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Starting Out In Buy To Let - Our Financial Plans


When my Husband first mentioned investing our savings into a Buy To Let property, I have to admit I was quite reluctant. It took me most of a year to come round to the idea as I worried instantly about the risk of losing our money or managing potential bad tenants. But as we discussed it more and more I realised that actually if it does work out, it is potentially one of the best places to invest our savings in to right now. 

We'd like to secure more of an income. 
We've been saving hard for a while now. We both work for ourselves and have thought a lot about the future, we aren't currently part of a pension and so our savings now and in the coming years are hopefully going to go a way to help set us up. Right now we want to use our savings to secure more of an income and having money sat in a bank account isn't bringing any return to us at all. And so we're looking to the idea of Buy to Let, and what's more, is that we're actually currently in the process of purchasing our first Buy To Let property right now.

Our plan is to buy property up North where property prices are a LOT cheaper than where we live down South and closer to London. 
We are looking for houses North of the country (around 2 - 2.5 miles away) and we narrowed it down by selecting an area that we have a good friend in that knows the different areas there. We also looked at what is happening in the area, what's upcoming that could potentially increase the demand for houses to rent and also the value of property. 

We also only looked four houses that are in an easily rentable condition, so neutral decor, a nice kitchen, bathroom and house layout. A lot of property investors look to buy run-down houses to do them up and sell them on, making a bigger and quicker return on their money. But we have limited knowledge about how to do work to houses ourselves and with being a few hours away we want to have to drive up North as little as possible. So we'd rather buy a house that's in a good condition with nice decor at a good price to then be able to rent out straight away.

The house we've offered on and are currently in the process of buying is exactly this and we've worked out that with a 25% deposit and an interest-only mortgage we should be able to make around £420 per month minus landlord insurance and tax). 

Of course, there are a lot of upfront costs. 
The stamp duty and deposit alone is £26,600 for a £95,000 house (25% deposit). And then there are things like the valuation fee, solicitors fee, survey fees, the broker's fee if you use a broker and then any repairs/work you do to the house or anything that you buy for it. For us this should be minimal - we're hoping a new fridge freezer, washing machine, a few paint touch-ups and the hire of a carpet cleaner should be really all that we should need. This all together including the solicitors and the other fees should cost around £2000. 

You can do it cheaper in other areas and if you buy a house that needs work.
Property up North can go for even cheaper than the two-bed place that we're hopefully purchasing for £95,000. I've seen properties for sale for around £60,000 before in different areas, which would mean a cheaper upfront cost for the deposit and stamp duty. Of course, the condition of the house and the decor may need work but if you know how or if you want to take on a project then this is a good option.

And so that is our current plan with venturing into Buy to Let. We plan to try out one property and see how it goes. If it goes well, the idea is that we will hopefully begin saving for a second one. It's a risk of course, but I think most investments are. I will keep you updated and hopefully, if the buying process goes well I will be able to share you a bit of a tour of the house on my youtube channel hopefully towards the end of the month as it's just us in the chain. Fingers crossed! 

Thank you for reading. 
  Alex xo

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