Should we buy a second house to rent out?

Bren_3

I would like some advice please...we own a house which is worth £450,000 and have a £130,000 mortgage. We are considering buying a second property for approx £170,000 to rent out for investments purposes. We have virtually no savings at present and therefore no cushion if things go wrong. Are we being foolish to consider buying a second property or is this the wise way to make money in the long term?

Thanks in advance for your help!

alanobrien

Long term property has been a good investment but that doesnt mean it will be in the future - although a lot of people are banking on it to stay that way!

You need some cash tucked away for emergency purposes various sources recommend 3 or 6 months living expenses as about right.

Personally i would not want a first let alone second mortgage without some fall back position. i.e. some cash in case of emergency. Good luck with your venture.

realwildone

I would like some advice please...we own a house which is worth £450,000 and have a £130,000 mortgage. We are considering buying a second property for approx £170,000 to rent out for investments purposes. We have virtually no savings at present and therefore no cushion if things go wrong. Are we being foolish to consider buying a second property or is this the wise way to make money in the long term?

Apart from the fact I find this morally wrong. When there is a correction you will get hit twice. I agree with the previous poster. If you got a bad tenant or voids, how will you manage.

chadfield

If everyone took the view that this was morally wrong, how would the non-house buying crowd ever be able to find a place to rent??

silvercar

We've done it but only to complete our house moving chain. You do need a cushion of money put buy to help you out. I needed a plumber in my new house the same day as my tenant phoned with a plumbing problem. Not only did I have to sort her problem out first but that left me waiting til the plumber had more time free for me!

gingin_2

chadfield wrote:

If everyone took the view that this was morally wrong, how would the non-house buying crowd ever be able to find a place to rent??

Houses might actually be more affordable, therefore those who HAVE to rent might actually be able to get on the housing ladder.

Not only have First time buyers been priced out of this ridiculous bubble, prices are being further increased by people withdrawing equity from their properties in order to buy more, thus increasing prices further.

silvercar

There are always people who want to rent, either because they keep moving around the country, they have temporary jobs, students, they are in receipt of benefits etc, or plainly they don't want the hassle of home ownership.

Having a healthy rental sector is valid otherwise rental prices get forced up because demand exceeds supply. This creates more social problems as where do people who can't afford to rent live?

lynzpower

Silvercar- careful careful, you might well be precipitating yet another "is renting dead money" discussion there.... run... run

cheefui

The house price couldn't go on just like that, probably adjustment in the near future. Since you have no savings cushion, I will wait a bit longer. Who knows you will grab a bargain when it crashes!

plane_boy2000

Just to add my point as a alandlord - I provide quality housing for people who do not want to or are able to buy / commit. I am sure as a whole the quality of rental propoerty available now is far better than 20 years ago. The employment market now is very fluid and people do move area and even country through work and tehse people sometimes want quality housing with little commitment. The house price boom has been as much by the number of people v number of propertys not just BTL

irnbru_2

Bren wrote:

we own a house which is worth £450,000

If its been valued at £450K then why not sell it and downsize.