In the current market, should I buy a 2nd House?

Cliff_Wright

I've been thinking of buying a 2nd house as a form of investment (one that needs work as I'm more than a little handy DIY-wise) but I'm concerned by the current rising interest rates and property prices. In addition I'm worried that I'd be jumping into an already saturated buy-to-let market ...

As it stands myself and my Wife-to-be own our own family home outright so I have no debts at all and could afford to pay a £10k deposit and bills for a house up to about £110k without over stretching myself, even if I didn't have a tenant. (having a rental income would obviously allow me to live a more comfortable life in the meantime though which is the plan ..)

Question is, what are your thoughts on this? Have I 'missed the boat' or is investing in a house that needs some work doing to it still a wise investment?

One other question is, I live in the midlands (Nottingham) and there are a few new build sites currently under construction. What are folks thoughts on buying 'off plan' for an investment?

Cheers

Cliff

PJD

my quick tuppence, - if you're keeping it long term, have a fixed rate mortgate, & it's a place that would be attractive to renters, then what does it matter if there's a crash? As it won't affect you at all.

If the idea of doing a property up etc etc interests you, then it's a great little project & you'll have fun & learn lots on the way

sortofok

Cliff_Wright wrote: »

I've been thinking of buying a 2nd house as a form of investment (one that needs work as I'm more than a little handy DIY-wise) but I'm concerned by the current rising interest rates and property prices. In addition I'm worried that I'd be jumping into an already saturated buy-to-let market ...
As it stands myself and my Wife-to-be own our own family home outright so I have no debts at all and could afford to pay a £10k deposit and bills for a house up to about £110k without over stretching myself, even if I didn't have a tenant. (having a rental income would obviously allow me to live a more comfortable life in the meantime though which is the plan ..)
Question is, what are your thoughts on this? Have I 'missed the boat' or is investing in a house that needs some work doing to it still a wise investment?
One other question is, I live in the midlands (Nottingham) and there are a few new build sites currently under construction. What are folks thoughts on buying 'off plan' for an investment?

Cheers

Cliff

This plan in your post that I have highlighted in bold is what is known as BTS (buy-to-sit) and is an option only available to people in your situation i.e. no other debts and good cashflow.

It will no doubt generate a good capital return over the long term
(25 years say).

But without tenants will not generate any income which will offset the capital return. In fact it will cost you a lot of money over and above the mortgage (council tax, maintenance etc). This does not make for a good business plan.

In addition to the money, there are social costs as well-

You have denied someone a home.

PJ is right a "correction" in price won't bother you if you're in for the long term.

If you do go for it put down more than 10k (of your own money) and rent it out.
This way, the rent is more likely to cover the mortgage.

Plus, if rents start to fall due to a glut of rental properties you will be in a better financial position than most other landlords who have debts up to their eyeballs and cannot offer competative prices.

I would say wait a year, save, save, save and see what's happening then. you may be a little surprised at how further your money goes.

best of luck

oh ..... and don't pay too much for the house!

Cliff_Wright

sortofok wrote: »

This plan in your post that I have highlighted in bold is what is known as BTS (buy-to-sit) and is an option only available to people in your situation i.e. no other debts and good cashflow.

This is in no way a plan, just a fall back option for periods where I didn't have a tennant. All I'm getting at is that in any scenario the financial risk of taking on a property is minimal.

sortofok wrote: »

But put down more than 10k and rent it out.

I would say wait a year, save, save, save and see what's happening then. you may be a little surprised at how further your money goes.

best of luck

oh ..... and don't pay too much for the house!

That was kinda my thoughts ... it's gamble of whether in a year's time house prices will have risen (the 'partially missed the boat' scenario) or house prices will have slumped because of interest rate rises (the I'm quids in scenario )

I've got plenty of saving to do in any case as I'm getting Married next year too

What about the question of new builds off plan? Anyone any thoughts?

Thanks for comments so far

Cliff

sortofok

You are obviosly a sensible man Cliff.

Sorry I forgot about your off-plan quetsion.

I would strongly recommend that you do not do this.

These tactics are designed to suck in the unwary.
Because they only work in a rapidly rising market.

The days when 20k, 30k, whatever can be made in 6 months by doing nothing more than sitting on your a**e are over. HPI will not come to your rescue at this stage in the cycle.

These properties are often overvalued to start with little hope of the gains often talked about by the developers.

Rover

Lifted from the last thread about 2nd houses, BTL. etc:-
My honest opinion, like others, steer away from BTL at the moment.
Considered opinion is that house prices have peaked. We are likely to see a correction over the near future.
In the mean time invest your capital conservatively and wait for the market to become more transparent.
Reconsider your BTL idea when the market (housing) has bottomed - NOT when 9 out of ten 10 money savvy people are advising caution.

Cliff_Wright

Rover wrote: »

Lifted from the last thread about 2nd houses, BTL. etc:-
My honest opinion, like others, steer away from BTL at the moment.
Considered opinion is that house prices have peaked. We are likely to see a correction over the near future.
In the mean time invest your capital conservatively and wait for the market to become more transparent.
Reconsider your BTL idea when the market (housing) has bottomed - NOT when 9 out of ten 10 money savvy people are advising caution.

I believe I agree with you to be honest.

Ironic statements given your signature though

Rover

It say's Brave not Foolish

Cliff_Wright

Rover wrote: »

It say's Brave not Foolish

Not quite "he who dares Rodders" then ...

moonbeam_7_98

I wondered if people would be kind enough to share their thoughts on my similar situation.

My partner and I currently live in a 3 bed property and are mortgage and debt free. My partner works in Brighton and I work in London, and I commute for almost 5 hours a day and my partner for almost 3. We'd both like to move to Brighton. Cutting our commutes down to 3 hours and 30 mins.

The problem is that it is proving hard to sell our house. We had it on the market for over a year and no buyers. We think one problem is that a lot of properties in our road are let and so it's not the nicest street in town.

Our crazy idea is as follows:
Raise a mortgage
Buy a 1 bed flat in Brighton
Rent out our property and live in the flat in Brighton
We'd be able to cover all costs associated with this even without tenants
We wouldn't be so comfortable either in terms of living accommodation and lifestyle
People think we're crazy for wanting to live somewhere smaller and renting out a larger property.

There's a long term regeneration plan for our town due for completion in 2012 so we figure we could sell both properties then and buy a nicer house in Brighton.


Any advice or similar experiences would be gratefully recieved. Are we being completely mad?!

Moonbeam