An idea - buy a house for myself and other grads

Lokolo

OK so I had a thought earlier.

Currently I am on placement with a number of students. I plan to go back to the company when I graduate, but I have a year back at uni.

Anyway, I was thinking if I could become a landlord if (when ) I go back. I could have a £20k deposit and was thinking of buying a 3 bedroom house, the area would mean the price would range from £150-£175k.

I was thinking that I could charge £400x2 rent which would include all bills (CT, Water, Gas, Elec, Upkeep - gardening) and such.

I could put around £600-£1k a month of my own earnings into the house.

I suspect (using mortgage calculators) I would be getting a mortgage of around £800 a month at the current rate (fixed 2 years). I also looked up I can not pay tax on the majority of the rent charged by including CT, Bills, 10% furnishing etc. so I think I would only pay 20% to be around £100 a month.

With that in mind, all my money would have to go to pay bills + insurance + upkeep.

I know I would have to research a lot more, but I don't want to bother if I am thinking too optimistic that this could work......

Thoughts?

(Theres a sticky about renting, but not about being a LL.... which I wouldn't mind seeing if there was one!)

neverdespairgirl

Is your income high enouhg to get that level of mortgage?

Lokolo

Ah boo. Thats put a dent in it.

HSBC would only allow me 70% LTV -_- I'd need 85%. Balls.

Haven't look at others yet(!) too tired xD

PasturesNew

Others won't be much different. Truth be told, you've probably not got enough ticks in the boxes for most lenders. There's a mortgages board on this site, where mortgage advisors hang out .... you could pop there and see how hard they laugh, but realistically, the bottom line is probably a big fat "no", for many reasons.

You do need an income for a mortgage ... being the biggest one.

Thinking you can get 2 lodgers that'll stay, thinking you can ask £X .... are different from the reality. e.g. if you get your timing wrong then everybody's already tied into somewhere else because they didn't think you'd get it in time. Mortgage lenders won't like to see a student loan and two student lodgers as the only source of income, even if you had a bigger deposit.

jockosjungle

Also do you want to live like a student your whole life? Sharing a house and bathroom, might be fun when you're 20 but eventually you'll want to grow up

R

Lokolo

jockosjungle wrote: »

Also do you want to live like a student your whole life? Sharing a house and bathroom, might be fun when you're 20 but eventually you'll want to grow up

R

Well I'm not going to be able to afford somewhere on my own so I'm going to be living with others anyway, so why not try and profit from it?

Rent for a group house would be around £300-£350 without bills, on my own, say in a 1 bedroom flat, would be around £600 in rent alone. So it wouldn't be economical. Although I agree, ideally I wouldn't be sharing, but that's not really an option.

Lokolo

PasturesNew wrote: »

Others won't be much different. Truth be told, you've probably not got enough ticks in the boxes for most lenders. There's a mortgages board on this site, where mortgage advisors hang out .... you could pop there and see how hard they laugh, but realistically, the bottom line is probably a big fat "no", for many reasons.

You do need an income for a mortgage ... being the biggest one.

Thinking you can get 2 lodgers that'll stay, thinking you can ask £X .... are different from the reality. e.g. if you get your timing wrong then everybody's already tied into somewhere else because they didn't think you'd get it in time. Mortgage lenders won't like to see a student loan and two student lodgers as the only source of income, even if you had a bigger deposit.

This is for when we graduate, not when we are students. We would all be on £27k a year. I have lived in the area already so know the rent prices and house prices, wheres good to live, wheres not good to live.

I would be able to get people to live there at those rates, no worrying about that.

mynameisdave

I think that the £7,600 you would receive in rent is more than the tax free allowance you get under rent-a-room relief for lodgers so there may be tax implications to consider as well.

I am sure someone more knowledgable can advise you on that.

Running_Horse

Lokolo wrote: »

Well I'm not going to be able to afford somewhere on my own so I'm going to be living with others anyway, so why not try and profit from it?

Because you're young and should be having fun, not aspiring to be an imitation Kirstie.

There will be plenty of time for mortgages and the hassle of being a landlord when you get older.

Lokolo

mynameisdave wrote: »

I think that the £7,600 you would receive in rent is more than the tax free allowance you get under rent-a-room relief for lodgers so there may be tax implications to consider as well.

I am sure someone more knowledgable can advise you on that.

Yep looked that up, been looking at the allowable expenses and that would cut the income tax down by quite a lot. The only one I wasn't sure about was bills, whether it would be 100% I could use, or 2/3rds. But as I say, I wasn't going to explore the definates til I heard others opinion

Lokolo

Running_Horse wrote: »

Because you're young and should be having fun, not aspiring to be an imitation Kirstie.

There will be plenty of time for mortgages and the hassle of being a landlord when you get older.

Who?

And yeh I agree it would be a little more effort, but I don't particularly want to be paying out rent of £450 a month and get nothing in return by renting for 5 years or however long.