Investing £20,000?

Jack7771

Hello,

I'm currently 19 years of age and have saved £20,000 and I am considering investing in a property to rent out. I am planning on using the £20,000 as a deposit on a low-value property (£70,000-£100,000) and renting the property out.

I have absolutely no experience with investing/property so I apologize for my ignorance. I am looking for general advice/suggestions and I appreciate any help provided.

What should I look for when purchasing a property, what hidden fee's should I expect? Should I invest this £20,000 elsewhere, and if so, why? What rental yield should I be looking to achieve?

Masomnia

I'm not an expert on it but I can't see you getting a BTL mortgage with that.

In any case though, do you really want the responsibilities of being a landlord?

I think if you have no experience in property, and I'm assuming also no experience in putting together a diverse portfolio of investments, I wouldn't have thought you're in a good position to make the decision.

It's a lot of money for someone your age, so I think you really need to take your time and figure out your options before you commit to such a huge investment.

The other thing that occurs is whether you currently own your own place and don't you want a deposit for that in the near-ish future?

Jack7771

Hello,

I'm aware that I would struggle to get a mortgage but this should not be an issue as the mortgage will not be in my name or were you expressing that £20,000 wasn't enough? Yes, I have no experience with property but how is one supposed to gain experience without experiencing?

I don't want my own place at the moment, I am planning on going abroad then possibly studying for a few years so I would not need a place of my own for at least 3-4 years by which I'll easily be able to afford another deposit.

I'd agree that I am not currently in a good position to invest thus why I am asking for advice and not investing. I clearly need to research more into this and would be appreciative of any advice you or anyone else can provide.

I am in no rush to invest, I am simply checking what options are available to me and will not invest in property unless I am sure that it is the correct course of action.

darkidoe

You would need to have financial sustainability checks to get a mortgage and would need a regular income for that. I don't see how banks would be willing to take you on without an income.

Jack7771

Hello,

Thanks for the contribution but as stated above, the mortgage will not be in my name. I will be able to get a mortgage, this is not an issue. I am simply asking for advice/suggestions from people who have experience in dealing with property.

silver145

If you have saved 20k, but the mortgage would not be in your name you will be required to sign a letter saying "this 20k is basically gift, i legally am handing this over and will never ask for it back"

E.g if that person decides to stab you in the back, you dont have a leg to stand on - hence why people are asking as from the above information it is a highly risky option.

bigadaj

Why not ask the question on one of the property boards?

dunstonh

I'm currently 19 years of age and have saved £20,000 and I am considering investing in a property to rent out.

Do you intend to buy a house to live in (with a mortgage) in the future? If so, a mortgaged buy to let could reduce the amount you can borrow.

What should I look for when purchasing a property, what hidden fee's should I expect?

There are no hidden fees. That is just laziness by people that do not read documentation.

this should not be an issue as the mortgage will not be in my name or were you expressing that £20,000 wasn't enough?

The lender would want the property in the name of the borrower. So, who would own the property and take out the mortgage if you don't?

Yes, I have no experience with property but how is one supposed to gain experience without experiencing?

By making sure they are financially sound before going into a risk based transaction.

I am planning on going abroad then possibly studying for a few years

How does the country you would be staying in treat the income and taxation from an investment property?

but as stated above, the mortgage will not be in my name. I will be able to get a mortgage,

So, which is it? Will you be getting the mortgage or not?

AnotherJoe

Why are you considering investing in property and not, say, oil, technology companies, utility companies, retail, consumer goods, banks, etc etc etc etc. E.g. Why property, specifically?

If you owned a property and let it out, who would run it for the next five years why you aren't there? Who would pay the mortage, manage the tenants , ensure all legal liabilities are fulfilled, who would chase bad tenants for rent, evict them if necessary, etc etc etc ?

You must have already done a short exercise looking at the cost of the mortage, all the expenses, the rent. What sort of profit does that show ? Does that include the costs for doing all the above amd additional unplanned expense such as repairs on appliances?

In your position, instead of risky, complex property, I'd pick a general, low cost global fund and invest the money in that, inside a savings and shares ISA to shelter from tax and also paperwork. You can leave it alone, it won't need management or have legal requirements, or tax returns,. It also doesn't involve illegal mortage fraud, which you are seemingly proposing.

There's a small chance it will be worth less than you put in, in five years time, but that's also true, when you you look at all the costs and expenses and what could happen to the housing market, of buying a low value house.amd it doesn't have the risk that whoever you give your £20k to won't run off with or otherwise lose the money either, however much you trust them.

KonkyWonky

If you're not going to be in the country then property would seem a strange investment choice. Your going to have to pay someone to look after your investment which is going to cut into your profit straight away.

Broken_Biscuits

If you do end up moving out of the country and will be paying an agent to manage the property...

There would be no reason to buy a property on your doorstep just because you were born there. It would make more sense to research what city's have low prices, high yields and high demands due to, say, universities, large projects that will create further employment needs etc.

Personally I would research stocks and shares and look more at a balanced portfolio rather than physical bricks and mortar. But best of luck whatever you end up doing, you clearly are a motivated individual to have saved 20k by age 19. Well done!