Ideas please - sell or let second property?

marksoton

I fail to see the problem.

Sell up both and move on with your life.

danslenoir

caronoel wrote: »

brit1234 has been predicting a house price fall for many years, and is dismissed on the Debate house prices board as a bit of a nutter.

Are you still waiting for he 50% fall by Christmas that you predicted in early 2009 brit?

Is this vitriol really necessary?

I don't forsee a sudden crash in prices anytime soon, but it would be foolish to rule out a downturn in what is a highly inflated market (in the South East, in any case).

It's perfectly sensible advice to consider the cumulative risk associated with purchase of additional properties, especially if OP will need to be highly leveraged in mortgage debt to enable this.

AnotherJoe

guest2016 wrote: »

One of the reasons I want to keep flat one instead of putting everything in to one property is an attempt at slight diversification. ?

Err no, its the exact opposite of diversification. Rises and falls will be magnified.

The only "regret" I have about the house I'm in is, I should have moved from a 3 bed to a 4 bed maybe 10-15 years ago to get better appreciation in price becausea 3 bed has a 'natural' limit irrespective how nice it is.

So, in your case, since you seem to have the ability to leapfrog the costs of buying up gradually (eg 2 bed to 3 bed to 4 bed, terrace to semi to detached, etc) then doing that would be keeping fewer eggs in one basket, and in the long term getting maximum appreciation since a 4 bed will generally do better than a 3 bed, and more to the point you will live in the best house you can afford whilst getting that benefit.

That is a benefit that perhaps you cant have a financial number on, but look at the reverse position, you could perhaps instead have 3 or 4 flats and cram your family into one of those and maybe in theory make more money, but at the 'expense' of worse living conditions for a long time. Is is worth that?

So, buy a nice house in good location with a decent garden, which will appreciate in value, and get the benefit of it over your child rearing years.

guest2016_2

Thanks AnotherJoe, you raise a point I hadn't really considered, although I disagree that putting everything in to one property is more diversified than having two in different locations!

Leapfrogging the costs of moving up the bedroom ladder one by one is something I will have to think about, but I can see why this could potentially make selling flat 1 a good idea. I think though, that even if I do sell flat 1, I probably won't be able to make a (effective) 1 to 3 or 4 bedroom jump in the areas of London we're currently thinking about.

Selling both places offers diminishing returns in terms of maximum purchase price we can afford. If we don't sell anything, we're limited by deposit size. If we do sell Flat 2 (and remortgage flat 1) we roughly hit a point where any additional deposit is only worth it's cash value on the actual purchase price. It'll buy more initial equity, but won't allow us to actually borrow more as the mortgage will become income limited.

This probably means that even with selling flat 1, we wouldn't be able to leapfrog any bedrooms. I think realistically we're most likely to end up with a 2 bedroom flat at best (which is still an increase of 1 bedroom on what I own now). My longer term plan is to move out of London in a few years and case in more then in order to buy something larger somewhere leafier.

Being able to quantify the benefit of living in the best place we could afford would be handy - I need to do some research, but commute cost and length starts to become a factor if we move out of London far enough to be able to afford more than 2 bedrooms. But perhaps I'm wrong about this? It's been 2 years since I last bought in London...