Opinions wanted - unique (ish) situation

mikecc

Hi all

I live overseas in the middle east, have done for about 2 years, and will be here for at least the next 2-3. I'd like some opinions please!

I'm in the fortunate situation to have no debt, aside from some residual student loan debt (under 3k) which I'm happy to let tick along. I am non-resident for tax purposes in the UK, and have no assets or obligations in the UK at present.

I have a chunk of money sat in my UK account (earned in ME and transferred back - all in accordance with tax legislation) and want to buy some investment property in my home city.

Initially I'd be looking at an investment of around 90k - enough for a decent 1 bed or small 2 bed flat where I'm from, this leaves me with plenty of contingency in my bank and my job is secure (as it can be) for the rest of the year. I I may look to do the same again later this year.

Now, logistical complications aside (being around for viewings/signatures etc), is this a good or bad idea? I have a basic understanding of tax implications and have an accountant I use for advice who can take care of things for me.

I was considering looking at planned developments and trying to pinch a bargain or two off-plan. I have the option of giving some sort of authority to my father and he would be happy to take care of the day to day stuff (renovations/tenant finding) etc.

Obviously in this instance I will not need a mortgage. I do not want a mortgage at this stage as it complicates things contractually for me.

What would you do in my scenario? Property or otherwise..

paddyrg

Bad idea - all your eggs in one basket, and being a landlord isn't a hobby but a serious commitment. Just my 2p

mikecc

Thanks for your reply - I appreciate (though perhaps don't fully know) the extent of commitment required and would have methods in place to manage the eventualities - including the use of agencies, having budget for contingency aside, and on-the-ground resource to manage anything an agency couldn't.

However, I don't understand the all your eggs in one basket thing. I don't have a need to buy a house to live in for myself, and have some other investments (minor), plus healthy cashflow. How else do you get into property rentals if not by buying your first portfolio property? Apologies if I'm not being clear, I'm just not sure how much more I could spread my risk at this point.

Pixie5740

How much can you let a decent 1-bedroom or small 2-bedroom flat for in the area? Is there demand for this type of property in the area?

People living abroad or about to move abroad often seem to think a family member can manage the let for them. I wonder if either party really knows what is involved. Would the family member be happy about being called on a Friday night when the boiler has packed in or deal with difficult, non-paying tenants or get the property ready in between lets?

Not to mention that new builds usually have some snagging. Who will deal with that?

G_M

If you have diversified investments elsewhere as well, then the eggs thing does not apply. If all/most of your savings will go into the property, then...... eggs.

If you have a good agent, and accountant, you can be pretty hands-off - once the purchase is complete. But choosing /relying on an agent can be a challange in itself. A poor (or self-centred) agent is worse than a poor tenant......

You really need to do some serious maths, to see how the costs/income a property investment will produce compared to, say, a diversified portfolio of shares. Using realistic figures for both the costs and income.

These posts might help:

* Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

Cakeguts

It is a bad idea because being a landlord is a business and you haven't done any market research. You have done what a lot of people do you work out how much you have saved and then decide to buy a property based on those savings regardless of whether that is the kind of property that tenants want to rent.

If you buy a property that most tenants are not interested in renting that reduces your choice of tenants. In order to let the property you have to take anyone who comes along. Doing this increases your chances of getting tenants who don't pay the rent, wreck the property, annoy the neighbours etc and you are not even in the UK. People who understand the letting business do extensive market research before they buy a property and decide what part of the market they want to operate their business in. If you are abroad you are less likely to want to have a property that needs a lot of managing. This means that you need to buy a property that tenants do want to rent. However you don't seem to have done any research into the kind of property or the cost of one in the area that you are thinking of buying in.