Thinking of buying with a friend, 50-50. Opinions needed.

pmlindyloo

adonis10 wrote: »

Oh i can fully appreciate this, and fully sympathise with your situation, but if we always made a decision based on the worst case scenario then we would never do anything (never travel due for fear of being eaten by a snake, never buy a house for fear of losing our jobs, never talk to a new person for fear of not being like etc.).

I could just live at home for the rest of my life if I don't want to take a risk, but I don't!

It's not about taking a risk it's about protecting yourself in case of illness/losing your job.

I'm not saying don't do it - I'm just saying take sensible precautions (Mmmmmmmmmmmm that's a saying I've heard before )

PS Thank you for your sympathies but I am thankful that it's not me that's in the described situation although as a more mature person (:):)) I am probably more aware of the risks (as you put it) than you.

zzzLazyDaisy

OP you are very unlikely to make a profit on the property within 5 years.

Why?

Because it is unlikely that house prices will rise much (if at all) during that time, and may even continue to fall.

Even if prices stay stable, you have the costs of buying and selling (solicitors, stamp duty, estate agents, land registry fees, searches, removal costs - they all add up). You then have the costs of general upkeep/maintenance - decorating, mending the roof when the tiles blow down in a gale, repairing/replacing a boiler/fridge/whatever. Plus the eventual costs of decorating when you later come to sell. A lot of these things are unknown but must be factored into the eventual overall cost.

If you are living in the place, you are saved from paying rent, plus you don't have to pay the £100 'top up' on the other house. If you buy on your own with a sizeable deposit and rent a room to a lodger, you can use the money to pay down the mortgage. If you keep the monthly mortgage repayments the same, and use the extra funds to pay extra on the mortgage, it is amazing how quickly the mortgage debt comes down. If you want to make money on property, in my view, that is the best way to do it. You can either over pay a bit each month, or save in a separate account and knock off a large chunk when you remortgage (or a mix of the two). That way you have full control of what is happening, and if the lodger fails to pay their way for some reason, you can get someone else in to help with the payments.

Also, if you live in the house and rent out a room, there is no tax on income from a lodger up to a certain amount (sorry I haven't checked this recently). If the owner doesn't live in the house and both rooms are rented out, the full income is taxable, less interest on the mortgage and some expenses (but not the full mortgage), and you must also comply with all the legal requirements of being a landlord. Also many lenders will not allow you to do that on a residential mortgage, so you could well be looking at changing to a more expensive btl mortgage.

It sounds to me as if your friend wants to buy a house but can't afford to go it alone, and you have money in the bank and see this as a good way to get on the housing ladder and make a quick and easy buck at the same time. Property is no longer the get rich quick plan that it once was, and the costs of buying and selling, and interim maintenance mean that a 5 year turn around will almost certainly result in a loss over-all.

geoffky

Profit in five years.....ha ha ha it will not cover your costs m8..we have just been to the very edge and back..please tell me where these profits are coming from? I love your optimism.