Best kind of property to buy, to rent out?

dancingfairy

Regarding being a landlord ( or investing in stocks a d shares) how much time do you want to spend on things? Do you want to be actively involved in running a property business or would you be paying someone?
If you're interested in becoming a landlord there's a useful post(s) somewhere on here that explains all the responsibilities and rules and regulations. I'm sure someone will post a link for you. I'd read that as it should clarify whether becoming a landlord is something you want/ are able to do.
Df

tlc678910

Hi,
I would suggest that you invest in property without going "all in" all at once.

Perhaps firstly find the house that you would like to live in with your family and move there (selling your current home if you can bring yourself to part with it) that will mean that there will be no additional stamp duty to pay due to owning a second property. Although if you buy before you sell in order to help the chain along you can reclaim this additional stamp duty if you sell within a window of time.

Once you have purchased the house that you are happy with you will be able to see what cash you have for your second property, fees and to keep for savings.

You will need to pay additional stamp duty on this purchase as it will be a second property but I expect it would be a cheaper property than your own home so it should not be as much.

As someone who is not keen to commit lots of time to property management and doesn't need the stress of lots of tenant issues I would suggest you buy one family home in a desirable area. A house in good condition, with parking, good local facilities and schools. If you were considering keeping your current property as your rental you need to try to be honest with yourself about whether it "ticks the boxes" for a good rental.

Then charge a fair rent for a good house and you should be able to choose your tenants carefully and with a bit of luck have a low turnover of tenants. I would personally prefer to use an agency to keep the relationship professional but whether this is a waste of time I guess depends on the quality of the tenants and the agents.

You would be likely to make more money with several flats or renting on a room by room basis to students etc but it is likely you would have a lot more stress and hassle and voids. This will be very stressful if you have maxed out and spent all your savings.

As it is now extremely hard for young people to get onto the property ladder I would be trying to choose a forever home that could allow my children to stay until into their adult years if they need to while maintaining a bit of personal space.

I would also, given the choice, prefer the rental in a location that might be helpful for my children in the future if they wanted the helping hand of a cheap rental while they saved a deposit. I appreciate you have no idea where your children will settle but a local house when you have several children could certainly come in useful and in that way add value on top of the purely financial decision of rental property versus stocks and shares.

Good luck with it
Tlc

cells

If it were me with the £330k and I wanted to be cautious I would buy 1 outright in the South East for about £270k which after solicitors and stamp duty will cost ~£285k leaving you with £45k of savings. Spend £15k on your own house to finish off the works and you still have £30k

It would give you a rental income of ~£15,000 a year and have somewhere in the region of £2,000 a year in costs. The remaining £13,000 would be your pre tax income

The £30k held back can be put into ISAs be it cash saving accounts or shares. That £30k would be a good buffer for any non paying tenants or any major works.



Of course another option is to put it all into an ISA slowly or even into your pension. Apparently dividends on a FTSE 100 tracker are about 4% at the moment which means your £300k (keep a bit back for your own needs) should leave you with £12k a year in dividend income and since it is in an ISA/Pension there is no further tax.

SuzieSue

cells wrote: »

Of course another option is to put it all into an ISA slowly or even into your pension. Apparently dividends on a FTSE 100 tracker are about 4% at the moment which means your £300k (keep a bit back for your own needs) should leave you with £12k a year in dividend income and since it is in an ISA/Pension there is no further tax.

And all with no hassle. Don't underestimate the time and effort it takes to be a landlord if you are a single parent with young children.

You can pay someone to manage the property, but as well as the high cost of doing this, you will still be legally responsible if things go wrong and if there is work needed the agent will have to contact you first, so really they are just acting as an expensive go between.

The more properties you have the more effort that is needed.