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STRing. Good idea for my circumstances?
Romani_Ite_Domum
Posts: 428 Forumite
We have just accepted an offer on my place and all being well with the sale, will be renting.
My figures:
Equity from house sale £210K
Annual Interest (5.95%) on investment of equity £836pm net basic rate tax.
To rent my current house would be in the region of £650pm.
As with many people who STR, in a "natural" market, we would be looking to move to a "better" house.
House price £340K
We would require £140K mortgage to do this. IO = £728pm ( Fixed rate 5 years 6.24%) £728pm would be very tight for us.
Rent for a similar property would be circa £900pm (minus £836pm) = £64pm. We would then be looking to increase our savings by £500pm and have a little extra for day to day living.
Having watched the market locally for the last 2 years, I would say that nominal HPI has been 0% (last 12 months) locally and the prices of some properties are now falling.
Anybody think this is a good/bad idea?
My figures:
Equity from house sale £210K
Annual Interest (5.95%) on investment of equity £836pm net basic rate tax.
To rent my current house would be in the region of £650pm.
As with many people who STR, in a "natural" market, we would be looking to move to a "better" house.
House price £340K
We would require £140K mortgage to do this. IO = £728pm ( Fixed rate 5 years 6.24%) £728pm would be very tight for us.
Rent for a similar property would be circa £900pm (minus £836pm) = £64pm. We would then be looking to increase our savings by £500pm and have a little extra for day to day living.
Having watched the market locally for the last 2 years, I would say that nominal HPI has been 0% (last 12 months) locally and the prices of some properties are now falling.
Anybody think this is a good/bad idea?
0
Comments
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THE STR'S ARE ALL GOING TO HELL WITH RED HOT POKERS STUCK UP THEIR BOTTOMS!
:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:0 -
Romani_Ite_Domum wrote: »We have just accepted an offer on my place and all being well with the sale, will be renting.
My figures:
Equity from house sale £210K
Annual Interest (5.95%) on investment of equity £836pm net basic rate tax.
To rent my current house would be in the region of £650pm.
As with many people who STR, in a "natural" market, we would be looking to move to a "better" house.
House price £340K
We would require £140K mortgage to do this. IO = £728pm ( Fixed rate 5 years 6.24%) £728pm would be very tight for us.
Rent for a similar property would be circa £900pm (minus £836pm) = £64pm. We would then be looking to increase our savings by £500pm and have a little extra for day to day living.
Having watched the market locally for the last 2 years, I would say that nominal HPI has been 0% (last 12 months) locally and the prices of some properties are now falling.
Anybody think this is a good/bad idea?
How can a £340K house be rented for £650 per month???
Who are these generous landlords that people speak of on this site but I never see in real life?0 -
In your situation, I would STR.:beer:I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)0 -
How can a £340K house be rented for £650 per month???
Who are these generous landlords that people speak of on this site but I never see in real life?
Think you need to re-read the post! He said
1) 210K house rented for £650.
2) 340K house rented for £900.I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)0 -
Romani_Ite_Domum wrote: »We have just accepted an offer on my place and all being well with the sale, will be renting.
Anybody think this is a good/bad idea?
Only problem is that you never know when a section 21 could end up through your letterbox meaning you will have to go through the hastle of moving again and again0 -
How can a £340K house be rented for £650 per month???
Who are these generous landlords that people speak of on this site but I never see in real life?
2.23% Yield, about what I'm getting NETT on my two BTL's, so if it'd gross, it's very cheap.
Going back to the OP's question, it does look like all the figures add up for an STR. I really can't see prices going up much further, with the exception of Prime London. However, I thought the market had peaked end of 2004 and was wrong :shhh: Whatever you do and however gloomy the outlook for the Market, STRing is still a gamble.
Phlash is right YIELD is 3.18% That's more like it!0 -
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pickles110564 wrote: »Even at £900 you would not rent a £340k in our area, more likely to have to pay between £1200 to £1500 per month
Friends are renting up the road from us for £825 per month. House would be valued somewhere between £410k and £460k and would sell within days at the lower range of valuation. The owners are working abroad for 2 years & probably wanted to be confident that their home would be reasonably looked after.
There is a world of difference between renting terraces to student / young professionals & renting 4 bed semi's / detached to small families.US housing: it's not a bubble
Moneyweek, December 20050 -
Good Idea? Personally I'd say No. I think your house should primarily be your home and not an investment.
If as you say HPI has been zero in your area for the last few years then it could be that houses in your area will start to go up again.
As Pickles has said you may end up moving every 6 months - into properties that might not be as nice as you'd like.
On the other hand, if the market doesn't move much and you decide to buy back in, a person with no chain at that point on the ladder can be very attractive to a seller.0 -
pickles110564 wrote: »Even at £900 you would not rent a £340k in our area, more likely to have to pay between £1200 to £1500 per month
Pickles, these are real figures for me not a scenario.
2 examples (I just found on RM ) available now that I could rent.
1. Price £250K rent £695pm
2. Price £329K rent £825pm
The more expensive the house the better value renting is. Rents are more in line with wages. It is not the rent that is out of kilter, it is house prices.0
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