Buying a second property a wise investment for your children?

Ifts

Nice_guy - Congratulations on the birth of your daughter.

IMO I would say buying a 2nd property as a BTL is a viable investment in your position. Mainly because you will be mortgage free next year so if you do have a void in rental payments you will be able to cover the mortgage repayments yourself, easier to buy a 2nd property once you have one that is paid off.

Low levels of social housing available will mean there is a place for private landlords, not everyone is in a position to buy their own house, some people have sold their house and are living in rented accommodation waiting to see which way prices will go before they commit again. Others don't want the responsibility of owning their own property and are happy renting (like many on the continent).

Have a look at the type of the property you are interested in and find out what sort of price range it is in. Do some research and determine possible rental yield for the type of property you want to buy. Work out what type of mortgage you will be best going for i.e. repayment or interest only and what the monthly repayments will be. The more of a deposit you put down the better rate you will get on your mortgage to keep you monthly repayments lower so maybe wait and save up more of a deposit.


Keeping your monthly repayments low is important so you have more of a chance of breaking even with the rent you receive especially on a repayment mortgage if it is rented single occupancy. If you go down the multi occupancy route you can earn more but it will involve more effort/time on your behalf finding tenants and collecting rent, but by earning more you can make capital repayments of your mortgage (as long as you don't get penalised for making over repayments).

Do your research and work out the figures involved, which will help you decide if and when to go for a BLT.
Short term price movements is not a problem if you are planning on owning this property for 20 years.
You are young enough to diversify with other investments in the future even after you go through with this.
All investments have a risk attached to them, so good luck in what ever you decide to do.

Nice_guy

jon3001 wrote: »

A bet you would win. I wouldn't let them take the p1ss though. Plenty of other places to take my skills.

Letting to your staff is one thing. But what you propose in terms of controlling their personal finances and employment contract to suit your personal investment goals is solely to your benefit and not theirs. Why would they rationally go for it unless they were being pressured?

Presumably if you rent to someone who is not in your employ then you don't get to mess with their pay. Your employees are not on an equal footing compared to other potential tenants. They get pressured into extra concessions if they wish to rent. Maybe they'll agree anyway but that doesn't mean there won't be problems later.

Jon3001 - you have completely got the wrong end of the stick, but please do feel free to carry on with your crusade. For the second time of asking please can we keep this thread on topic? Surely not too difficult to do?

Again for the second time too, feel free to PM me, instead of clogging this thread up with information you have taken out of context and that has no relevancy to the subject of this thread.

Nice_guy

Ifts wrote: »

You are young enough to diversify with other investments in the future even after you go through with this.
All investments have a risk attached to them, so good luck in what ever you decide to do.

Thanks for the advice Ifts, all very good stuff. I think you made the point about all eggs in one basket nicely too. This will be by no means my only investment. I have been focused in getting the mortgage cleared on our main property in order to allow me to invest in the future with a certain safety net of owning our property outright.

cashbackproblems

A buy to let is a great long term investment and by the time hes 21yrs old it'll have been paid off and providing an income, plus if he wants any money for uni etc he can release the equity.

Ignore the ppl who are trying to put you off they are simply jealous you are able to to this and are those kinds of ppl who never make money apart frm there few pounds a month from a regular saver. Its important you find something rentable and location is good.

avalanche_3

You need to buy a property where you can get at least a 7% rental yeild to cover mortgage and other costs.

jon3001

Nice_guy wrote: »

Jon3001 - you have completely got the wrong end of the stick, but please do feel free to carry on with your crusade. For the second time of asking please can we keep this thread on topic? Surely not too difficult to do?

Again for the second time too, feel free to PM me, instead of clogging this thread up with information you have taken out of context and that has no relevancy to the subject of this thread.

The topic is about the wisdom of buying a property investment. This is predicated on the rental income which you have stipulated as secure because you expect to rent to an employee who's finances you expect to control.

I'm disputing the basis for this arrangement as being workable which consequently affects the basis of your investment. Just because you keep dodging the issue with your patronising and dismissive remarks and assertions that it's off topic and irrelevant doesn't mean that is the case.

I've nothing to PM you and will continue to add to this thread as I see appropriate. I trust that addresses the questions you have directed at me.

Primrose

You say "My partner and I". I'm hoping you haven't overlooked even more of a priority in looking after the well being of your baby daughter. By this I'm assuming you're not married, so have you both made a Will with named guardians for her if something were to happen to you both? Also if you're not married there could be inheritance tax implications in the event of one of you dying and owning substantial assets. Best to get the fundamentals sorted out first before thinking of the strategic long term!

Jonbvn

cashbackproblems wrote: »

Ignore the ppl who are trying to put you off they are simply jealous you are able to to this and are those kinds of ppl who never make money apart frm there few pounds a month from a regular saver. Its important you find something rentable and location is good.

Have you not noticed that we are just coming out of the worst recession since WWII?????

Nobody is trying to put the OP off anything. He asked for comments on what he is proposing, which he is getting. As with all comments there are pros and cons.

Whether the OP decides to consider any comments or not is is solely up to him.

Wobblydeb

Nice_guy wrote: »

I'm not sure I follow on some points regarding an 'all eggs in one basket approach' and suggestions that I should be investing in a more diverse investment that would allow more flexibility.

As far as having all eggs in one basket goes, I'm not sure this will be the case, as we will be mortgage free so if the investment has quiet periods we can always route funds to the second property if needed. I would think after a year or so of setting the second property up we hopefully will be in the position again to invest into another area.

Not sure if anyone else has yet explained the eggs in one basket idea, but here goes.

Buying a single property means all of your risk is in that single building. If the street or area declines then you may lose a massive amount. While it might seem unlikely, here's a few examples:
- What if subsidence starts occuring in that area?
- What if unscrupulous investors start buying and boarding up / renting to idiots to drive down the prices in that street? I have seen it happen - they do it to drive down prices so low that they can snap up lots more at low prices, waiting till they own most of the street before renovating the houses and moving in better tenants.
- What if there is overdevelopment near by, and builders drop prices so low that to compete you have to take a loss? (possibly on both rental income AND value of the property).
- If you buy a student rental what happens if the market dries up with rising fees and more students living at home?

Your eggs are in a single basket even if you own lots of properties in different places - as every landlord has found out in the last 2 years. Hence why people are suggesting diversification. As property prices have continued to drop, commodities (gold!) and share values have risen. Two alternative investments for your hard earned cash....

greenface

OP hasnt stated whats in his basket already he may have stocks, shares ,savings ,pensions ,gold ( he will feel he owns a large part of mothercare in the next year or so) 20+ years is a very long time to think about problems with property. You say student let whose to say its not. but in 10 years time a huge University or Accrington Stanleys new ground ready for the 2022 new European Premire League is built in the next street we cannot predict some things that far ahead.
Some great pros and cons here for OP and his family to take in. but a House today for your childrens future isnt a daft idea IMO. I could afford a mortgage aged 18 with my future wife (25 years ago) but my 21 yo who earns well hasnt a chance raising a deposit twice the amount as my first house cost.