Thinking of buying a lodge with attached BTL cottages

by Readers Question

11:33 AM, 11th June 2015
About 3 years ago

Thinking of buying a lodge with attached BTL cottages

Make Text Bigger
Thinking of buying a lodge with attached BTL cottages

Thinking of buying a lodge with attached BTL cottages

Hi there everyone,

Total newbie to the forum and website having previously only browsed over a few topics and now I am in a position to start my projects I have become a member – great website!

So I need some advice and opinions. I have two options available to me and I am looking at the pro’s and con’s of each. I would like to start investing some money – maybe BTL’s or standard investments or likely a bit of both.

My first option is to stay in my current family home and start buying BTL’s in Surrey near to Gatwick airport where I know that rentals are strong and easy to come by but don’t have massive yields – I’d expect c6.5%-7%. I can afford to purchase £1m of BTL with my current 25% deposit and purchase costs. This seems like a logical step

OR

I have the chance to purchase an old lodge with 3 attached cottages in 4 acres. This is very much a picture box house, a lifestyle purchase and each BTL dwelling has a small section of garden. Currently the cottages/mews houses are rented on AST’s and whilst the yield is less at 5%, it’s a significant purchase but the numbers stack up and I know that the rental will be strong due to the location – Pilots and business professionals currently rent them.

My question is a simple one really – having never had any experience of renting properties or being a landlord is this a bonkers way to start?

I would still have enough to purchase another BTL property but I may hold off on this purchase to stagger my investments.

As you can probably imagine I am really keen on the second option partly because it would never be a house I could afford in normal circumstances and due to the current structure of the title and so on it seems good value.

Is renting properties that close a terrible ideal in general?

Comment away – Ta

Marc



Comments

Mark Alexander

11:43 AM, 11th June 2015
About 3 years ago

Hi Marc

I don't think it is possible to compare the two options you are considering because one is financial and the other has such a large element of lifestyle choice which only you can place a value on.

Living next door to tenants has positives and negatives. You can keep an eye on them but you are never away from them either.

Have you considered or looked into serviced short term letting of the cottages? You may find the returns are far greater, albeit more hassle in terms of dealing with bills, bookings, cleaning etc. I have a friend with a very similar property setup to the one you are describing and he does very well out of it. That said, his place is in Norfolk, just a stones throw from Norwich and the Norfolk Broads so he gets the best of both worlds, i.e. holiday makers and contractors.

I think your idea is far from bonkers but you may find that getting a mortgage on what I'm calling the lifestyle property would be more difficult than standard BTL properties.

I really think you ought to have a chat with a whole of market mortgage broker before you proceed further, I recommend this chap >>> http://www.property118.com/member/?id=314
.

Marc MF

13:31 PM, 11th June 2015
About 3 years ago

Reply to the comment left by "Mark Alexander" at "11/06/2015 - 11:43":

Mark,

Thanks for your comments.

You are right that they are difficult to compare directly, I just wanted some form of reassurance that it wasn't a mad idea and then to get some of the general pro's and con's. The larger purchase is absolutely driven by a lifestyle choice not financial. With my financial head on I would go the traditional BTL route.

I hadn't thought of the serviced short term lettings approach - do you have any pointers on where to gather more information on that other than me just doing a 'google' search which I will do.

In terms of BTL mortgage financing I will have a chat with your contact and see what he suggests, I can get finance as I will be separating the titles of all 3 properties and have spoken to an advisor. Another opinion is always good though.

Mark Alexander

14:32 PM, 11th June 2015
About 3 years ago

Reply to the comment left by "Marc Morley-Freer" at "11/06/2015 - 13:31":

Hi Marc

Have a look at this website >>> http://www.homeaway.co.uk/

Also have a chat with Hoseasons.
.

Tim Fenn

12:04 PM, 13th June 2015
About 3 years ago

Hi,
I'm also a short term Lettings landlord, finance is difficult and usually a breach of standard buy to let mortgage conditions, that also means paying higher interest rates.
with regards to living with your tenants, personally I'd chose not to, it is a very personal choice though, they will knock on your door at midnight....

Marc MF

14:27 PM, 4th July 2015
About 3 years ago

Well it looks like I am certain to take the route of buying this property rather than building a traditional BTL portfolio.

I've been offered reasonable financing terms from Birmingham Midshires for all 3 BTL's. The finances add up and are acceptable to me, are they a good mortgage provider? I've no experience of this mortgage sector so am keen to get a second opinion.

Thanks in advance

Mark Alexander

14:33 PM, 4th July 2015
About 3 years ago

Reply to the comment left by "Marc Morley-Freer" at "04/07/2015 - 14:27":

Yes they are an excellent mortgage provider
.

Marc MF

17:12 PM, 4th July 2015
About 3 years ago

Thanks for the quick response as always Mark, much appreciated

Renovate To let

19:54 PM, 4th July 2015
About 3 years ago

Sounds like your new lifestyle is imminent - well done...

In case you consider moving over to short lets (I certainly would run the numbers given the major airport is close), you should be aware that short lets are commercial, not residential use of the property and so need planning permission, the right mortgage (i.e. not BTL) and the right buildings and liability insurance (again, not BTL).

Otherwise you risk planning enforcement, lender difficulties and most importantly potential ruin if a client is injured or there is a fire and your insurer has a get-out.

Marc MF

7:58 AM, 5th July 2015
About 3 years ago

I am definitely going to let these out on a residential basis rather than short term. It seems the easier way to get myself into the property sector. I don't think I would be able to give the time that short term rentals require and they sound more complex.

Thanks to all the advice and comments so far

Mark Alexander

9:28 AM, 5th July 2015
About 3 years ago

Reply to the comment left by "Marc Morley-Freer" at "05/07/2015 - 07:58":

Hi Marc

Viewings and maintenance isn't going to be be important for you to outsource but I do strongly recommend that you outsource inventory, tenancy, referencing and purchase rent guarantee insurance.

Please see our letting section.
.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Change to Universal Credit rent arrears payments

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More