Location location...

bodmil

I am keen to buy my first house this year. I work away from home and this year lived 'the dream' abroad so I'm not often in the UK however this is where I grew up so I want to buy there.
My salary is approx 32k and my budget is around 150k. I'm keen to buy something with rental potential as I'm quite likely to move abroad again in the near future, but it's probably important I would enjoy living their too in case things change. My ideal location is a nice town in the country with good links, but house prices are high and my budget wouldn't get me much, a 1 bed flat for example. However, in my university town, which is nice enough but not really where I would chose to live, with the same money I could buy a 4-6 bed house. I do like my uni town and as I have lived there a long time I feel quite at home with the student rental market. But is this a good idea?
For students I like the fact that they would be out every summer so if my plans change I can get my house back easily, and whilst it would be a bit of a dump on purchase, it perhaps represents a project to do up and sell on when the markets recover.
In this scenario however, I would HAVE to rent elsewhere (inevitable if I go abroad) or spend my time off at my parent's house.

:T Congrats if you're still with me having read all of that!

I really don't know what's best!

mwahaha

A few unstructured thoughts:
1) Don't bank on the markets 'recovering', most people aren't predicting large increases in price in real terms over the next few years.
2) You seem to be treating both options as an investment, albeit one you live in initially, this means the thing you should care about most is the yield. Probably this won't be very high on a ~150k one bed flat.
3) Since you're planning on living in it initially you'll be able to get a residential mortgage with their lower rates, but don't count on staying on this rate when you need permission to let. Check your sums on the much higher BTL type rates.
4) You'll need a good agent that you trust to manage the property while you're abroad, especially the 4-6 bed student house. Factor both the agency fees and possible voids between tenants in your calculations.
5) It's much easier to do the sums and get a good deal when you know the market and area. I'd be very, very wary about buying a one bed flat in an area you don't know as an investment.
6) You'll need enough savings left to act as a buffer in case you get problem tenants. Take a look over at the landlordzone.co.uk forums to see examples of what can go wrong and check you would have the stomach for it.

marcg

Also consider 3 bed terraced houses and having a couple of lodgers - simpler for tax and mortgage purposes, simpler than becoming a proper landlord, simpler to come and go to suit your lifestyle.

I'd recommend Bristol but you'll struggle at £150k - you need £20k on top of that to get near the fashionable areas.

Fire_Fox

bodmil wrote: »

For students I like the fact that they would be out every summer so if my plans change I can get my house back easily, and whilst it would be a bit of a dump on purchase, it perhaps represents a project to do up and sell on when the markets recover.
In this scenario however, I would HAVE to rent elsewhere (inevitable if I go abroad) or spend my time off at my parent's house.

I don't understand this: once students have signed an AST they have the same rights as any other sort of tenant. Just because they aren't resident in the property over the summer, if they have a contract and they are paying rent/ a retainer you can't simply move back in! In many university towns students sign up for a rental in the Spring, whereas a working tenant often only signs up a few weeks before the tenancy starts which would make it easier to change your plans at short notice. Or am I missing something?

marcg

Fire_Fox wrote: »

I don't understand this: once students have signed an AST they have the same rights as any other sort of tenant. Just because they aren't resident in the property over the summer, if they have a contract and they are paying rent/ a retainer you can't simply move back in! In many university towns students sign up for a rental in the Spring, whereas a working tenant often only signs up a few weeks before the tenancy starts which would make it easier to change your plans at short notice. Or am I missing something?

Yes, some students sign up for only 40 weeks a year.

bodmil

marcg wrote: »

Also consider 3 bed terraced houses and having a couple of lodgers - simpler for tax and mortgage purposes, simpler than becoming a proper landlord, simpler to come and go to suit your lifestyle.

I'd recommend Bristol but you'll struggle at £150k - you need £20k on top of that to get near the fashionable areas.

My intital plan was to get a 2 bed flat in Bath and let out the second room and come and go for work. But realistically I'd be absent a lot more be there and if I had a property that was let-able as a whole it would encourage me to go back abroad anyway. :cool: So as the 2 bed seems out of reach a 4-6 bed seems like a good back up plan. I could also get a really nice 2 bed flat in the uni town but I'm not sold on living there full time myself, even if I could get one for well under budget.

Fire Fox, yes true, students tend to sign up in February for the folowing year. But then I should get my house back for the summer for essential works as marcg says. And as I go abroad for the winters it could work out very nicely. Also, student contracts are for the year and usually ave parents and garanutors (sp?!) so they won't leave me without rent, right?

Thanks mwahaha, some very good points. I will investigate agents a bit, particularly as I'm unlikely to be able to interview tennants and weed out the bad ones.... ie groups of boys!