Buying a House as an investment

Cerberuz

Im looking at buying a property as an investment, what I'd like some help and advice with is whether to buy the house outright or put down 50% and have a mortgage for the remaining 50%, the house will be rented out and I have a long-term tenant lined up.

Additionally the money to buy the property is coming from my personal injury trust fund, do I need to have the property deeds put in the name of my trust fund?

Thanks in advance

GDB2222

I assume that this will be an investment made by the fund, and so I guess the property will need to be registered (deeds are out, registration is in!) in the names of the trust fund trustees.

If you can get a mortgage in those circumstances, that will leave some more cash within the trust fund, which will have to be invested. Will the investment return earned on it be more or less than the interest rate you pay on the mortgage?

Cerberuz

Thanks for the reply, If I bought outright i'd only buy the one property, If I were to go the 50% deposit / 50% mortgage route i'd buy another property of the same value (or maybe 2 flats) again with the 50% deposit / 50% mortgage. I've got other investments planned, but they will be managed serperate from the property.

GDB2222

So, what rate of return do you expect on the flats?

Cerberuz

GDB2222 wrote: »

So, what rate of return do you expect on the flats?

Haven't gone into too much detail of buying two flats, purely because of the two options i'd prefer another house, the rental income on the house would be the same as the first house whch would be around £800 to £850 PCM, and the buy to let mortgage repayments would be around £650 to £670 a month.

GDB2222

So, the whole of the rent will be swallowed up in expenses and mortgage payments on those figures. Where do you expect your return to come from?

GDB2222

To get somewhere on this a bit faster, why don't you set out succinctly in one place all the details about your first proposed investment? You haven't said, for example, whether the btl mortgage payments are are interest only or capital and interest? Term of the mortgage? Fixed interest or variable? Is the house being let furnished or unfurnished? What sort of tenant? Agents' fees? How do you know it's a long term let, and so on and so on.

Cerberuz

Thanks for replying, Ive now decided that i'm going to buy the properties outright, and have today made an offer on the first one. I understand that its good practice to have your eggs in many baskets so i've also invested a few hundred k and I've also opened a few bank accounts which will have 85k in each.. Its costing a fortune in legal fees to have everything put in the name of my personal injury trust fund, but I cant avoid that really..

Thanks again..

jamarshad741

i am thankful to you that you share property problem from me .

IronWolf

GDB2222 wrote: »

So, the whole of the rent will be swallowed up in expenses and mortgage payments on those figures. Where do you expect your return to come from?

The return comes from increased equity on the house.

martindow

IronWolf wrote: »

The return comes from increased equity on the house.

Only if the value increases. The return is negative if the value drops.