Buy one house or three?

Jizilcaaegir

I've luckily paid off my mortgage... I have enough cash to buy a very cheap terrace house 'up north' so that my daughter could have a secure tenancy, though she would pay me rent as I don't have a pension and I would get more than in a savings account obviously!!!
My question is, buy one house outright and rent to daughter OR buy 3 properties with a mortgage, rent one to daughter and 2 on a commercial basis????

Opinions on the best option gratefully received

booksurr

letting to family means you must have a Regulated BTL mortgage - they are rare and more expensive

whether you buy one or 3 have you allowed for higher rate SDLT?

Mr.Generous

Either way you're going to be hit with new stamp duty charge. Renting property to non family far from where you live could throw up a few issues unless you pay an agent. If the return is the same I'd buy one and rent to family. Commercially three £60k houses (say) pay a much better yield than one £180k house. Aim for about an 8% yield and you're doing ok, anything over well done, anything much less keep looking.
Best return we've got was Leigh (Nr Manchester / Wigan) small old terrace at 9.5% worst was Warrington, modern 3 bed semi at 6% (too expensive purchased wrong house to let)
Pension schemes reckon to get about 5% yield so I say go for it!

HappyMJ

Jizilcaaegir wrote: »

I've luckily paid off my mortgage... I have enough cash to buy a very cheap terrace house 'up north' so that my daughter could have a secure tenancy, though she would pay me rent as I don't have a pension and I would get more than in a savings account obviously!!!
My question is, buy one house outright and rent to daughter OR buy 3 properties with a mortgage, rent one to daughter and 2 on a commercial basis????

Opinions on the best option gratefully received

My opinion....none. You can get better returns elsewhere without the hassle.

If you have spare money you could give her the money to buy one outright in her own name and she gives you money back each month. Buy it with no mortgage at all. As it's in her name you wouldn't be paying additional SDLT and you wouldn't have a CGT bill as it's her PPR and her property.

Cakeguts

It depends where up north. In desirable areas you can let 2 bed terraces easily but they cost more than 60k to buy. If you aren't local you don't want something that is a lot of hassle and has lots of voids.

Pixie5740

My tuppence worth is to set up a private mortgage arrangement with your daughter. She would own the place but you would have first charge on the property. That way you don't have to worry about landlord responsibilities, CGT or possibly IHT (not that you would be worrying about IHT because you'll be dead by then).

As for buying another 2 properties, you'd need to do your homework. Do you want to be a landlord? Can you get the same returns for less hassle (yes)? Is the government taking steps to make BTL less attractive (yes)?

danslenoir

I'm guessing that your daughter, like many young people, will be struggling with high rental costs and that purchasing is not realistic prospect for her because of insanely high property prices relative to incomes.

How about not contributing to this situation by not buying three houses to use as cash cows?

HappyMJ

Jizilcaaegir wrote: »

I've luckily paid off my mortgage... I have enough cash to buy a very cheap terrace house 'up north' so that my daughter could have a secure tenancy, though she would pay me rent as I don't have a pension and I would get more than in a savings account obviously!!!
My question is, buy one house outright and rent to daughter OR buy 3 properties with a mortgage, rent one to daughter and 2 on a commercial basis????

Opinions on the best option gratefully received

danslenoir wrote: »

I'm guessing that your daughter, like many young people, will be struggling with high rental costs and that purchasing is not realistic prospect for her because of insanely high property prices relative to incomes.

How about not contributing to this situation by not buying three houses to use as cash cows?

Read the OP again....a very cheap terrace house 'up north' is not priced insanely high relative to income.

Anyone working full time and earning the NLW can afford to buy one of them. I personally live in Burton upon Trent...the Midlands which is more expensive than 'up north' and there is plenty of good quality two up two down terraced property around £75,000. A 10% deposit would require a mortgage of £67,500 and require payments of £299 per month at a rate of 4% over 35 years. Someone working 40 hours a week earning £7.20 an hour would be earning £1,248 and can afford that. Their take home would be £1,112 and they'd be left with £813 for bills.

Mardle

Definitely look into a private mortgage. You can charge interest and if you're still working you can set the rate of repayment low to start with and increase it when you need the extra income. You won't have the hassles of being a landlord and your daughter will be on the property ladder.