Advice needed!

Guy_Montag

moneysavinmonkey wrote: »

would you borrow 85k to invest in the stockmarket?

Yeah whyTF not. If it all goes pear-shaped it's not your money you've lost.

But fair point.

I did a graph a wee while ago based on either Nationwide or Halifax data, (I forget which), which showed that property in NI had risen to the same prices as property in the SE England (excluding London). However, the SE of England surrounds a world centre of massive wealth generation. NI is a small province that no-one really wants, sustained almost entirely by grants from HM Govt. Whatever happens in the rest of the country, property in NI is horrifically overpriced & must surely come down.

Sara_c_g

Debt_Free_Chick wrote: »

Don't worry - you probably would have spent more on mortgage interest plus the other costs of homeowing, which you avoid when you rent (buildings insurance, maintenance etc).

By all means see a financial adviser about the mortgage, but have you really thought this through?

You are planning to borrow money to make an investment. You don't know that the investment will repay the borrowing - as house prices could fall, so that when you sell, you get back less than you've borrowed. What will you do then?

In addition, you are planning on letting the property out .... a few questions ....

What is the rental market like in Glasgow? Plenty of tenants? The rental market in this are is good. I checked with a local agent. Also, my cousin has lived here for 6 years and knows the people who come in and out of the building etc

What monthly rent would the property command? £475-£525 per month

What is the current state of the property? Is it "immaculate" and likely to have tenants fighting over it? Or do you need to spend money to get it up to scratch? It is immaculate. Its just been painted, recarpetted and is in very good shape.

How will you pay the mortgage when the property is empty e.g. before you get a tenant in? Whilst you decorate or improve? In between tenants, as you can't have one moving out at 10am with another moving in at 12pm?
We can pay some mortgage payments while the place is empty. We actually earn very good money (45k between us) but its still not enough to consider a Belfast property.

Who is going to manage the property, to be on hand to deal with any issues the tenants have? You can't do this, living in Belfast - so have you factored in the costs of paying a managing agent to do this?
Yes, an agent takes 10% of the rent and my cousin has also agreed to be involved.

Do you have a contingency for any emergency repairs or maintenance e.g. replacing the boiler if it fails with a tenant in the property?
We plan to overpay into our mortage bank account, in order to have a 'float' to conver these things.

You say you don't even have a deposit - is that right? :eek: What about all the costs of buying? Solicitor, survey, searches etc?
We can gather a 5% deposit and parents will help with a survey etc. We also have a family solicitor who will work for us for very reasonable rates.

If you are letting the property, you will almost certainly need a deposit - but see what the financial adviser suggests.

In addition, even if you don't need a deposit (unlikely) you will need cash for the costs, plus a contingency, plus you may need to improve/decorate in order to let the property.

Have you looked on Rightmove for similar properties available to rent, in the same area?

Yes, flats in this area can command from £400 -£650 for similar 2 bed properties.

Sara_c_g

Guy_Montag wrote: »

Yeah whyTF not. If it all goes pear-shaped it's not your money you've lost.

But fair point.

I did a graph a wee while ago based on either Nationwide or Halifax data, (I forget which), which showed that property in NI had risen to the same prices as property in the SE England (excluding London). However, the SE of England surrounds a world centre of massive wealth generation. NI is a small province that no-one really wants, sustained almost entirely by grants from HM Govt. Whatever happens in the rest of the country, property in NI is horrifically overpriced & must surely come down.

I hope your last sentence is right! Its really crazy here. We earn a lot less than the rest of the UK and our living costs actually tend to be higher so its a nightmare. My partner and I earn over £45k between us and you would think we would be able to find a nice house easily but the houses in the area we live in now (3 bed semis) are commanding over £300k!

pandhandj

Sarah,

where about is the flat in Glasgow? Is it a new build or a tenement? Does it have a tenant?

There are lots of new builds in the Partick area, which got a lot of bad press earlier in the summer – severely over priced, not selling etc.

moneysavinmonkey

with a 5% deposit you mortgage payment is going to be around £470...
that's interest only and assuming you can get a 7% interest rate...

given that you are looking at a 95% LTV BTL
and you aren't home owners you may be struggling to get a deal as good as that in the present climate.

If you are expecting a best case scenario rent of £472.50
(i've subtracted the 10% agents fees) worse case £427.50

So you aren't making any income on the rent at all and I haven't even factored in service charges, maintenance costs, buying costs, legal costs, voids, problem tenants, regulatory costs (you have to be registered as a landlord in scotland I think), lost interest on your capital, calling in favours from your family. etc .etc

Catblue

I agree with macaque - let your cousin sell the flat for £90K and gift you the £5K for a deposit in Belfast. Your cousin would be no worse off by doing this and you'd be much better off.

If it is such a good deal, you need to ask yourself why your cousin is not interested in doing it himself.

Why don't you ask your cousin if he could put up £45K towards the buy to let? His reaction will tell you whether he truly believes that this will be a money-making venture.

Sara_c_g

Hiya, Its in Springburn and was built about 7 years ago.
The reason my cousin is selling is because he wants a big deposit (he has made about 40k on it) as he is buying a house with his girlfriend nearby.

pandhandj

Sarah,

i dont know how well you know Springburn, no offence to your cousin, but it's not what i would call plush.

It's quite close to the city centre. But it's pretty rough itslef. The area's around it are also pretty rough - there is no way i would walk about at night by myself.

Rightmove has 3, 2-bed flats for sale at offers over £73K - £79K. With your expected rent of £400 - £600 (approx.) I'm wondering who would pay that much to stay in Springburn!

Sara_c_g

OK, well it seems that this idea isnt the right one for us but we are still going to see the advisor so we are able to make an informed decision ourselves.
Another option is to use co-ownership here in Northern Ireland to buy a house in a not so nice area but at least it would be ours- does anyone have opinions on this type of scheme?