In Barnsley, you can get a very decent house for £150000. If you have a 10% deposit, i.e. £15000, your mortgage repayment at, say, 3%, would be around £640 a month. Much better than renting.
The couple that rent out the BTL that we own, pay £675 a month for a 3 bed ex-council house in a nice part of Crosby -about 2 miles from the beach and 2 miles from the M57/M58 close to good schools both primary and secondary.
It's worth about £150K. Why don't they buy?
a) They haven't been together long.
b) He has a child (a teenager) with his ex-wife and pays maintenance.
c) They haven't yet saved a deposit
The interesting thing about your post is that we are paying exactly £640 a month - £180 interest and the rest off the debt, which should pay off on my 64th Birthday (plus or minus a year). This means that for the next 13 years we are actually have a negative cash flow, because tax and insurance take it over £675 a month.
Looking at the house next door but one as a second BTL tomorrow. Again an Ex-Council 3 bed.
My Current spreadsheet says that the Investment we are going to make should result in a 10% return on OUR investment. It should pay off in 17 years, but what about the risks ? Interest rate will be fixed for 5 years and we don't use a letting agent, but do have professional vetting. Rents might go down, because brexit, but none of the people who inquired about the first house were anything other than UK citizens, and we could have rented it out to 10 people. I think the rent is a little low, but hey...
The idea is that if and when we pay off both loans then at current rents that's worth £1400 a month.
Which as pensioners, will be a bonus.
Interestingly my daughter and her boyfriend have just applied to rent a flat next to the Anglican Cathedral (technically Toxteth...as in Toxic DEATH) £650 a month, because she has the deposit for a property, he doesn't, and she doesn't know where she will be working in 10 months time (Pre-reg pharmacist, could end up anywhere)