Would you buy a house now as an investment?

dandy-candy

My siblings and I are due to come into a large inheritance and I asked my sister if she planned to use her share to pay off her mortgage which she is currently only paying the interest on. I was pretty surprised when she said no, she is going to buy a second house with a 60% deposit and get another mortgage for the rest and then rent it out. She reckons rentals are booming in NW London and as she will keep both houses for 20 years+ the value will only go up.
What do you think of buying a 2nd house of a rental investment at the moment? I haven't decided what to do with my share but I don't have a mortgage and banks are paying rubbish interest on savings. I just am very wary of the housing market!

Sibley

At the end of the day it's the safest bet for retirement.
I'd buy a house for sure. Renting is easy money if you get the right tenant.
Put 50% down and let the renter pay off the rest.Nice bit of money coming in every month.

Pimperne1

dandy-candy wrote: »

My siblings and I are due to come into a large inheritance and I asked my sister if she planned to use her share to pay off her mortgage which she is currently only paying the interest on. I was pretty surprised when she said no, she is going to buy a second house with a 60% deposit and get another mortgage for the rest and then rent it out. She reckons rentals are booming in NW London and as she will keep both houses for 20 years+ the value will only go up.
What do you think of buying a 2nd house of a rental investment at the moment? I haven't decided what to do with my share but I don't have a mortgage and banks are paying rubbish interest on savings. I just am very wary of the housing market!

Some of the answer depends upon how long she has had her current home for. If she has had it for a while then she will no doubt have a large amount of equity in there so expecting that to be paid off at the end of the term is probably very reasonable (ie if you bought the average house back in 1990 with a 10% deposit then you would only owe £6k in 4 years time on a house worth £165k). Even that takes into account a massive crash and long period of stagnation between then and now - some would argue two massive crashes. If she bought it in 2007 then that might be another matter. Therefore if she buys another one now on IO then she will only have 40% of the value at today's rate to pay off in 25 years time - who would bet against the comparison being similar or better than the 1990 purchase?

My honest opinion is that we might see small further falls, although I am guessing along with everyone else, but in the long term (we should ignore any reference to Japan here) houses really do only go up. My view is based on the fact that I believe we are through the worst of the economic news - how could it be worse than three years ago?

All investments can go up and down in value.

chucky

dandy-candy wrote: »

Would you buy a house now as an investment?

well if you can get it at a decent price, it provides a good profit for you, you have the time to devote to it and you have the cash then buying a house is a good investment as part of an investment portfolio.

don't forget that investing in property is always a gamble - the house always wins...

crash123

My honest opinion is that we might see small further falls, although I am guessing along with everyone else, but in the long term (we should ignore any reference to Japan here) houses really do only go up. My view is based on the fact that I believe we are through the worst of the economic news - how could it be worse than three years ago?

All investments can go up and down in value.[/QUOTE]

My honest opinion
WE HAVEN`T SEEN THE WORST YET.
Too much debt in the system.

PasturesNew

I'd not do that. I'd rather be mortgage free and sitting on a beach with a tomato sandwich, than owing money, having to work a job to ensure I can afford all the repayments ... and spending time up to my elbows in a toilet as it's blocked and I am trying to save a plumber's call out fees.

chucknorris

You didn't say what your age is, I think it's relevant because I have been a landlord for 20 years and I am now 53, I don't know if it's just me (it could well be) or whether I have justification in saying it's not something you want to be doing in your 60's and beyond.

For me it's been extremely profitable, that doesn't of course mean that it will also be over the next 20 years, but having the experience of the last 20 years, if I was in my 30's or early 40's I would do it all again (I think you need to think about at least being in for 15-20 years, it's not a short term thing).

Just remember one thing though, it’s a business not just an investment, you will have to deal with issues when you want to do other things, it’s not like something simpler like holding shares.

ninky_2

PasturesNew wrote: »

I'd not do that. I'd rather be mortgage free and sitting on a beach with a tomato sandwich, than owing money, having to work a job to ensure I can afford all the repayments ... and spending time up to my elbows in a toilet as it's blocked and I am trying to save a plumber's call out fees.

yes but PN how are you paying for the tomato sandwich or your current home? the best things in life may sometimes be free but the rest costs money. working hard to meet repayments on an investment now might mean a life of beaches and tomato sandwiches in the future.

macaque_2

crash123 wrote: »

how could it be worse than three years ago?
My honest opinion
WE HAVEN`T SEEN THE WORST YET.
Too much debt in the system.

You answered you'r own question.

Pupnik

If you can get a property for a very good price that you think is worth it, in a fairly good area and without a huge mortgage than yes, I'd say property is good- it may go down in value in the future, but it will probably go up again too eventually. Be smart about it and don't overspend.

abaxas

It depends on your view on investment and what relative too.

Take for example (in euro terms) UK house prices are at Quarter 3 2003.

You have made money, but also not.