Is one house, owned outright, enough?

chrishar

I am possibly at a crossroads and not sure which route to take.

I am in my early thirties and have one property with around 40-50% of the mortgage paid off. I currently rent it out and live with family.

The situation now is I would like my own place to live, but I also like the idea of having the rental income in addition to my weekly wage, which helps overpay the mortgage.

I don't like the idea of taking on more debt, but that is one option. I have enough equity to re-mortgage and buy a second property, so I could have two properties and two mortgages (both would have 25% equity). One to live in and one as an income.

The other route is to keep overpaying my current mortgage using the rent money and then possible find somewhere to rent for myself as cheap as possible, where the cost would be covered by my wages and still overpay a little on the mortgage.

So going back to my initial question, is the ultimate aim to pay off your mortgage and own your house outright? I guess after that you only have your bills to pay so require much less income.

Where would this income come from? Is it a good idea to have a second property for this (and get this as early as possible?) or are there better ways off having a regular income without working? I have heard annuities mentioned which I guess would be less hassle than property, but I don't know a lot about them. Would love to hear peoples' thoughts on this.

turtlemoose

Being a landlord comes with risks as well as benefits.

What if you can't find a tenant and have a long void period (where the property is empty) - could you afford the mortgage payments? What about your building insurance - most insurers don't want your property empty for more than X amount of consecutive days.

What if you get a tenant who runs up lots of arrears?

What if you get a tenant who trashes the place and leaves you with a huge repair bill? Ok maybe you can claim some on your insurance but then your premiums are higher and you've got that void period from while you refurb....

Or none of those things could happen and it could all tick over nicely. It's a gamble!

I'm an accidental landlord. I bought a shared ownership property, the value dropped hugely, I bought the full 100%. Then I met somebody, fell in love, had a baby blah de blah. We bought our own place, as the first house is in a horrible area, I'd had loads of crime - burglary, vandalism, I'd been assaulted etc.

I'd have liked to have sold that house and just got rid, but at the time with an ERC, solicitors fees etc, it would have cost me about £5000 just to sell it, on the assumption I managed to sell it for the same price I'd bought it. I simply didn't have that money.

I've trundled along and luckily have had the same tenant for nearly 3 years. The rent has always been paid on time (part housing benefit, part top up by the tenant), the property is clean and tidy, she's decorated it tastefully and to a high standard. My tax, mortgage and repairs combined cost less than I receive in rent, so I do actually make a profit now (didn't at the start).

HOWEVER my tenant is now moving out in July. So I have all of the above at the start of this post to consider.

Flugelhorn

I did have 2 properties - one a holiday let. Was quite a lot of work to keep everything in order etc. Fully owned house probably not so adventurous but less hassle and don't have to worry about anything but upkeep and utility bills.

quicklee99

I don't think there is a right or wrong answer it just comes down to your view on risk and your long/short term goals. Don't they say there is no reward without risk?