advice needed on maybe buying a buy 2 let

angchris

my brother emigrated to canada a few years back and now wants to buy a property out there..to do this he has to sell his quite nice 2 bed house that already has a tenant in it (who has lived there years) to free up his money. i already own a house that we live in and are lucky enough to only have 28k outstanding on it and we are quite happy living here. my oh is able to get a mortgage as he is on a good wage and it seems likely that we could possibly buy the house for cheaper than it is worth as he wants a quick sale and there would be no estate agent involved etc as it would be a private sale.
what would you guys do? would you go for it? oh is worried about being tied down with another mortgage at the age of 47 and that we would have to put something towards the mortgage ourselves as well as the tenant each month. in my view its worth it as its an investment in our future and chances to buy bargain houses with tenants don`t come along too often, but i need extra reasons to try and talk oh into it helpppp....angchris xx

PROFESSIONAL_LANDLORD

Good idea, I thought until I read,

we would have to put something towards the mortgage ourselves as well as the tenant each month.

Bad idea, you should never consider a BTL if you have to 'put your hand in your pocket ' to subsidize the mortgage. What about empty periods/ non payers,

what would you guys do? would you go for it?

honestly NO

angchris

we would keep the tenant thats already living there, theres no need for her to move as she is an established tenant. surely after a while her rent would go up with interest rises etc and the mortgage would reduce very slowly so hopefully should break even after a while/few years. i don`t mind adding a couple of hundred a month if it means we own another house at the end of it

TTMCMschine

One of the porblems with this kind of logic that people seem incapable of seeing, is that you will be paying interest on the mortgage as well as dipping your hand in your pocket as well. By the end of the term you will have paid back a substantially higher amount than you borrowed, which, when combined with your subsidised tennant, & CGT when you sell will mean that you will make not very much at all. You'd do better to stick your money into some form of ftse tracker every month.

A_Nice_Englishman

You wouldn't buy a loss-making corner shop and put your hand in your pocket to subsidise the customers would you?

Why would you want to buy a loss-making property rental business?

If you feel you want to borrow more money to put into residential property at a time when the market seems shaky at best buy a more expensive house for yourselves and at least you'll have somewhere nicer to live and won't have CGT to pay when you sell.