new buyer for investment

jonbesco

Hello everyone

Me an my girlfriend are both very lucky in the sense that we have inherited money about 40k each in savings we are looking to go travelling for a year, but had an idea to buy a house and rent it out when we are gone

we both live with parents now and should anything need to be done can rely on one of our parents being able to help out and pass info on to us when we are abroad

is it a good idea to put say 20k each into getting a property then renting it out while we are away, as the prices have come down a bit in the recession we are thinking it is a smart time to buy. Also as we are chain free we are both hoping we can get some money off the asking price

Any advice or ideas for a better investment would be very much appreciated

thanks in advance
Jonny

G_M

It's an awful lot to ask of your parents! There are huge amounts of legislation to be complied with even if you are here. If you're not, there are tax considerations too (see recent thread).

If they have lots of time, and experience, and are willing then it's feasible.

Investment-wise, you need some good budget planning.
Cost of property
Mortgage level, and monthly repayments: both initial and if rates rise
Expected rental income (10 months pa max)
Overheads (too many to list)
Tax
etc etc

get a good book like Tessa Shepperson's on renting and do some research.

jonbesco

thanks a lot we would set up everything before we went like securing rent for a year and other things

as an investment for the money do you think this is the best thing to do

jonewer

jonbesco wrote: »

as an investment for the money do you think this is the best thing to do

No.
.

Theogirl_2

Don't underestimate the amount of work involved and the costs you could incur. For one year, you would do extremely well to break even.

You will need a BTL mortgage and the relevant contracts, safety checks, deposit schemes. You could use an agent to sort it for you, but they will take 10% of the rental + other costs.

Honestly I don't think it's worth the bother. Put your money in a 1 year bond for the year and make a profit

G_M

like securing rent for a year

Forgive my ignorance but how do you do that?

12 month contract. Tick. Tenants credit vetted. Tick.

You still can't guarantee it. Things go wrong. Most sensible LLs budget on getting 10 months rent a year.

And of course you are familiar with the tax laws regarding overseas landlords?
From a practical point of view I'm dubious you have enough knowledge yet to be able to evaluate what's involved and what you'll have to do to "set up everything before we went " and what your parents would have to do (eg if the tenants stop paying rent).

Investment-wise I'd be interested to see your budget/business plan. Without that, it's hard to advise you if it's a a wise investment.

I'd say, though, that a key question is whether this is purely an investment plan for your £40K, or whether you see this as a future home for yourselves and you are trying to buy into the housing market at what you perseive to be a good time and use rental income to keep it ticking over till you come home?

LoopyLuna_2

Renting a property isn't as easy as it sounds, and honestly it depends on what you will be ding when you come home. A property you may be able to rent easily may not be suitable for your needs when you come back home, ie tenants have trashed the house, location is poor as right next to a train station, good for tenant bad for resale ext.
Personally I wouldn't risk it untill I got financial advice and gain more info on the renting market. Many other people may be having the same ideas as you, ie buy properties when they are cheap..
Hope it goes well for you, whatever you decide