Investing in property for the future, what to do?

tbourne

Hello,

Any advice very welcome of where to start, we are mortgage free but little/no pension and would like to invest (with friends) into the property market to either rent out or make improvements and sell on.

I believe the best way to begin with would be to re-mortgage as we do not have savings, I would like to be ready to go once we find the right property.

Do you think that is the way forward rather than applying for a buy to let mortgage?

Thanks in advance

Tina

marksoton

tbourne wrote: »

Hello,

Any advice very welcome of where to start, we are mortgage free but little/no pension and would like to invest (with friends) into the property market to either rent out or make improvements and sell on.

I believe the best way to begin with would be to re-mortgage as we do not have savings, I would like to be ready to go once we find the right property.

Do you think that is the way forward rather than applying for a buy to let mortgage?

Thanks in advance

Tina

Stop right there. Money and friends do not mix.

And that's before you chuck in the added complication of remortgages/BTL mortgages.

Cakeguts

You are starting from the wrong place. What you have to do is to work out how you are going to pay for repairs to the property, buildings insurance and any other costs associated with letting a property as well as the mortgage. So you need to work out how much rent you can get for a particular property in your area compared to the cost of the mortgage allowing for the fact that you pay income tax on rent.

The fastest way for friends to fall out is over money and you are contemplating doing this with friends.

I feel sorry for any tenants. You need to have savings to be a good landlord this is not a business that you can run without keeping money in the bank.

marliepanda

Risking your home by remortgaging?

No money?

Investing with friends?

None of this is a good business plan.

AnotherJoe

tbourne wrote: »

I believe the best way to begin with would be to re-mortgage as we do not have savings ...

Do you think that is the way forward rather than applying for a buy to let mortgage?

Shockingly bad idea. Goodness knows why you think BTL with friends is the best way to save. The absolute worst I'd have said.

The best way forward is neither of your options, it's most likely to start accumulating savings and pensions and avoid tying up all your interests in a highly illiquid and risky venture with friends, since friends and business rarely mix well.

And, examine your current spending to work out why you don't have savings. And examine your reasoning why you think that with no savings and presumably no abilty to save, you think you can afford all the expenses of being a landlord.

steampowered

If you do decide to invest in property with friends, it would be worth getting a solicitor to draw up an agreement for you.

This should cover for example what happens if one of you wants the property to be sold but the others do not.

It might be worth trying to build up a savings buffer through an ISA before making a very large investment like buying a BTL property.

bouicca21

If you have no savings and very little pension (in payment or just building up contributions?), then you can't afford to become a landlord. Simples.

G_M

tbourne wrote: »

Hello,

Any advice very welcome of where to start, we are mortgage free but little/no pension and would like to invest (with friends) into the property market to either rent out or make improvements and sell on.

I believe the best way to begin with would be to re-mortgage as we do not have savings, I would like to be ready to go once we find the right property.

Do you think that is the way forward rather than applying for a buy to let mortgage?

Thanks in advance

Tina

I agree with all the previous posters, but if you wat constructive advice / alternative ideas, then much more information is needed eg:

* why do you want " to invest....into the property market? What makes this market more attractive to you than other markets?
* what other investments do you have?
* how old are you? Starting out? Or retirement age?
* what financial commitments do you have?
* what dependants do you have?
* why no savings? Are you profligate? or just making ends meet on your income?
etc etc

(sorry - got bored by the rather obvious questions.....)

tacpot12

If you want to go down the investing with friends in Property, I would suggest you look renovation and resale route, This will minimise the time that you can fall out. With luck you will be too busy doing the work to fall out.

You need a fair way to split the proceeds. If the idea is that you all work on the property together, you need to be aware that even good friends will say they will turn up after work and at weekends to help, but won't. If you are going to pay contractors to do the work, then you are not going to make as much money, and you have the risk of a bad contractor being engaged by one friend impacting on the profitability of the whole venture.

Property Rental is a long-term business, with plenty of ups and downs, even if you are lucky with tenants. What if the friends want to withdraw their investment, but you want to continue? Will you be able to buy them out?

Investing in Mixed Asset Mutual Funds through a Stocks & Shares ISA is so much easier, but then the returns are more volatile, and one can argue there is more risk.

tlc678910

Hi OP,
Imagine that you have released finance from your house for half of a deposit and renovations to get the property ready to let and that you also are responsible for half the mortgage on the buy to let property. Imagine that these payments together are £500. (You have bought half of a modest property).

If you have bad tenants who aren't paying their rent and have to evict them can you manage? If these tenants then leave and have left the house in quite a state with a cost to put right of 3K each and a further couple of months before you are able to relet (no rent) do your personal finances still hold up? ?..and then the insurance is due (that's £200 each) and the gas check (which says you need to replace the hob - another £100 each)....and is that a damp patch on the ceiling in the bedroom?

I'm sure you get the idea. Sometimes being a landlord is plain sailing and sometimes it doesn't rain, it pours!

Tlc

Some lenders won't lend against a property for the purpose of buying another (I'm guessing for all the reasons above) so check this with the lender before you put in an application.