9:08 AM, 9th January 2014, About 9 years ago 7
First of all, an introduction. My name is Nathan, I’m 27 years old, originally from the UK but currently living in Brisbane, Australia.
I have always been interested in property and bought my first buy to let investment in 2012 with my Wife. We knew we would be returning to the UK in the next couple of years and wanted to take advantage of current property prices being quite low. We are lucky that our income is quite high in Australia and hard work and being good with money allowed us to save enough for our first purchase. We bought a 2 bedroom apartment that was originally priced £120k as a repossession for 60k. We paid a 25% deposit and took a bug to let mortgage of 45K. The property has been rented out to a close friend (I’m aware this is usually a big “no”, nowhere, this friend is a very reliable,stable and house proud person so we have had no issues.
The mortgage payment is £221 per month on a repayment mortgage and the property carries a £50 per month maintenance charge. I’m doing my friend a favour at £400 PCM rent however I have saved on letting agent fees. I currently make a profit of £179 PCM.
We have just put an offer of £70k on another 2 bedroom apartment, the mortgage will cost £265 repayment and interest or about £130 interest only. I’m inclined to go for interest only after more research for reason I will explain in a moment. The rent will be approximately £475-500 PCM. Maintenance charges yet to be confirmed but estate agent “thinks” £60 PCM. I will also need to factor in letting agent fees.
The reason for me wanting to invest is that I would like to return from Australia with a sizeable deposit for my own home and look to make enough profit each month to cover the mortgage payments on my own home.
My question is, what would you do next in my position? Continue to buy more property? (This is what I feel I should do).
My income in The UK when I move back is unlikely to match what we earn now hence the reason for me wanting to increase my income and putting it in an appreciating asset is the best thing i feel I can do. On an interest only basis I’m hoping that inflation will erode the value of the loan substantially.
Another question is, given the figures above for my second property, what would you say was reasonable for letting fees?