Is Buy to Let in Glasgow worth it?
Keeping your existing place when you move or investing your money into property can be a sound investment. It is not without its negatives and it is important to consider these, alongside what it is you want to achieve.
In this blog, I will talk through what I learned over the years with my own mortgage investments.
I’ve used a standard 2 bed flat in G5, I paid £100,000 to buy and took a 25-year mortgage term.
Why invest?
Property is considered one of the safest investments in the UK. Traditionally property values tend to rise each year. In Glasgow this can be in the region of 3-4% a year, greater than majority of savings accounts!
If we take a conservative view of 2% annual property rise, a £100,000 property investment, would expect to return £164,060 after 25 years, not considering monthly rental income.
What do I want from it?
This is the most important question to consider in my opinion.
Short term Long term
Property Value £100,000 £100,000
Mortgage £75,000 £75,000
Mortgage payment £187.50 £355.66
Rental Income £700 £700
Mortgage Interest rate 3% 3%
Letting agent £70 £70
Sale Price £164,060 £164,060
Gross Income (25 years) £221,810 £246,380
Simplistically, long term achieves a greater value, this is due to reduction in interest paid due to reducing mortgage balance. Now, this doesn’t consider repairs, the property market, legislation changes or that on interest only, you realise the profit quicker which could allow you to buy another, therefore increasing your profit (maybe)!
What type of property?
If you ask most investors, they will tell you 2 bed flats are best but, in my experience, that might be too simplistic. If we measure lettings market, you find that 2 bed flats can have high turnovers which means regular cleans and re-marketing costs. I always found 3 bed semi-detached houses to offer good value. They often achieved family tenants who seen the house as their home, close to a good school, friends and family. They took pride in what was their home and were often great tenants for the long term.
Should I use a letting agent?
In my opinion, absolutely. A good letting agent will charge around 10% of rent and can be invaluable. They will have trades on hand, a database of tenants and a need to let if the contract is they only get paid from rent!
Financial Gearing
Now you’re exciting me! Financial gearing is the plan of spreading your money, buying more property, increasing your profit whilst reducing the risk. Almost seems too good to be true but is a great idea if you have a large chunk of money to invest, this is definitely a conversation we want to have!
Summary
As you can see, there are lots of ways to make it work for you. Hopefully this has helped give an insight into the things to consider.
If you would like to discuss this further, do not hesitate to get in touch.
Scott McKellar
Director
Only Mortgages
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