Advice please. Do we buy?

mb008

Hi

Would really welcome some thoughts. We are in the process of buying our first investment property. Mortgage agreed, valuation okayed - just waiting now.

It's a BTL - which means a hefty deposit and increased stamp duty costs, so that we'd be looking at nearly £100k out of our account. The idea was to hold onto to it and rent for about 6 months and then sell on.

But... with Brexit - I'm not sure this is such a good plan. If we planned to hold onto it long term then I'd go ahead, but we need to sell reasonably quickly to realise some profit and then use this to invest in the house we live in which needs a lot of work. (We're awaiting planning approval on our own home to get it extended etc).

Should we buy, or drop out and try and pick up something else at a better price? We're buying the BTL in Reading and so I need to factor in the Crossrail effect as of 2018/19 but which may be countered by the Brexit effect.

I know the market's not changing significantly right now, but in 6 months it may be a different picture.

Any advice?

*~Zephyr~*

When you say "reasonably quickly", how soon would you intend to sell?

Pixie5740

Property is a long term investment. If you're thinking about buying a property, letting it for 6 months and then selling it, this investment will cost you money, it won't make any money for you Brexit or not.

You'd be better off just using the money to do whatever work it is you want to do on your home.

smile88egc

Not sure you'd find a tenant that wanted somewhere for only 6 months,

And even if you found one that said they did, there's no guranatee they would actually leave

And with prices dropping off after the brexit vote there's a real risk you could make a loss, particularly when taking into account the extra stamp duty.

Sorry this sounds like a bad idea, and terrible timing!

pinkshoes

Brexit or not it sounds like a ridiculous idea.

The only way to make profit over such a short time period is to add value, e.g. Buy a wreck of a property for very little money they do it up nicely and sell on. Not always guaranteed to work though, so do your homework!

david1951

Brexit or no brexit, six months is awfully short period of time to 'flip' a house, especially if you aren't doing any work. With respect, I'm not sure this was a good idea to begin with...how much is the property?

ChattyBear

I have recently moved and in the 6 months my house went up by £5000, so in my area at least the house prices are still rising and the need for houses are still pretty high. Plus with most banks looking to get loads of new home buyers in with low interest mortgages there is a lot of competition but saying that who knows what is going to happen in the next 6 months.

Depends where you live and what the current market is doing, speak to local estate agents and see what they think before you make a choice.

I would say if you still have a mortgage to pay use the extra money on that, unless you have money to burn but still investing in your own property is the way forward.

mb008

Hi
The house is £250k to buy - which in Reading is a good price for this type of house. It needs work - tidying up etc and we planned to add some value to it. Rental potential is good - around 6% yield. But, we don't want to hold onto it for that long (i.e max 1 year, ideally less). Prices in this area have gone up every month for the last year, or more, due to the planned arrival of Crossrail.

david1951

OK, so stamp duty alone is £10,000 and total costs might be about £15,000.

I suppose, pre-Brexit the price could go up by at least this much over a year and rental yield would add to this and cover rental costs/redecoration.

Post-Brexit, you are less likely to make a profit over a year and might need to hold onto the property for longer. This isn't the end of the world if you are still making money from renting it.

As an aside, does the mortgage have an early repayment penalty?

hazyjo

Have you taken into account the extra stamp duty? Do you know how much it costs to move?! (I'm having to budget for around £13k for my next move - without the 2nd home SD you'll prob be clobbered for.)


Are you aware it may be difficult to sell after 6 months? Some lenders require the vendor to have lived there for a year before they will lend on it.


If the market does drop, even slightly, or stay static, will you be out of pocket?


You may find it hard to find a tenant for just six months. Have you factored in rental voids?


Jx

mb008

No early repayment penalty - deliberately sought that when taking out a mortgage.