My first Buy to Let – Is the estate agent being fair on price?

It is all relative. I paid £345K for my BTL flat in London in 2005. The rent currently is £2250 per month, but has been higher. (Last spring was a difficult time as there were many flats on the lettings market in my area.) The flat was new when I bought it, and has been well-maintained, so not a great deal of hassle with it.

Hi All

I can not see how anyone can make a profit on by to let when the purchase price is so high. I understand you get a higher rent but for that amount of money I bought quite a few properties not in the best areas but areas of high rental demand. And get a great return every month.

if your tenant does not pay rent or a void the cost would be quite high each month If one or two of my tenants don't pay I can cover this by rent from other houses.

I would like to know from others how you can make a profit on a house you buy so high.

I know you may get more capital growth. but less rental each year.

Where I get more rental and still get capital growth. I think the way I am doing is the best or am I missing a trick.

I have never had tenants who have not paid their rent. I only accept professional tenants, who pass referencing for rental warranty. (I have always paid for a rental warranty, although I have never needed to claim.) The only void period in the past 9 years was 6 days last spring, and only because a great deal of time was wasted on prospective tenants, one of whom failed referencing. (The letting agent had not bothered to check their references properly.) I do actually currently clear about £1250 pm before tax. The current market value of the 2-bedroom flat is £700K. It is very difficult to find very cheap BTL properties in good areas of London. In cheaper areas it would make sense to buy several smaller properties. I am not a full-time Landlord, so do not have the time or the energy to manage several properties. It would have made sense to buy a couple of more flats a few years ago, but at the moment London is too expensive - you need a large deposit and the yield is too low.

First Thanks to everyone who took time to read my query and responded.

Since I wrote here there has been some progress on that topic. So when the agent asked me for AIP (on Thursday morning), and then on Thursday evening he called me to say we have forwarded your offer. Now on Friday afternoon I got a call saying seller has to attend a funeral so he will get back to me on Monday which I believe wasnt right as the seller might be wanting to see offers out of the viewings booked for weekend.

Anyways, I will now see what he has to say on Monday. But to answer couple of questions which were asked in the posts:

1) Are you buying for rental or capital gain -- I am mainly buying it for my daughter so capital gain is what is the priority, however I also want the rent at the same time to cover the costs of the property.
2) Parking: What i have noticed on zoopla, mainly all 2 bed Ground floor flats were advertised on marketed and sold without parking. I believe parking might be for First floor owners.
3) Area stats: All the flats in this block were sold at or around 250 mark and in some cases I have seen around 280 as well but they were sold 1 year ago and also they were on higher floors with parking. For some reason zoopla estimate is 300 for the flat. there are lot of developments coming in the area, new flat which are marked for 290 for 1 bed. Now there are 2 things 1) they are new and little more closer to the station so makes sense.
2) They are big in size as well.
My budget will float around 270-280 , so should I wait for anything to come up in this range, or go for new developments but that will give me 1 bed flat rent which might not be higher than 1100 as in any case 2 bed flat will attract more. or should i go for this flat.

Given the fact capital gain is in my mind I am just worried that flat without allocated parking might not give me issues when I plan to sell. Although there is parking offstreet on permit which for rentals should not be an issue.

Yes the Estate Agent is definitely playing you on price. Walk away and they'll soon come running. I've done this many times. This is how I've built my portfolio.
Here's how it went last time I bought a property:
Asking price £124,950.
Sat Morning. Me: I'll offer £110k. Agent: They won't accept less than £120k.
Me: Ok no problem I'll leave it.
Less than an hour later agent rings back. 'They'll consider £115k if you can complete within 4 weeks.'
Me: I never promised that. My offer stands at £110k.
Agent: I'll see what I can do for you.
Within a week I had bought the property for £110k on MY terms. The agent knew that was all they were getting so that was it.
Stick to your guns and you'll get what you want in the end.

I think the agent is squeezing you too. Don't know which area you are in, but if similar properties sold for £250k only 8 months ago then a £25k jump in price seems pretty steep to me, especially for ground floor flat with no parking. I wouldn't budge on price - but of course only if you are prepared to lose the property if there is indeed someone prepared to go that high.
Parking would be a deal breaker for me, I think having a dedicated space could only mean easier to rent and/or eventually sell especially if you are aiming at families. But that is just me and might be very different in your area.

I am no expert, just commenting as your situation seems similar to where I was a year ago. We also wanted a property to rent out that would ultimately be for my daughter, but it had to be desirable as a rental too.

In the end this is what we got: One bed flat, rent is £900 (bought with existing tenant), service charge £1200 pa, about 7 minute walk to Orpington station (good for London commute), secure parking space, 5 year old building so relatively new, high spec, top floor (3rd floor) with nice view, purchase price £197 000, good capital growth.

Good luck!