why do some people own more than one property?

axomoxia

FTBFun wrote: »

Because this isn't the Soviet Union, so if someone wants to purchase property without recourse to state funds that's their business (and of course the mortgage company's etc).

Ironically the second summer home, the Dacha (see http://en.wikipedia.org/wiki/Dacha ) is very most popular in the Soviet Union!

Werdnal

OP, having looked back at some of your previous threads there seems to be a recurring theme.

You claim to own a property (mortgaged) which you rent out, and have been renting another place for yourself. You also previously asked about whether you would be able to buy yourself a 2nd property to live in rather than continue renting. Are you greedy too? Or is it just a status thing ?

Have you posted this question just out of curiosity or are you asking in relation to your own circumstances? Having rented out a property yourself, surely you understand why people would want to own a 2nd property, for the income generating potential?

I just wonder whats the purpose of this thread ... if any.

somethingcorporate

I don't get the status thing, I really don't but I know a lot of people do.

I'd get rid of mine in a heartbeat if it made financial sense to. I'd rather the financial safety of paying off my own mortgage than the millstone that a second property around my neck currently feels like.

They can be very good investments but instead of a pension it can be a little bit foolish, since income isn't guaranteed (voids in rent are common), property is incredible illiquid and it is a single asset class.

Like most things in this world, moderation and balance are key and a second property balanced with other investments and plans are vital to ensure you are not overexposed to one area of risk. Unfortunately, not everyone gets this.

Thrugelmir

want2bmortgage3 wrote: »

The only reason I can think of is people don't trust pensions and want an alternative investment, to one day live off the rent of the 2nd property? Is there any other reason apart from greed/status?

People believe that property is one way bet based on (more recent) historical data.

Only time will tell given that the Big Bang when banking was deregulated is now in reverse.

want2bmortgage3

Hi Werdnal, you are correct in that I own one property which I am stuck with. First tried to sell it, no offers. Then tried to move back in but tenants wouldn't leave, ending up agreeing tenants can stay as long as rent paid.

Ideally I'd like to just live in my own place and overpay the mortgage steadily. Now I've let them stay though, I'm faced with renting at very high prices, or buying a 2nd property as another mortgage probably will be less than renting.

Nothing's ever straightforward!

Werdnal

want2bmortgage3 wrote: »

Hi Werdnal, you are correct in that I own one property which I am stuck with. First tried to sell it, no offers. Then tried to move back in but tenants wouldn't leave, ending up agreeing tenants can stay as long as rent paid.

Ideally I'd like to just live in my own place and overpay the mortgage steadily. Now I've let them stay though, I'm faced with renting at very high prices, or buying a 2nd property as another mortgage probably will be less than renting.

Nothing's ever straightforward!

There are ways of getting tenants to leave, they cannot just decide to stay if you want them out, but you need to go through the correct legal procedures and if necessary take out a possession order through the courts.

Surely you cannot blame the tenants for your predicament? If you want the place back, evict them and get on with your life the way you want to!

want2bmortgage3

To be honest I'm not that concerned at moving back in to this property, imagining living there myself doesn't actually make me feel that good. I started the thread as one option I had was buying a 2nd property and wanted to see attitudes towards doing that. It still leaves me with what to do though, hopefully situation should become clearer in the next week, I might have an option of sharing with a friend in another town, could be a change I need.

AlexMac

An interesting thread! As the US presidential contenders say- 'it's the economy, stoopid!' Or rather, it's called capitalism.

I used to have qualms about capitalism, but I was lucky enough to work (v hard) in a satisfying job in the public sector, then, (equally hard) as a fundraiser in charities, screwing money for good causes out of government and the European Commission. But I am a realist and never disrespected the fact that in a 'mixed economy' like the UK's, many people have no choice but to work or operate in a capitalist system, which some think is more efficient than state-directed 'command economies'.

And in that UK context, if you could afford it, buying a (1st) property was certainly a no-brainer in the second half of the 20th Century, as it was an obviously cost-effective thing to do in a time of high property inflation. Government (of both colours) in the 1970's and 80's actually used to encourage or even subsidise home ownerships via 100% mortgages from local authorities like the (now abolished) Greater London Council, generous tax breaks ('Mortgage interest relief at source- MIRAS') - both of which I experienced, and discounts on the sale of former council property.

But I morphed into being a proper capitalist when I bought a cheap ex-council BTL flat, initially for the semi-altruistic purpose of providing a decent cheap rental home for my partner's child and baby grand-daughter! And although she moved on, I kept it because its incredible capital gain- over 500% in 15 years - massively exceeded the modest profit I've made on the post-tax rental income. So it seemed another no-brainer to buy a second cheap BTL- a wreck, at auction - to do up and rent to the stepson and his mates, as an alternative to him continuing to make our house untidy. That enjoyed even more meteoric inflation - almost 200% in 3 years when I sold it in the late '90s; making me more money than I earned in wages by honest toil in that time!

So, returning to the question ' I started the thread as one option I had was buying a 2nd property and wanted to see attitudes towards doing that'. I'd say go for it- but do the sums as you'll no longer enjoy the capital gains which we had in the 20th Century. And while you should be businesslike, you might maybe try to treat you tenants right, as I can afford to do. As a 'reluctant capitalist', with just 2 BTLs, I offer the slightly hypocritical excuse that my latest recent purchase- another ex-council flat sold off by the Thatcher government - is back in the public sector as bizarrely, I've leased it back to to a local housing association on a three-year deal for them to accommodate someone in housing need. But I'm sure my old SWP komrades from the 1960's will think I'm just a capitalist lickspittle running dog (as we used to say on the barricades).

johnbusby

To restrict the supply of property and lock a generation out of home ownership and instead consign them to paying extortionate rents to the baby boomer generation who managed, through more luck than anything else, to own property while prices rose at unprecedented rates leaving them with a tremendous amount of equity?

OK I'm bitter! However, I really dont see why this is to be encouraged and would love second home ownership taxed much harder. Housing is not a luxury, it is something that is needed by everyone one so why is it right for some people to buy up all the stock and then make huge profits renting it back to people that have little choice but to pay?

want2bmortgage3

It does seem funny that the government sold off so much council housing, when they are now paying rent directly to private landlords in order to accommodate the long lists of people needing housing via benefits.