£38k savings - should I buy a flat or keep saving?

googler

If you get that one with the guide price £26,000 for that price, I'll..... be very surprised.

That one is a top floor flat as well. What's in the budget for roof repairs? It's being sold at auction, so unless you have free access to someone's spy satellite, as per 'Enemy of the State', you ain't gonna get a look at the roof before you buy it.....

mynameisdave

Well Google Earth has the most recent photo dated May 2009 so you could get a reasonable idea.

It does appear to be next to a main road and an infant school, above commercial property and has a pub on the corner of the block.

the_3rd_dynasty

CloudCuckooLand wrote: »

Prices fell by 8% in Q1 2010...
Doh. Not the best plan in the world.

Isn't -8% for Oct-Dec 2009 though? I think prices are on the rise now.

googler

the_3rd_dynasty wrote: »

I think prices are on the rise now.

.... the evidence for this is .... where?

the_3rd_dynasty

googler wrote: »

OK, so you buy for £25k, spend £5k on refurb so it 'owes' you £30k.

You take in £100 per mth rental, but have to deduct expenses from this - repairing things that tenants break, fixing appliance or heating breakdowns, maybe even common repairs, if these are tenement flats you're looking at....... so let's say you get £80 per mth for 3 years - that's £2,880 income.

What if the value of the property drops by more than £2,880 in this time? If you had to sell at that stage, that leaves you with zero profit, and you've actually lost money.

If these flats are selling for £25k now, what were they selling for 3 years ago?

Luckily if I bought it outright then it's unlikely I'd have to sell it until I felt the time was right to do so. I'd expect to get a lot more than £100 per month rental income though, that was in the worst case scenario.

googler

the_3rd_dynasty wrote: »

Isn't -8% for Oct-Dec 2009 though?

Whether it's -8% for last quarter of 2009, or first quarter 2010, does that really make a difference?

You're talking about taking in annual gross rental income of 9.6% of the purchase & refurb price, before expenses, when in one of the quarters of the last year, average prices in that county have dropped by 8.0% .......

the_3rd_dynasty

googler wrote: »

.... the evidence for this is .... where?

Within the PDF link in the previous post it details average prices for Jan - Mar 2010 and the same for 2009. Between 2009 and 2010 there has been a 3.3% increase in prices in this area from what I can see.

googler

the_3rd_dynasty wrote: »

Luckily if I bought it outright then it's unlikely I'd have to sell it until I felt the time was right to do so. I'd expect to get a lot more than £100 per month rental income though, that was in the worst case scenario.

You're still assuming that prices WILL recover, and you can sell for more than you paid, when 'the time is right' ........

the_3rd_dynasty

googler wrote: »

You're still assuming that prices WILL recover, and you can sell for more than you paid, when 'the time is right' ........

You're right that I am assuming this but let's say I kept it for two years. As long as the town centre and local infrastructure doesn't implode or anything disastrous like that, what are the chances that it will be worth less than what it is now? I would have thought very slim especially with all the talk of house prices having already bottomed out. Surely there is more chance of an increase in value in two years than a decrease?

millym

OP, I know Paisley well, and had a look on rightmove. The first flat that I would even consider looking at was in the East End and at a fixed price of £56,500. And I don't mean to buy, I mean as a possible rental, and even then, it would have to be about £300ish per month.

There is no way that you would be able to rent out a flat in the west end - not a nice place. I certainly wouldn't recommend living there. I would keep your money and buy somewhere nice. There are nice areas in Paisley - but not for £25k. Sorry.