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bradley_d

Advice on my First Buy To Let

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Hi,

I am very new to property and looking to make my first buy to let investment.

I was hoping this group could provide me with some useful guidance and positive criticism on my current plan.

As it stands I'm looking at properties up north in Liverpool.

I have seen many houses for around 50K and I have budgeted as per the below.

 

My budget considers a 25% buy to let interest only mortgage at around £80 per month, Agency fees of 15%, rental of £425 per month and landlord insurance at £50 a month.

image.png.a6501c846ca1055e9c343dc878a19683.png

 

Does this sound realistic? I am very happy to be given a strong reality check here.

Have I missed any key things or not provided for certain outcomes?

At the moment it just seems too good to be true at roughly 20% return without capital gains!

 

Please let me know your thoughts or advice on this.

 

Many thanks,

Bradley

 

 

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Hi - you need to add stamp duty £1.5k and any refurbishment costs to your capital investment - virtually all properties will need something spent on them to get ready for letting, even if its just basic decorating & tidying. There may also be broker/finance fees unless you get your mortgage direct.

The 19% yield is before maintenance & voids (I budget at 1 month/year rent for voids and 10% for maintenance), another factor is that the lower down you go in the housing market the more tennant payment issues and potential damage you will get. I don't have experience of Liverpool but the cheaper areas near me only attract social housing tennents and arrears/non payment significantly impact actual returns (as well as the hassle) so this needs factored in 

Insurance and agent fees look a bit high - I rarely pay over £200 year for insurance and my highest agent fee is 12% and lowest 8% in the North West 

good luck with your investment 

Adrian

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Thank you for your thoughts Adrian.

 

I was hoping the 2K I have budgeted for legal fees would cover any of the broker/finance fees you have alluded to. Do you think it will be higher?

I revised the budget with SDRT, 11 months rent, 12% agent fees and insurance as per below.

The 10% you mention for maintenance, is this 10% of the 12 months rent?

image.png.1795d697406b9ef64ed83b32e7c3def2.png

 

If anyone else also has an opinion it would be most welcome.

Many thanks,

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I think your numbers look ok. Within the cost figures, I would add in cost of gas safety certificate (£65), 5 yearly electrical inspection certificate  (£250) and locksmith to replace door locks (£120). Best of luck.

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