Rent our flat to rent a house??

chatnoir

Hi all,

We had our flat valued yesterday by 3 agents and all came back with the sam price of 155k- 160k. We bought the flat in 2007 for 155k with a 100% mortgage and our balance on the mortgage is £150k, with no savings (as we have just got married) we are in no persition to move. But we are desperate to start a family and can't do so in our flat!Someone has suggested that we rent our flat out and then rent a house for us to start a family until the market moves (hopefully..upwards) or until we can save enough for a deposit.

Would this be a good idea? or would it be more difficult or more hassle the it seems?
Thanks

BitterAndTwisted

Apart from all of the possible disadvantages in becoming a landlord, it would entirely depend on whether you could afford all of the mortgage payments and service charges on the flat as well as any rent on the property you intend to occupy. Anything else would far too risky, especially once you are a family and have only one salary coming in. I would suggest that you should either start a family where you are or think about postponing parenthood until you've bought a property suitable to raise a family in.

adam1982

I know where you are coming from. We are in a similar situation with owning a small flat and wanting to start a family. The flat is worth less than i paid but put down a decent deposit so negative equity shouldnt be a problem (fingers crossed!)

Some people make it seem easy to rent out a property but i think if you have no financial buffer it can be risky. As Bitterandtwisted said you have to be sure you can cover all the payments. Also could you afford to cover the costs if the property was empty for a few months at a time or the tenants did a runner.

Need to carefully work out worst case scenarios. Not impossible at all but would not do it myself without the cash backup.

Hope this helps.

chatnoir

thanks for the advice guys

westlondonbuyer

I really sympathise with your predicament. The worry is that you're currently out of savings. Moving house is expensive, whether you're renting or buying. Being a landlord is expensive if you haven't allowed for the expenses that can inevitably arise. And you can live in a flat with a baby for a good while, especially whilst you can manage with a sling rather than a pram. If I were in your position, I'd try and build my savings back up and then consider the options once I had a bit of breathing room financially.

pinkshoes

Personally I think it's a bad idea, as becoming a landlord could potentially end up causing you more stress and hassle than you anticipate!

If I were you, I'd start trying for a baby anyway, as you never know if it's going to take 1 month or over 1 year to conceive. Babies don't require much space, so unless it's a studio apartment, you'll manage just fine in a flat until the baby is at least 1 year old!

You could put the flat on the market once the baby is born, and would have the advantage of selling it with no onward chain if you're moving into rented.

Don't forget that renting will require 1.5x rent as deposit, then 1 months rent up front, then agent fees etc... so you will need a fair amount of savings just to do that!!