Buying to Let For Later On In Life

carlbcfc

My mother is mortgage free in a maisonette worth approx 70k with her husband. In 10 years time she plans to move to another area when older family members are most likely to be no longer with us. House prices will be much higher when she moves.

A question arose when one of the neighbors around the back of my mothers sold their house for 60k (literally within the week too).

Will buying a cheap (60-80k) property locally, and renting it out, be worthwhile financially for when my mother will need a big cash boost in 10 years?

Rough calculations suggest it can be rented out for approx 500/550, with a 15 year mortgage approx 450/500pm. The idea being they have another mortgage free property so they can sell the 2 to buy a more expensive one later on.

Deposit is another issue. This would need to be a loan, or releasing some our of the current property.


Anyway, for those that have experience here, I would be grateful.

So, is it wise to buy-to-let, a cheap property, in an area where houses do rent, as a savings idea....

PheoUK

You're not saving, you're making an investment. You need to evaluate the options accordingly.

Its not really that comparable to a savings account.

For instance, as a landlord, you have legal responsibilities, cost etc. Your rent payment vs the mortgage leaves very little to cover business costs such as a new boiler replacement, roof maintenance etc.

Obviously, property prices could go up in this time, and theoretically you might be quids in. Having said that, the house could need £10k worth of work, and equal a lot of stress.

You need to evaluate as an investment and business, not as savings.

Audrey_Wright

This is a pretty complicated subject.
First of all the property market is not something you can predict for 10 years in the future, so you don't know what will happen when she decides to sell - will you be on top or under ?

Second, letting is not something easily done. As a landlord you will have many responsibilities, much of which will require payment to agencies, contractors, services and so on. It's a job, which needs attention, time and some dedication (if you're to do it properly).

Lastly, there might be a need for a substantial investment in the property before you're able to let it, such as updating, cosmetics and ensuring all safety regulations are upheld.

If you're looking for absolute profit in ten years, buying to let cannot guarantee it.
As any investment, this one can go bad as well, so sit down and think if you're up for it and want to take on the risks.

It's not that I want to demotivate you, but you need to know where you're stepping in to first, before you take the step.

ognum

carlbcfc wrote: »

My mother is mortgage free in a maisonette worth approx 70k with her husband. In 10 years time she plans to move to another area when older family members are most likely to be no longer with us. House prices will be much higher when she moves.

A question arose when one of the neighbors around the back of my mothers sold their house for 60k (literally within the week too).

Will buying a cheap (60-80k) property locally, and renting it out, be worthwhile financially for when my mother will need a big cash boost in 10 years?

Rough calculations suggest it can be rented out for approx 500/550, with a 15 year mortgage approx 450/500pm. The idea being they have another mortgage free property so they can sell the 2 to buy a more expensive one later on.

Deposit is another issue. This would need to be a loan, or releasing some our of the current property.


Anyway, for those that have experience here, I would be grateful.

So, is it wise to buy-to-let, a cheap property, in an area where houses do rent, as a savings idea....

Firstly being a LL is not to be taken lightly. Secondly I worry about your finances for this, you rent to mortgage payments is not a viable sum and taking a loan for the deposit is a ridiculous idea as you will have to pay that back too.

Any tenant deserves a LL who has the funds to repair and replace in a property as needed, where will your mother find 2k for a new boiler or money to pay the mortgage when the tenants stop paying the rent or the flat is empty.

Is your mother a tax payer because the rent she receives is also taxable so some will disappear to the tax man.

So IMO your mum does not have enough equity to do this.

G_M

carlbcfc wrote: »

....

Rough calculations suggest it can be rented out for approx 500/550, with a 15 year mortgage approx 450/500pm.......

£500 per month rent = £5000 pa (allow for 10 months rental income not 12)
£500 pm mortgage = £6000 pa

Can she find £1000 pa extra? Plus enough for new boiler, letting agents, redecoration perriodically, structural repairs (roof etc), etc etc

AND a contingency in case of the dreaded 'Tenants from Hell'?

Don't forget income tax on the rent. And Capital Gains Tax when she sells......

See also:

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