital for BTL seems to work out at about 3%, less than you might expect.
Personally, I'd do it as house values should never approach zero, unlike some shares and pension plans. It's a safeish place to put money.

Do the sums: look at rents for the area you're interested in, then the prices for those properties. Take into account overheads such as maintenance and management fees, and assume 10-15% voids, and then calculate the ROI based on getting a lowish rent for the area.

The deposit is going to be the limiting factor. At least a 20% deposit on BTL is normal in this climate.
That gives you £80k. On interest only at 6% gives you a finance charge of £400 per month before you've started paying off the capital.
So you need a £100k property that is going to be rentable at at least £600 per month to break even.
Good luck

Thanks both.

Rob

From my numbers, it doesn't look that promising, but there are at least a couple of other things to consider:

1. With your age and salary, you should be able to remortgage your own house to increase the deposit. Not ideal, but may provide a better long term outcome.
2. Given your location, are holiday lets an option? Obviously more work, but potentially higher returns too.

+1 for holiday lettings.

I work for an agency in the South West and our target is to let 30 of the 52 weeks for our homeowners. I'd guess the IoW would be similar to here in that you probably have service companies locally who would manage changeover and basic maintenance so it needn't be that much more hassle than a standard shorthold tenancy. You'd need to factor cleaning and changeover into the cost but returns can be higher than BTL if you're in the right location with the right property.