Where to invest in Property...

trailingspouse

So you've got +/- £75,000 capital available.

That's fab - well done you.

In your shoes I would buy a decent place using, say, £55,000 of your capital and whatever you can get as a mortgage. At your age you could get a 30+ year mortgage? (I know my son did, aged 22, but that was 4 years ago and things change). Don't buy your 'forever' home - you're far too young to be doing that and at some point there may be someone else in your life who you have to consider - just somewhere that works for you and won't be difficult to resell when the time comes.

That leaves you £20,000 in capital for sundry expenses (solicitors, surveys, decor, carpets etc etc etc) and as a buffer while you discover just how much it costs to live on your own.

steampowered

StevyyR wrote: »

When looking for up and coming areas I'm looking for things like planned housing/industrial builds as well as new transport link opportunities.Are these the kind of things that I should be looking for

If you are buying property based on the fact it may go up when a new transport link is announced, you are simply gambling.

You might as well just go to the casino and stick most of your money on red - at least that doesn't tie you in or sting you for extra tax.

If you want to gamble with high risk investments that's fine. If you want to play high-risk stakes I think you would be much better off investo-gambling by purchasing high risk shares - at least shares won't tie up your capital or get you stung for tax at a time in your life when that is inappropriate.

Its a very bad idea to take extreme investment risks like this when you only have £70-80k to play with and when you'll need to have access to that for your deposit.

saajan_12

StevyyR wrote: »

I have enough money saved up in the bank from working after leaving school to look into entering the housing market (currently still at home due to being <5miles to work, it's just too handy!). In my mind I am currently processing the following plans/ideas as want to know which, from experts, is the best move to make:
-Purchase a studio flat approx. £70-80k outright for rental purposes at 7% yield and then off the back of this income plus extra income from my pay packet, try to get a mortgage to purchase another house to live in. - studio flats are hard to mortgage, affecting future resale value and hard to let because of their limited market. Also, the return on a low value property is limited, compared to losing FTB status, which means any future (likely higher value) purchases are hit with extra 3% stamp duty, no longer eligible for Help to Buy / other schemes
- Alternative option here is reverse the tables, buy a flat to live in and then get a mortgage to buy a property to rent.- this sounds like the better route, if you actually want to move out. However if you're at an age where flexibility is useful then the costs of selling and buying elsewhere in a few years will outweigh any short term return. So if you want to just invest then there are other options.
-Purchase a nice house with a sizeable deposit and small mortgage to live in (easy option).
-Do what someone at work is telling me and split my deposit 5 ways on 5 different flats, looking at around 10% deposit on all of them, live in 1 and rent the other 4 (risky and hard option).- The rental flats would need BTL mortgages, which would require 25% deposits, often need you to be aged 25+. You'd be liable for the extra 3% stamp duty for each property as you already own a home. Further, managing changing tenants, repairs, LL legal responsibilities for 4 properties is a lot of work, time you could use working elsewhere - if you count a wage for that time, how do the returns look? If you can get another job for the same time & bringing in the same money then you don't have the capital risk

Due to having the money just sat there in the bank currently earning <1% total it is slowly driving me mad that I'm not doing anything with it! Any help and advice would be massive appreciated.


Thanks all
:hello:

I'd suggest look on the Savings & Investments board for short term investment options so your capital can start returning a bit higher but you still maintain some flexibility while you figure out a longer term solution.

AnotherJoe

Lot of good advice here OP, whoever was telling you about 10% deposits is living 10 or more years in the past, well before 25% minimum deposits, 3% extra SDLT and a whole raft of new and forthcoming tax and legal requirements that mean that being a landlord is no longer the simple route to riches it perhaps once was.

In your case I’d look into buying a nice place to live in for yourself (with an eye on resale) and also investing in your long term future with a pension, at your age even small amounts will grow hugely over time and have a disproportionate positive effect long term due to compounding and tax relief.

I would advise against a studio flat, in the event of houses prices falling, they are usually hit first and hardest and they also are the most limited as to rises, should prices go up.