On Mon, 6 Aug 2012 09:26:50 +0100, "TheScullster"
wrote:

Hi all

From posts to the group in the past, it is clear that a number of posters
own property for rental.

Is the market saturated after all the buy-to-let hype of recent years?
Is it a worthwhile investment if starting now(ish).

I am likely to be in a position to take on a property (finances permitting)
this year and wonder if this would be a good move in the current climate.

The property is 3 bed semi in decent area - I am guessing at purchase price
of around £150k and rental £500 pcm possibly more.

Only very tentative interest ATM - not sure I could live with the hassle!

If my figures are right on the rental income, what costs should I expect to
pay out of the £6000 pa income?

I'm in the same position as you - in fact I'm off to look at a couple
of properties this afternoon - but I'm increasingly less certain about
it being a good way to go. In my case, it's a matter of trying to get
a better return on cash investments.

If I were you, I wouldn't assume that £500 pcm adds up to £6000 pa.
Unless you are in an area where demand outstrips supply and where
people stay put in one place for years at a time I would either
subtract an amount for void periods or subtract an amount for using an
agent or subtract an amount for using an agent yet still suffering
from voids.

Part of the arithmetic of buy to let used to be the increase in
capital value of the property. Unless you live in one of the few areas
where property prices are still increasing, you live in one of the
many areas where they are not - and there are people I trust who say
that we are many years away from bottoming out. I'm doing my
calculations on the basis that £Xooo investment will produce £Yoo
return year after year and even if the value of the asset falls,
that's what I've committed to produce the income. It could be many
years before I see an increase in value of my capital so I'm not
counting it and if £Yoo expressed as a percentage return on investment
is less than I could get somewhere safe then it's not worth the hassle
to me. Round my way there are 50-60 grand properties that will rent
out for 350-400 per month so the arithmetic looks a little better to
start with.

Other costs?
Insurance
Gas inspection and repairs
Energy Performance Certificate or whatever they call it nowadays
Running repairs - which will depend a lot on the property and your
tenant
You might also like to take a look at this:
http://www.newham.gov.uk/News/2012/J... approved.htm

...and ask how long before all councils are doing it.

Personally, I'm also looking into the advantages or otherwise of
buying a bigger house for myself and taking in a lodger. And I'm
looking very seriously at peer-to-peer lending as a way of getting a
decent return.

That's my opinion: YMMV. And naturally, being in the position I am
right now, I'm very interested in other replies!

Nick