Buy to let or buy to live!?

soapstar88

Hi Folks,

I will give you a summary of my current situation and hopefully all you helpful people will give me your thoughts on what you would do!

I am in my mid twentys and currently living with parents. I have saved up a considerable amount in savings (around 40K) and now I feel I am ready to invest into property. Its been a plan of my for some time now to get into letting property at some point and have done extensive research and keep tabs on the trends on areas around the Aberdeen area (where I live). Anyone who knows the Aberdeen property market knows how different it is to the rest of the country, there is serious renting potential and with house prices rising quickly.

Here is my predicament - Myself and my girlfriend want to move in together and ideally we want to build our own house on my parents land. However due to pace that the local planning office works its not going to be granted permission any time soon. Therefore we are looking into other options in the mean time.

We have already been to see about getting a DIP (currently around 300k is our figure). There is plenty houses in the area I want to live that can be bought for this amount however since I want to get into property letting I feel I should hold back and invest money into a smaller property first (1/2 bedroom flat for instance are making around £650) for around 120k max. This means I now have a place to live and a good future letting property. I say live as from what I gather I cannot get a buy to let mortgage being a first time buyer, therefore I would stay in this property for 1 year (also solving the issue of not having a place together!). After this period i should of gathered enough funds to inject into another property which we would prefer such as a 3/4 bedroom house. Now in theory I will have the flat to let (mortgage covered by rent) and a nice home to live in.

The other option which is to buy the house to live in first, sinking all of my deposit into plus hitting the limit for mortgage. If im right this will in theory take longer now to save for investment into a buy to let property due to higher mortgage payments on the house, all savings spent on house etc...

Im sorry for the long winded question but what would you do in this situation? Do you invest into a flat then buy home after 1/2 years (even build dream home if permission is granted). Giving me a flat to rent plus dream home.

OR sink all money into a nice home now, wait to build up deposit (and possibly re mortgage home) then invest into flat to let or rent current home if permission is granted for building dream home and build? Giving me a house to rent plus my dream home built.

My heart wants a home now but my head wants to invest! Either way I feel the investment will be worth it however I just need some experienced advice on this situation!

Perhaps this is a silly idea asking peoples opinions on this as its a little confusing! I will answer any questions to make it slightly easier!


Thanks ever so much for your time reading this!

Pixie5740

Do you think the rental market in Aberdeen is still as buoyant as it was given the number of contractors being let go and the pay freezes being announced for staff due to the low price of Brent crude?


Personally, I go for buying a property to be a home first before considering any investment properties. Is a rental property the best way to invest your money? What kind of yield are you looking at? Could you make your money work harder investing in something else?


Also do you want to be a LL? Have you looked into what that entails?

soapstar88

Pixie5740 wrote: »

Do you think the rental market in Aberdeen is still as buoyant as it was given the number of contractors being let go and the pay freezes being announced for staff due to the low price of Brent crude?


Personally, I go for buying a property to be a home first before considering any investment properties. Is a rental property the best way to invest your money? What kind of yield are you looking at? Could you make your money work harder investing in something else?


Also do you want to be a LL? Have you looked into what that entails?

Hi Pixie,

Thanks for your response. I myself work in the oil industry (big surprise there!) and have good reason to assume this 'blip' in the price of crude will change in approximately 1.5/2 years although no one can be 100%! But its something I am willing to gamble with.

I've looked into many investment opportunities and property rental comes out on top. My parents rent holiday lodges which I am also involved in therefore I have a very good insight into the demand (we are through the roof with people needing long term accommodation) and the general commitments required of being a landlord.

In terms of net yield i would expect to cover my mortgage interest comfortably hopefully. Still unsure wether i would go for letting agent or not which would obviously effect my net yield.

Thanks!

Pixie5740

It's up to you. You seem to have your heart set on buying an investment property in Aberdeen so if the sums stack up then go for it. If you wait until April you might even save yourself some stamp duty or whatever the tax will be called then.


I'm buying a home in Aberdeen this year and I'm not sure how the offers over is going at the moment. Before things went down the pan it was quite common for properties to go 15%+ over the o/o price. Meaning that not only did you have to have the deposit but an extra 15 odd % too.

Caz3121

It would be worth checking out the BTL mortgage market, not sure if any/many will give BTL mortgages if you don't already own a property