First investment for a 27yo, London or Manchester

hazyjo

Mark1987 wrote: »

My idea was to buy a cheap property in less than 10 years to sell/rent it after to buy something bigger. Even if small, I will have a return. Renting a room I won't have any return, unless I invest my savings in something else but I don't have enough knowledge to take a risk, even if low.

Only if the prices continue to rise. I once bought a house for £227,500 in E4. A couple of years later, it was worth nearer £300k, but then the recession hit and I sold around 5 years after buying for £228,500. I'd spent loads on it (new roof, guttering, etc, lovely new kitchen and built-in appliances, some flooring, new boiler, shower...). Would have been cheaper for me to rent!


Property is the biggest risk going - can make you the most money, or the biggest loss, depending on the market. Nobody has a crystal ball.


Jx

Mark1987

Only in London is so unstable or everywhere else in the UK?

sydenhambased

Mark1987 wrote: »

Only in London is so unstable or everywhere else in the UK?

Who knows?! London seems to rise quicker than the rest of the country but basing decisions/predictions on the past is a little like driving down the motorway looking at your mirror: you're likely to crash!

RAS

Yes

Rellies bought a flat in Essex for £52K which was worth £27K 18 months later. Took years to sort out.

Houses here went from £58K - 44K - £60K - £100K+ - £200K ish and then down to £160K. In the last period some flats went from £120K - £57K.

The property that fluctates most appears to be studios and one bed flats, with two bed flats just behind. Houses are more stable but never buy in a cheap area at the top of the market as they crash further.

Pixie5740

Mark1987 wrote: »

My idea was to buy a cheap property in less than 10 years to sell/rent it after to buy something bigger. Even if small, I will have a return. Renting a room I won't have any return, unless I invest my savings in something else but I don't have enough knowledge to take a risk, even if low.

Yes but remember that if the property you own has gone up in value then the bigger property will also have gone up in value.

For example, you buy a £200k property in London now and sell it in 5 years time for 10% more than you paid for it, so it's value has risen by £20k.

The bigger property you want to buy is currently selling for £400k and in 5 years time it's also worth 10% more than today so you'd need to pay £440k for it.

Any "profit" you've made it swallowed by the increase in price of the bigger property.

Obviously this is just a very crude example which doesn't take into account solicitor's fees, SDLT, mortgage interest, service charges and any maintenance costs. I've also assumed that the bigger property will also be in London. If the bigger property was outside of London then you might fare better but as my Magic 8 Ball isn't working at the moment I can't guarantee that will be the case.

Mark1987

Yeah, that's true but maybe sometimes the increase/decrease depends on the zone, so a house in Hammersmith can increase 20%, one in Richmond can decrease 10%. It's just an example obviously

[Deleted User]

The prices of houses are not a 'London' price, but an 'area within London' price - so that Victorian terrace in Hammersmith might cost more than one in Lewisham. However, the Lewisham area may get regenerated and prices might increase more... It's pretty complex and hangs off a lot of things to do with trendiness, services, transport and schools.