Selling a large house and investing in two to fund pension

keith2012

My wife and I are considering selling our rather large house to buy a smaller one for our own use and a second one to support our pensions (we are close to, but not quite at retirement age).
What are the pitfalls and benefits of buying a second property for this purpose?

ACG

Im guessing your not looking to take out a mortgage?

The main pitfalls are ensuring you have the correct insurance in place, you choose the correct tenants and get a good property that is easily rentable - not always something that you would live in yourself.

keith2012

No a mortgage will not be necessary (we hope) as the proceeds from the property, and a bit extra we have, should fund the purchase of two properties.

Thrugelmir

Crunch the numbers and calculate the after tax return.

Fixed term cash ISA's offer over 4% with no risk.

You've still time to boost your pension pots too. With an instant boost of tax relief and a tax free lump sum to draw down.

brit1234

Duplicate thread, other below:
https://forums.moneysavingexpert.com/discussion/3987679

My reply on other about the main disadvantage.

brit1234 wrote: »

The main one is your equity will fall at double the rate in 2 houses rather than one in this falling market.

ACG

brit1234 wrote: »

Duplicate thread, other below:
https://forums.moneysavingexpert.com/discussion/3987679

My reply on other about the main disadvantage.

Jesus wept! Every post of yours i see about people buying a property is negative! Your coming across quite bitter about not being able to get onto the property ladder. And your signature abotu scams is just a joke!

If houses were losing money would we be seeing an increase in lending? Would we see 90% mortgages coming back to play? of course we wouldnt!

Nobody knows what will happen with house prices but my money is on lenders have a good idea otherwise they wouldnt be prepared to handover their money (and millions of pounds at that) would they? Of course in some areas house prices probably havnt hit the bottom but in other areas prices are back on the increase and others have levelled out. Its a case of making sure you do your research beforehand.

bigadaj

The risk of house price falls has to be taken into account, but not obsessed about. Housing market outside London isn't healthy with record low interest rates, and I think most people's guess for prices would e flat. Interest rates go up and prices will decline again.

Letting a house isn't easy with voids and problem tenants, my preference for a sum of money for income, which is what you are really after, would be a mix if high yielding shares, but not everyone would agree.

kidmugsy

Why not try to take advantage of buying two properties simultaneously - e.g. buy neighbouring properties so that it's easier to keep an eye on the tenants, deal with workmen, etc? If you ensure that the one you intend to let is nice enough that you'd live in it yourselves, then you could from time to time move from one to the other so that you avoid, or at least reduce, the tax on the capital gains that you presumably hope to make.

keith2012

Yes - this is the type of thing we were hoping to do. We would like to be able to keep things simple and properties nearby would fit this bill.