First time buyer, buying to rent....

Iamdave

I'm aware that I cannot rent out the property immiediately but i'll explain my situation.

Was looking to purchase a house this time next year approx value £150k with a 35% deposit. However have had an email off the estate agents for a house reduced in price by £30k (£115 down to £85k) Reason given that the seller has found a house that is a reposession that they want to buy and need to sell quickly)

It is not a house I would have normally bought to live in myself although it is perfectly fit for the purpose,

My questions are thus though:

* am i taking a risk of not being to sell the property on within the next 1 -2 years or will the benefit of perhaps getting the original asking price outweigh that (i.e. even if i sold on for £105k i'd still make a profit)

* When looking to rent out how long would i have to wait due to me being a 1st time buyer?

* The G/F is on the waiting list for council accomodation, could i offer the house up for this service and would i have a say in who i wanted to live in the property? (i.e. could i give priority to the G.F and her little boy whilst covering the rent with her housing benefit)?

DannyboyMidlands

Why would you want to sell within 1-2 years? With the fees involved I doubt you'd get your money back even if prices were static. But with prices currently falling I think it's highly unlikely.

Iamdave

Well I wouldn't have to sell within 1 or 2 years but it'd mean staying at home with the parents for a few more years, Just trying to weigh up the pro's and cons of the situation. I guess a lot depends on whether I could sell the property on for the original asking price within the forseeable future?

I suppose if the renters market is strong enough I could rent the property out until I find a buy.

DannyboyMidlands

Personally, I'd stick the deposit in the bank until I was ready to buy a place to live in.

hazyjo

Are you planning on buying a house with a view to selling in a couple of years to make a profit? Or do you think the rental income is going to be far more than your mortgage and you'll save from that? Just a bit confused...

Who's to say prices aren't going to drop 20% in two years. You just don't know. At the moment, they're still heading downwards (generally) and the days of buying something to sell in a couple of years to make money are long gone (a good thing IMO!).

Jx

Iamdave

My main thought is 'is a drop in price of £30k to good to pass up?'

Obviously the seller is desperate to sell up as they have a property they want to buy (but must do so quickly as it is a reposession and the vendor will sell to the easiest sufficient offer)

This time last week the house was on the market for £115k so i'm unlikely to lose out on an £85k investment with a drop in house prices.

BitterAndTwisted

I cannot conceive of why someone who lives at home with their parents would consider buying any property other than for themselves to live in. Just because it's been propped in price does not automatically mean that it's good value. I can understand why you'd be tempted if you were planning to live in it, but otherwise not. Please do not act in haste! You need to do some very thorough research into rental-values in the neighborhood as well as the tax-implications and a LOT of research into what it means when you set up in business as a landlord.

Niv

Your assuming the reason given for the price drop is real. It could be that the house has a problem (sorry to be a negative).

Niv

DannyboyMidlands

The reason it isn't selling for £115k is because it isn't worth £115k. Just beacaue the asking price is cheaper than yesterday doesn't make it a bargain.

I have my eye on a place, original asking price £260k, currently £210k. If I were to buy it (which I'm not) that doesn't mean I've saved £50k and automatically insulated myself from house price falls. It just means it was over-priced to begin with.

hazyjo

Agree with above - it was probably just overpriced to begin with.

The house we bought was initially on at £500k. Got it for £435k. Doesn't mean we could guarantee a profit now or in one or two years if the market continues to drop.

A property is only worth what someone will pay for it. Nobody paid the full whack, so it wasn't worth that.

Jx

Iamdave

Thanks for the advice guys,

Obviously I am going to weigh up all the pro's and cons and make an educated decision. Going to view the house on monday so will have a better idea then.

In regards to there being something wrong with the house, isn't the seller legally obligated to declare any problems and aren't surveys etc designed to find faults?

As i've said the house would probably suit me to live in, it's 3 bedroom, looks as though little work or modernisation is required. It's just the orignal plan was to save up a 35%-ish deposit up and start looking at houses arund the £150k (max) mark this time next year. I could theoretically buy this house live in it for 5 years and then upgrade.