Buying a second property a wise investment for your children?

jamesd

Nice_guy wrote: »

A win win situation, I have tennants I can trust and their quality if life improves too.

What happens when you fire one of them? When they leave your employment voluntarily? What happens if you're sick and unable to look after the property and they resent it at work? Or if they just link housing and work together in their minds because of the link you set up and resent one or the other. I can see why it's attractive to you as a landlord but you're not apparently giving enough weight to the negatives.

Look how many people have said here that they think it's a good idea. You should be noticing that lack. Even though you don't like it. Something like advertising the places for rent first through work would give you the same major benefits without the complications.

Nice_guy wrote: »

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.

Wrong move. Your cheapest available financing for the BTL is almost certainly going to be to increase the mortgage on your own property, lend that capital to your BTL business and use it to buy the property. The interest paid on the mortgage is still a tax deductible expense for the BTL business but it'll be cheaper than a BTL mortgage. Note that any capital repayments are not a tax deductible expense for the BTL business.

Because of that tax benefit you don't usually want to clear the debt on a BTL property. It ends up better to take the surplus income, if any, as income and leave the debt around. Otherwise any capital payment you make reduces the debt and increases the tax owed. If you want to build up equity that income can be invested and the investments thought of as the equity.

If you're a sole trader the lend to the BTL business part is just getting the mortgage money and placing it into the current account set up for the BTL property and recording that fact in the books of the business as a capital transfer.

Be sure to make a PPR election/nomination to HMRC if this is the first time you own two properties. Losing three or more years of CGT allowance as a private residence would be a bad thing. Moving into the BTL for a week to renovate the place could suffice as a period of residence for HMRC purposes, if so be sure to use the address in the correspondence with them so that they see that documentary evidence that you were living there.

pramsay13

Hi nice_guy, I want to know how you're mortgage free at 28, that's impressive enough.
My wife and I have 2 buy to let properties. They were our own flats before we got married and bought a house together, so we didn't set out to be landlords but it made sense at the time.
One is in a great student area, so rents every year without fail, and would rent 10 times over. The other one is further out of the city, but on good transport links so gets young couples for longer rent periods, although can be slow to rent.
I think that long term property is very safe, and if your location is right and can rent it easily enough then you'll be fine.
And as a long term investment for a child I think that's great as well.
We have an IFA who deals with our mortgages, insurance etc so as long as he / she is impartial they will still be getting paid from these products, so definitely a good place to start.
Not sure about some of your figures though, last year on student flat, we brought in 10188 in income, spent 8550 on mortgage costs, and 2435 on other costs, so a net loss of 700 for the year so not the money spinner folks think, but the mortgage is repayment so getting capital paid off and we're in it for the long term.
PM me if I can give you any other specifics.
Cheers

greenface

jamesd wrote: »

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Wrong move. Your cheapest available financing for the BTL is almost certainly going to be to increase the mortgage on your own property, lend that capital to your BTL business and use it to buy the property. The interest paid on the mortgage is still a tax deductible expense for the BTL business but it'll be cheaper than a BTL mortgage. Note that any capital repayments are not a tax deductible expense for the BTL business.

Because of that tax benefit you don't usually want to clear the debt on a BTL property. It ends up better to take the surplus income, if any, as income and leave the debt around. Otherwise any capital payment you make reduces the debt and increases the tax owed. If you want to build up equity that income can be invested and the investments thought of as the equity.

If you're a sole trader the lend to the BTL business part is just getting the mortgage money and placing it into the current account set up for the BTL property and recording that fact in the books of the business as a capital transfer.

Be sure to make a PPR election/nomination to HMRC if this is the first time you own two properties. Losing three or more years of CGT allowance as a private residence would be a bad thing. Moving into the BTL for a week to renovate the place could suffice as a period of residence for HMRC purposes, if so be sure to use the address in the correspondence with them so that they see that documentary evidence that you were living there.

Will this fit in your signature because that is top notch advice that NICE-GUY should stick £2 in the next charity box he sees for.