Second property with the other half

AbiJ11

2 years ago I got a little house on my own and have invested a fair bit into it.

It was bought for £101000 and since has had a brand new kitchen, brand new bathroom, overhauled garden and cosmetic upgrades. Average house price has gone up by £15000 on my road too. So I'd expect my property to be worth £120000 now. There is £91000 left on the mortgage.

However, now I'm making the huge decision to buy a house with my partner for a lot of reasons. We have two viewings at the weekend - £200000-£220000. We have the 10% and then some for upgrades and conveyancing and what not.

Now because of the amount of love and money and effort I put into my house (and for financial security), I would like to keep the first property as a rental ~£650/m

Will I be able to do this? Does it stack up? Do we have enough of a deposit? Any and all advice is welcome

Pixie5740

AbiJ11 wrote: »

2 years ago I got a little house on my own and have invested a fair bit into it.

It was bought for £101000 and since has had a brand new kitchen, brand new bathroom, overhauled garden and cosmetic upgrades. Average house price has gone up by £15000 on my road too. So I'd expect my property to be worth £120000 now. There is £91000 left on the mortgage.

However, now I'm making the huge decision to buy a house with my partner for a lot of reasons. We have two viewings at the weekend - £200000-£220000. We have the 10% and then some for upgrades and conveyancing and what not.

Now because of the amount of love and money and effort I put into my house (and for financial security), I would like to keep the first property as a rental ~£650/m

Will I be able to do this? Does it stack up? Do we have enough of a deposit? Any and all advice is welcome

That's a terrible reason to keep hold of the property and turn it into a rental.

Does your budget account for the higher rate of SDLT you will have to pay?

davidmcn

AbiJ11 wrote: »

(and for financial security)

Wouldn't you get more financial security by paying off the mortgage and taking the cash?

gingercordial

AbiJ11 wrote: »

2 years ago I got a little house on my own and have invested a fair bit into it.

It was bought for £101000 and since has had a brand new kitchen, brand new bathroom, overhauled garden and cosmetic upgrades. Average house price has gone up by £15000 on my road too. So I'd expect my property to be worth £120000 now. There is £91000 left on the mortgage.

However, now I'm making the huge decision to buy a house with my partner for a lot of reasons. We have two viewings at the weekend - £200000-£220000. We have the 10% and then some for upgrades and conveyancing and what not.

Now because of the amount of love and money and effort I put into my house (and for financial security), I would like to keep the first property as a rental ~£650/m

Will I be able to do this? Does it stack up? Do we have enough of a deposit? Any and all advice is welcome

This is a bad idea. You are (understandably) emotionally invested in this house and you will hate seeing what tenants will do to it. Not saying your tenants will necessarily be bad or trash it (I am a tenant!) but you will still expect them to use it according to your vision and memories and you can only be disappointed. If you are going to be a landlord you need to be able to treat it dispassionately as a business.

Further, if you were going to start a rental business from scratch and had the funds to buy a £120k BTL property, would you really buy this *exact* one? If not, why would you start a new business with a less-than-ideal asset choice?

Linton

How will you feel when the house in which you have expended a large amount of love and money is let out to strangers who dont treat it with the respect you feel is due?


Is a house that you have lovingly set up to meet your tastes and requirements suitable for the average enter?


If you were buying a house to rent out why would it be this one?

elonii

To be honest, I'd sell and take advantage of the premium you'll get on price for it being really perfect. I once rented out my newly renovated flat whilst I went away to live elsewhere for a while, and came back a few years later to my bathroom ankle deep in water, kitchen cabinets ruined by water damage, and every single surface drawn on with felt tip pen (lovely family!). It was heartbreaking. Letting agents do not always do a great job of monitoring the property.



Also, have you budgeted for the additional stamp duty you'd be due for your new place with your partner, and what would the fees be regards switching your mortgage out to a buy to let? Are you aware of the tax issues surrounding buy to let properties whereby you don't get a deduction on full mortgage interest? How does your return on investment stack up versus taking the cash from a house sale and saving money on your new mortgage?



Buy to let takes quite a lot of time and knowledge these days, you'll need to do your numbers and make sure they stack up in your benefit. Don't just keep the property because you love it. It's not the right reason on its own.


Best of luck with your decision

davidwood681

Relationships fail and I presume you're not married so I'd keep the first property as a back up if things go wrong with your partner. ( never sell anything if you can afford to keep it )

davidmcn

davidwood681 wrote: »

I'd keep the first property as a back up if things go wrong with your partner.

And then do what - bunk up with their tenant?

sheramber

Have you investigated the legislation a landlord has to follow when letting out a property?

AbiJ11

I mean none of your replies answered my specific question but we had an offer accepted and the ball has started rolling.

Okay so far so good. There is a significant upfront fee for flipping the current mortgage but because my rate was so poor when I first purchased this will save me a significant amount more over the next few years and be a lower monthly cost. I also have to pay additional property stamp duty.

This is a pain but will give us plenty of time to work out whether to keep the house as a start to a property portfolio or to just sell it at a more profitable time. If we sell within 3 years we get the stamp duty back.

I will be using a letting agent to manage the rental of the first property so most of that is covered too.

davidmcn

AbiJ11 wrote: »

I mean none of your replies answered my specific question

You asked three specific questions and also said that "any and all advice is welcome".