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Keep current flat to rent out & buy second propety to live in?
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It depends where the flat is. It's feasible if you can guarantee you'll have a tenant at all times and you can rent the place for more than the cost of the mortgage. If you can't or it's in a low demand area, sell it.
I've considered doing this myself when I can afford a flat. I'd be looking to buy a flat in Aberdeen where demand is always sky high and you can easily charge 2x your mortgage payment in rent each month and then relocate down South and rent somewhere in the Central Belt (Edinburgh or Glasgow) where the rent is significantly cheaper even for good properties.
We're in a very high demand area. Rental properties usually go within a day.0 -
The long term view of capital appreciation is all very well, but it's pointless if you can't service the debt.
Your margins look unrealistic at £800 a month. At a grand it's more manageable. You really need to nail down the income potential before going too far into this.
The agent said yesterday that £1000 - £1100 / month would be the going rate for it.0 -
The cost of finance makes or breaks you.
If you can get a five year fix for 4%, the interest is £7,600 a year on £190k. Assuming you cannot get an interest only mortgage, your monthly repayment is likely to be £800. Rent of £1,000 gives 125% coverage.
It's a classic Buy to Let set up. If you borrow less, you have more capital tied up, and you pay more tax, because you have less deductible, but you have greater safety margin.
There is a concept called return on investment (ROI). It's great when you borrow money to invest, and terrible when it's all your own money.0 -
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mizrahman26 wrote: »Hi, can I ask what area your flat is ?
as you say you are in a high rental demand area..
thanks
West Didsbury, Manchester.0
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