[Closed] Anyone own a Buy to let / holiday home?

Its a huge subject for which each person's experiences will cover the breadth of possibilities.

I recommend plenty of research first: an understanding of the genuine financial costs and returns and the ability to calculate them properly, the legal responsibilities of being a landlord from EPC to Gas Safe and everything in between, and knowing to what extent you have the time to actively manage your property and tenant to maintain both productively.

Here's a good start
http://www.landlordzone.co.uk/

Obviously you're not going to put too much emphasis on 'Investment' are you.
My mum has a holiday house that we thought about renting out, but there was not a lot of money in it for the amount of work and potential problems it involved. The other issue was that the best rental periods are when you want to be there so it sort of defeated the object of having the house in the first place.

Good tenants and its among the easiest money you'll ever "earn".

Bad tenants and you'll wish you'd signed up to that ponzi scheme your mate down the pub was telling you about 🙂

Buy house. Advertise, do viewings, take money, give keys, what could possibly go wrong?

Well I've had Police involvement when one tenant set up a cannabis farm, one nearly burnt down needing £8000 of repairs, I paid the heating engineer over £500 yesterday for boiler repairs, and essentially I'm on call 24/7 when there's a crisis. Obviously not all in the same week, that would put anyone off, but they are all possibilities in letting. Holiday homes are a different matter.

Every area will have a sweet spot of house type and price which will return a decent yield while not being a nightmare to manage. For me that's three bed traditional houses, in cheap but decent parts of town. Let to families with smaller children and they don't want to go anywhere fast. If you can't pay the loan back on nine month's rent, don't bother. You will need to keep money for contingencies, or have tons of insurance cover, or some balance of the two.

From the investment side of things, we aim to have them all paid off and fully belonging to us by our late fifties, then rent is basically our pension.

What about abroad? anyone got an overseas property?

If you can't pay the loan back on nine month's rent, don't bother.

midlifecrashes...can you expand on this ? When you say "Loan", do you mean 12 months "loan" payments to equal 9 months income ?

Ok, assume I buy a house for £75000, and rent it for £500pcm

BTL mortage might be up to 85%LTV, but let's assume 66%
That's £25000 down, and another few hundred on lawyers and banking fees etc.

Borrowing £50000 over 17 years at 5% is £370 pcm, £4440 pa repayments.

Max rental income possible is £500pcm, or £6000pa.

You have insurance, gas servicing and certs, all the regular maintenance with owning a house to pay for, plus pay tax on the income from rent while only allowed to offset the interest of the loan, not the full amount. Nine months out of twelve is the rule of thumb I work to to keep it ticking over. If I couldn't break even with 9 months rent covering the outgoings, I'd not take it on. That allows ,in this case, around £1500 to pay all of that stuff and hopefully build up a war chest for new boilers, carpets, irregular bigger bills. That doesn't include the £25000 deposit, that is cash up front from me, the price of entry to the game.

Edit: The point is, after 17 years, I outright own a property producing (today's rates) £4500pa/£375pcm (sticking to my 9/12) which has cost me £25000 down, and seventeen years of management effort. If I had to buy an annuity at 65 with that £25000, I might get £100pcm

What about abroad? anyone got an overseas property?

We have a place in Tenerife
Not sure about the rest of Spain but there's a big purge on illegal holiday lets at the moment.
Basically if you want to rent it out short term, it needs to be on a specific tourist development.
We've just managed to have someone stopped who was renting out a place on our development [residential], not sure what the outcome will be for him but big fines have been threatened.
In Portugal, I believe you need a yearly permit @ €1000
Bottom line is make sure you can legally let whatever property you buy.

I have a couple of properties I rent out and it pays well. One property which I bought 14 years ago gives me a 886% return on my monthly investment - the mortgage payment. The other property bought 9 years ago is less lucrative giving me a 200% return on investment.

Both properties have also appreciates considerable, the first having quadrupled in value.

So from my experience its a great way to earn money but I bought both properties a long time ago and I would be more wary now.

I manage one through an agent as its 200 miles from home the other I manage myself but use an agent to find a tenant.

[i]I paid the heating engineer over £500 yesterday for boiler repairs, and essentially I'm on call 24/7 when there's a crisis. Obviously not all in the same week, that would put anyone off, but they are all possibilities in letting[/i]

I have landlord boiler cover at £19 a month, I use an agent for one property so no hassle there. I had a tenant in for 5 years and the place needed gutted but that was no big deal.

I guess I've been lucky though.

edit: I also have a very good accountant.

So from my experience [s]its[/s] was a great way to earn money

FTFY to take into account the OP is looking to buy now, but I agree if you bought years ago. I own a small house with my sister that we bought for cash (£40k each I think it was) about 8 years ago.
It came with tenants, who we already knew, and they're still there. Rent is low but but we still take out £2k/year each plus whatever appreciation there has been over the ownership period.
Would I do it now? No.

Not sure I want to do it in the UK, house prices are massive these days.

We've got a deposit of a fair size so we are thinking somewhere abroad whicj might be cost effective.

We bought a place in Alicante but we don't let it out as we had
taken advantage of the low prices and bought what we need
as opposed to the grander must have.
But we are about to buy another place here but to live in and rent
the one we have now.

But if i was to buy to let a holiday home here You must visit
the people/Business that will manage it to make sure you
get advise on the correct property and location don't just buy a bargain