I am a 30 year old single male with no children.
I wish to become a buy to let investor/landlord.
I already have £10,000. If I were to take a job paying for £12to14k a
year. After 3 to 6months, would I be able to borrow the money to buy a
£20to40k(maybe even £50k) buy-to-let house (either here in the UK, or
in the USA)?
Or would my income be deemed too low.
Thanks for your help inadvance
So are you saying you have no job at the moment? Any income?
Outgoings? None? Living with parents? OK, so that means the
pressure is off and you can take your time to think about how
to, erm, make something of yourself. But ask yourself whether
landlording is a good way to do that. If you think it is,
why not tell us why you think so.
Perhaps. Whereas if you were to buy a house for yourself to live in,
most lenders operate lending limits of around 3 times your annual income,
BTL lenders instead require the expected rent to be large enough to
more than cover the loan interest, by a comfortable margin. Although
some BTL lenders also want you to have an income of at least £15k,
shopping around with the help of a mortgage broker specialising in BTL
should find you a loan that's right for you.
If you're buying a place costing between 20 and 50 k, realistically
you're looking at borrowing between 15 and 45 k, since you will need
to keep back some of your savings for emergencies and to cover the
incidental costs of buying. At a typical 6% interest rate this will
involve you paying between £75 and £225 a month. Can you rent out
a property for twice that? Do your research.
I dare say it is possible to buy properties as cheaply as £20k but
they tend to be so grotty no-one will want to live in them.
The loan is likely to be the least of your problems. What's the
point of the venture? To give you income from rent? If so, be
very careful about how you calculate your profit. You could easily
find your expenses exceeding your income if you end up with either
a problem tenant (who won't pay and won't leave) or with no tenant,
even for only a few months.
Or is the point to benefit from capital growth in the fullness of
time? If so, it may have escaped your notice that house prices
are widely thought to be near a peak, and so growth is lilely to
be negative for at least a while. That will leave you owing more
on the loan than the house can be sold for, even by the time you
expect to retire.
Your post has the feel to it that this is an idea you've picked
up on and it "sounds like it might be a good thing", but you
need to think it through thoroughly.
Here's a better idea: put all your cash into stockpiling frozen
poultry. It will shoot up in value as soon as the fresh poultry
industry gets shut down for bird flu. Expect a return of 300%.
Still, it might not be enough to cover the freezer hire.
thanks to all who have replied so far, i live in my fathers house that
he rents out to tenants, and would live there while having the job
im aware that uk housing market is at its acme.
my primary interest was whether i could obtain a buytolet loan when the
market is more reasonable on that low income.
it would appear there is a fair chance
"When the market is more reasonable"? Well, we're not talking a wait
of a few weeks here, you know, but years, perhaps very many. In the
resulting New Climate lenders may not be throwing credit around as willy
nilly as they are now. So don't count your chickens before they're
In message ,
The best way for you to go about this is to have a 10 or 15 year plan.
Buy a house when you can afford it and then, when it has risen in value
enough, remortgage it to provide the deposit to buy another, and so on.
If you can spot the start of the next boom, hock yourself to the hilt to
buy as much as you can, and keep your fingers crossed.
You certainly cant make it happen over a period of a couple of years,
unless you get really lucky.
More than likely, the banks' lending criteria is so lax they'll lend to a
monkey provided he has a heartbeat.
Lots of BTL land lords that have bought over the last couple of years are
actually subsidizing their tenants since the rent doesn't cover the
mortgage, they hold on in the vague hope of some capital gain, though that
If you go ahead with this ensure you have enough free cash flow from your
job to prop up the mortgage, also read up on the last fool theory.
During the last boom they didn't tend to exceed it anyway, just shows you
how far we've come. Not sure about afterwards apart from enforcing strict
criteria regards deposits, and they just stopped lending to some groups
(see; credit crunch).
In message , Aztech
Those with any sense arent hanging on for short term capital gains.
The hope isnt vague, it's a reasonable probability, given that it has
been happening for the past 40 years or so
I agree with this.
What on earth has this got to do with anything???
Run your figures through the mortgage calculators on one of the
largest brokers for a rough idea -
There's some property stats. on my webpage
There are a number of landlord forums, see links on my webpage
The subject of BTL is a FAQ; see
I'm sure if you're in it for 20 years you've not got a problem.
But most BTL are not looking that far ahead.
Seems perfectly reasonable to me
'Now' is almost certainly not the time to get into BTL.
Even 20 years isn't necessarily not a problem. It's a question of
exactly when the 20 years end. We could easily see a 12-year plunge
followed by a period of recovery of equal duration, which would
make a 20 year period starting now not quite break even.
In message , "tim (moved to sweden)"
I dont disagree with you.
I answered the OP's query by suggesting a long term view, and your
comment added to that by suggesting that hopes of capital gains in the
short term were vague.
Hopefully, the OP has now got the message
Not necessarily with property - time tends to be a great healer.
I agree - but at 30 years of age, it's not a bad time to be thinking
about it, gathering information, and planning a strategy.