Selling Up, wise move?

jetsetwilly_2

Bought a flat (with mortgage) 5 yrs ago for 47k

Value today is about 80k

I want to move to a bigger place, but looking at 150k for a 2 bed in nice area in this neck of the woods.

My girlfriends dad says he is willing to rent us his 2 bed house (worth 550 pcm) for 400 pcm.

Its a great deal, but i am not 100% sure about taking a step off the ladder.

So,,,,

What would you do

And if you would sell then rent, how would you invest the 35-40k profit (Savings, Foreign Property etc?)

brasso

Personally, I would seriously think about accepting the offer if that rent is cheap for your area.

Much has been written recently about what may happen to the property market this year. No one knows for sure, but I do think that there is likely to be, at best, stagnation, and at worst a significant drop. None of us knows when it will happen or by how much but there is somehting to be said for "STR" in your situation -- selling to rent. This is only worth doing if you're careful to invest the money and continue to save to keep your money topped up. The theory is that your £150K next property will drop in price along with the flat you sold, with your savings as the sizeable deposit.

That's the theory. It could work brilliantly, or it could all go wrong, with HPI increasing yet further, and/or your savings diminishing through bad/unlucky investments. We really don't know.

If you are uncertain it might be safer to stay put, but if you're determined enough, and have the financial self-discipline and patience to follow through on the plan and to keep saving, then definitely consider it.

I would be keen for your GF's dad to put something in writing about the tenancy. Supposing he changes his mind, or you split with his daughter?

One other thing -- I wouldn't invest in foreign property. Personally I would buy a range of funds (including having £7K in an equity ISA) but this strategy wouldn't suit everybody as you could lose some of your money. If you ant a boring but safe investment, go for a high interest bank account. This is just what I would do. It may not be good advice for you. Depends on your attitude to risk.

suitusir

Hi,

Personally I would not sell up, rent the flat out, of rough figures you would probably get £400 a month rent for your flat, so that would cover you new rental. You then only got your mortgage to pay and I would suspect its around £300 mark, but you already paying that now, so you just carry on.

Upside is your flat is going up in value.

Upside if you eevr want to buy a bigger house you can remortagege you flat for more and the rent with probably still cover the extra loot borrowed.

I never sell a house, does not make sense.

I hope that helps,

Kevin

suitusir

Hi forgot to mention if you buy another house, your flat would be an investment property and if you sell you would be liable to capital gains tax on profit, but if you remortage it while its an investment property its TAX FREE.

You can take out the extra mortgage fee and its tax free to blow/spend/buy another house.

House prices may go down but supply and demand will allways bring them up.

The way I look at it, we live on an island, its getting no bigger, theres not enough room to build more house, the population goes up, which means more people looking for houses which means higher prices.

I hope that helps,

Keep smiling

Kevin

Alan_M_2

Are you aware that only 5% of the land mass of this Island is developed?

Zammo

Don't gamble with your home.

cwcw

Alan_M wrote:

Are you aware that only 5% of the land mass of this Island is developed?

Really? I thought it would be more than that. What is your source?

Lets hope we never have to start building cities in the remaining countryside areas.

epz_2

not to put a downer on it but if you split up with your girlfriend not only will you have a very hostile land lord but potentially no home to go back to.

i personally belive the housing market is due for a correction as well but i would still rent out the original place as a bit of insurance

tomstickland

Upside is your flat is going up in value.

You mean that everyone hopes the flat is going up in value.

Robert_Sterling

I would not rent.

lynzpower

if your relationship is secure I would do it.

stash te equity in something well performing and carry on paying into it the difference between what you pay now, and what the lower rent would be.

where in the Uk are you?