buy to let with my dad and brother....good idea?

adrian_bond

I'm starring to wonder if this is such a good idea afterall!

Basically my dad wants to invest £40k into something that would provide a stable income or investment that woukd benefit is long term. My brother renting the property was just a bonus (gaurunteed good tennants) but I don't want it to become legally irritating its pain in the rectum!

So how woukd you go about investing the £40k? We are leaning toward houses as its something we all have a little experience of and is a tangible investment. We are looking st approx 20 years im guessing unless circumstances change!!

Any advice is appreciated

maninthestreet

Isa ???????

princeofpounds

Look, there isn't anything particularly wrong with investing in property. Personally I'm a little bearish, and I don't think it's a great point in the cycle, but it will be a lot better than keeping it in cash.

Over the long term you want to be in real assets, i.e. those that are resistant to inflation. Real estate is a major category, but shares are also a possibility. Things like commodities are also real assets but the don't produce an income so those are only suitable for a part of a portfolio. Cash will get destroyed in value over a decade or two and bonds too, although less so.

BUT the problem everyone has is not an investment in property, but the way you are doing it. It would be understandable for your dad to fund a BTL for the two of you, if it were to be let out to third-party tenants. But being the half-landlord to your brother is complex.

Now families can and do work through these things, but people are just pointing out that there is potential for massive conflict at some stage.

kidmugsy

adrian_bond wrote: »

i think the buiness model is to buy into a slowly rising housing market as it is deemed a very long term investment.

Remember the old definition of a long term investment - a short term investment that went wrong.

G_M

adrian_bond wrote: »

.... My brother renting the property was just a bonus (gaurunteed good tennants)

No tenant (family or otherwise) is a guaranteed good tenant.

He loses his job (made redundant whatever) and can't afford to pay. You going to evict your jobless brother?

kidmugsy

£20k each lets you each fill ISAs this month and again in April. No complications. Why not keep it simple?

jackomdj

Or £20k each, you use it towards your mortgage and he uses it as a deposit?

Mojisola

adrian_bond wrote: »

I should have said already that both myself, and my brother all own our own proteries (well mortgaged anyway). I live in mine, and my brother rents his out privately, and is currently living with his fiance in her rented flat.

Does his mortgage company know the house is rented out?

adrian_bond

hi again all, and thank you for your replies. i havent got the hang of quoting so please see my responces below;

In response to princeofpounds; i think the reason that we are looking at real estate instead of shares is the tangible element of such a purchase. we (the family) are all expereinced to some extent in home repairs and renovation, so could maintain the value or increase its value easily - not taking market fluctuations into account of cousre.

Shares are less well known to us outside the funds chosen by our IFA`s and pension funds.

The whole exercise is a method to not only invest in the families future, but to also bring us together in a joint venture where we can work and enjoy the benefits as a whole.

to G_M, i understnad that there is a risk attahced to any tennant, and even particularly to family. but if i cant trust my brother then who can i? should the worst happen (e.g. redundancy, inability to work, death etc; then we would have to put aside suffiicent funds to cover 3- 6 months mortgage payments as a failsafe to give ourselves peice of mind - along with the 1.5 months deposit perhaps.

kidmugsy; we have thought of this option (investing into our ISA`s for this year and next), but it kind of looses its atraction compared to being able to actually work together on a project. as long as the investments were sound then it could still be a vaible option if a buy to let mortgage were sought - as a savings viechle.

to jackomdj - this is also an option, and it will have to be thought of carefully.

and finally to mojisola - im not sure tbh. i know his original mortgage was interest only, but i think he is now on a repayment like the norm. its rented all above board incase you were about to pounce - origionally through a letting agent, but now privately as he has excellent tennants.

thank you all for your advice but please keep it coming. im trying to look at every sceanrio and make the best decision so we dont make any catasrophic mistakes. Adrian