Returned after a year - buying an investment flat.

peazz

Hi all.

this time last year my father passed away and i come to you guys for advice. i decided to sell my house, which was a fair drive from all my friends, and family. ive found a buyer and im very close to signing the contracts.

one of the reasons i decided to sell was it needed alot of work to bring it up to scratch, and also the upkeep for me and my gf would of been to much, with CCJ's i cant freely get a loan to fund the renovations.

so, with that in tow, im looking at place's in chelmsford, essex seeing as this is where all my friends etc are from, im aware the rental market is pretty decent in chelmsford and being on the mainline to london, this helps even more.

now i have a couple of options. buy a 3 bed house in a council estate get slower returns ( from what im aware ) or i can get a nice flat really closer to town and the station both for practically the same prices. council estates in chelmsford are not amazing and can be quite run down.

im going to see a flat tomo, its 30 second walk to the train station, 15 second walk to the main bus station, and its practically in the middle of town. its been on the market for 4 months, and has been reduced already once down to 180,000 from 189,995 then they raised it back up to 185 again for some reason. they bought it in 2006 for 176,000.

my common sense is telling me get it for 180. rent it out for around 800PCM and sit on it as a long term investment and possibly see a decent return when it comes to selling, hoping that house prices raise again.

any advice would be great! although im buying in cash, im still a first time buyer, theres only so much google search's can do :P

EDIT: any advice on what to offer if we like it would be great. although they bought it for 176k in 2006, it looks like they have not updated it since then and to be fair, kitchen main bathroom and en suite need replacing and updating without a doubt. carpets need replacing. looks like they bought it rented it out and now selling it without refurbing it. but i could be wrong. the price its up for seems quite steep

G_M

Not sure what you expect from us but you need to do a full budget.

Market value of property
Price YOU think it's worth
Cost of purchase
Cost of renovation
Cost of BTL mortgage
Cost of letting (ALL costs - see here)
Tax
Contingency
etc

Monthly rent expected x 10 (not 12).

peazz

hi mate,

im really really new to this i dont know where to start. im only 23 aswell there wont be any mortage as ill be buying in cash.

im going to see it tomo so will do the budget tomorrow,

GDB2222

Where are you living? Why don't you buy yourself somewhere to live?

peazz

GDB2222 wrote: »

Where are you living? Why don't you buy yourself somewhere to live?

Well, in the long run that's what we are doiing, we are currentlly living with my fiancees parents they have retired and have a big place and asked us to stay with them. There other daughter is at uni. We are also planning to go travelling for. Year or two we want to put all rent into a saving acc, live in the place in some years and sit on it and then sell it at a later point and get something bigger when we are both in better positions. But atm we are both young with no ties or restrictions. So a flat is ideal. The rent it brings in for 5 years will be a nice keep safe for the future. Although I'm getting a lump sum from the house sale. A portion will go to probate fees a lot will go on my previous debts and rest a place, travelling and saving for emergancys and backup.

JQ.

The figures you have show a gross yield of around 5%, pretty terrible. Therefore I guess you are expecting to get capital return, however, this makes the assumption that house prices will rise - I wouldn't be so sure about that. I really can't see property prices rising over the next 5 years. Property investment has high entry and exit costs so in the long term these costs are eroded, however, if you plan that this is a short term hold, until you settle down then you could very easily lose money.

Personally, in your position, unless you can find a property with a considerably better yield (10%+) then I'd be looking at more secure short term investment vehicles. Then when you do come to buy your house to live in you'll have the cash.

MFSaver

You might be better off putting that money in high interest rate savings. A couple of months of non-vacancy might make a big dent in your profits for that year, or even worse bad tenants damaging your property. Given that it is generally expected house prices are unlikely to rise in the next couple of years (it could be different in your area), all that money could be sitting in a property doing nothing.

Have you considered looking at repossessions? You might be able to get a place cheaper than market rate if you are lucky.

GDB2222

A flat rental investment is a bit of a tie. Not really compatible with going off gallivanting around the world for a few months.

BitterAndTwisted

If you're not going to buy a property to live in yourself I think you're mental to acquire a property with that kind of yield. Plus all of the responsibilities of becoming a landlord when you have absolutely no experience. And when you're planning to be out of the country while doing it.

I doubt very much that property prices are going to soar in the next couple of years, especially with the current state of the economy and with the rate of unemployment at a 17-year high. Not to mention all of the public sector redundancies just around the corner which will push those numbers up.

Find another investment vehicle, do your travelling and then come back and buy a home to live in.

peazz

hi all,

thanks for the reply's from doing my search's its really hard to find repossesion's, they all want money to get access to there record which im not willing to work out!

we have decided upon chelmsford as a place ot live and want the home, but it dont seem like ill make more then 6% on any propertys i have found, unless im doing something wrong? i really am not feeling living in the middle of baddow or melbourne housing estates

For anyone reading this thread looking for repossesions, i found this thread on the forum

/showthread.php?t=396185&page=2

G_M

peazz wrote: »

hi all,

For anyone reading this thread looking for repossesions, i found this thread on the forum

/showthread.php?t=396185&page=2

Thread here.

Try auctions. And no, you do NOT need to pay for most auction lists )though lots of people will try to sell them).