Buying an investment property for children

Thrugelmir

RonnyRaygun wrote: »

Yeah, I understand that, but my thinking is that as long as the rental income covers the repayment mortgage and any essential maintenance, then the property is effectively bought for you, meaning that all you've spent on the property is the deposit required to get the mortgage.

As I said earlier crunching the numbers is key. If it was that easy to make money everybody would doing it. Letting property is a business. So along with the rewards also come risks.

RonnyRaygun

19lottie82 wrote: »

What happens if when your sons are older one wants to sell to get his £££ but the other doesn't?

Ah, well if I go down the traditional buy to let route in my name, they won't have a choice in the matter. I can sell the property when I see fit.

RonnyRaygun

Thrugelmir wrote: »

As I said earlier crunching the numbers is key. If it was that easy to make money everybody would doing it. Letting property is a business. So along with the rewards also come risks.

Absolutely. As said, I've found an area I know fairly well where the rental income appears to be significantly higher than the cost of the repayment mortgage. Many areas do not give this return.
Also not everyone would be doing it, as many people only see risk, many people do not want the hassle or burden, and many people do not have the required capital to start with.

It's early stages but as far as I can see it has to be better than leaving the money in the bank...and my experience of investments based on stocks and shares mean I don't see that as a viable option either.

theartfullodger

Investment for the kids?? Nah, bring them up telling them they should expect to inherit absolutely nuffink from you (what I did with my 3..) as you plan to drink it all, ensure they are robust & able to earn their own £££ & stand on their own 2 feet.

If you wrap them in cotton-wool, buy them a place etc etc they'll get ripped off left right & centre & probably never bother the work....

Anyway, spend the £££ instead on a mistress/toy-boy (or both..), round-world cruise, new speedboat/sports-car..

Cheers!

dimbo61

One or two problems with your IDEA!
Your existing lender may well be happy to lend you extra ( Additional Loan Products) to buy a property outright! but not keen on lending you the deposit and then you taking out a BTL mortgage!
Lending is much tougher than a few years ago and they also like you to have a history of owning BTL,s properties and experience of being a Landlord.
Could you cover the new bigger mortgage IE existing mortgage plus 25% for BTL and BTL mortgage? from your income just in case the property is empty for a period of time ?
Buying fees, BTL mortgage fees, searches, legals, setting up the property to let out IE Gas safety checks, repairs!, Electrical safety checks, Landlords insurance etc RLA association

RonnyRaygun

dimbo61 wrote: »

One or two problems with your IDEA!
Your existing lender may well be happy to lend you extra ( Additional Loan Products) to buy a property outright! but not keen on lending you the deposit and then you taking out a BTL mortgage!

I don't think there would be any problems with getting the capital to put down a deposit on a house. We've got enough equity in our property that I don't think there would be any problem with remortgaging and obtaining a bit more money. Enough to put down a deposit on a buy to let? I don't think there would be a problem. It's something that we will not be doing until the time comes to remortgage so different lender means it's an entirely new loan. If we had to tell a fib or two to get the additional funds I wouldn't rule that out either.

dimbo61 wrote: »

Lending is much tougher than a few years ago and they also like you to have a history of owning BTL,s properties and experience of being a Landlord. Buying fees, BTL mortgage fees, searches, legals, setting up the property to let out IE Gas safety checks, repairs!, Electrical safety checks, Landlords insurance etc RLA association

If you had read the whole thread, you would have noticed that I do have experience of renting out property. I have been renting out property constantly since 2006, so I also understand the implications of being a landlord and will factor that into my calculation if and when the time comes.

dimbo61 wrote: »

Could you cover the new bigger mortgage IE existing mortgage plus 25% for BTL and BTL mortgage? from your income just in case the property is empty for a period of time ?

Well, considering we are currently spending £1200 on nursery fees a month, and that the kids will both be at school in the next couple of years, I really think we could.

Nothing is set in stone yet, and everything will be carefully considered.

xylophone

The CTFs do not have to be cash based. In addition, it may be possible that the government will permit a transfer to JISA in due course.http://www.selftrade.co.uk/get-started/choosing-an-account/ctf/

https://www.gov.uk/child-trust-funds/overview

Outside tax privileged accounts like CTF JISA, there are tax considerations
when a parent makes gifts to a child, whether in or out of trust http://www.hmrc.gov.uk/trusts/types/minors.htm

http://www.hmrc.gov.uk/individuals/savings-income.htm

http://www.mumsnet.com/family-money/10-things-you-need-to-know-about-childrens-savings

Yolina

theartfullodger wrote: »

Investment for the kids?? Nah, bring them up telling them they should expect to inherit absolutely nuffink from you (what I did with my 3..) as you plan to drink it all, ensure they are robust & able to earn their own £££ & stand on their own 2 feet.

If you wrap them in cotton-wool, buy them a place etc etc they'll get ripped off left right & centre & probably never bother the work....

Eh? I was very lucky and am extremely grateful that my parents & grandparents started savings for me from the day I was born. They also taught me the value of working, budgeting and always putting some money aside. When it came for me to buy a place, I had a large deposit, ended up with a small (£50k) mortgage which I repaid early, about 6 years after I took it. The mortgage is the only money I've ever borrowed, and I have a fair amount of savings. I also did quite well on the stoozing front in the heydays of 0% balance transfers with no fees and reasonable interest rates on savings accounts

Slightly_Squiffy

I would also be extremely wary of anything that would automatically transfer funds/titles to your children when they come of age at 18. No matter how responsible they may be, I would never trust an 18 (or even a 21) year old with any significant sums of money.

RonnyRaygun

Slightly_Squiffy wrote: »

I would also be extremely wary of anything that would automatically transfer funds/titles to your children when they come of age at 18. No matter how responsible they may be, I would never trust an 18 (or even a 21) year old with any significant sums of money.

Yes, a trust that automatically transfers to a child at the age of eighteen is not ideal, although I wouldn't tar all eighteen year olds with the same brush. Even at the age of eighteen, my priority was saving money, first for a car, and then for a deposit on a house. By the time I bought my fisrt house I had a substantial deposit almost entirely saved up myself.

Obviously it's the automatic transfer that is the issue as it wouldn't give me the opportunity to to decide if my children were ready for the responsibility of being bestowed a large sum of money.