Buy a property to rent out or not

restless6

OP I am a single parent and live in a rented house .
i also own a house elsewhere which I rent out.
it gives me a decent return and is an investment for my future - should I wish to live there or one of my kids live there one day.
The difference is that it used to be my family home so I already owned it before I moved into rented accommodation.
if you can raise the funds then I don’t see why people think it’s such a bad idea. Plenty of options to invest money yes - but a house could come in more handy for you or your kids. 

zxc9

OP, As a LL of over 30 yrs experience property is still a good investment for the long term ie 15 yrs plus, granted you don't get the same yields as in the past, you will get people happily quoting all the legalisation but it's not exactly rocket science, your running a business it's just your customers are people and with good communication and common sense you shouldn't have any problems.

Remember rent is dead money you are making some one else rich.

Mumoffourkids

restless6 said:

OP I am a single parent and live in a rented house .
i also own a house elsewhere which I rent out.
it gives me a decent return and is an investment for my future - should I wish to live there or one of my kids live there one day.
The difference is that it used to be my family home so I already owned it before I moved into rented accommodation.
if you can raise the funds then I don’t see why people think it’s such a bad idea. Plenty of options to invest money yes - but a house could come in more handy for you or your kids. 

zxc9 said:

OP, As a LL of over 30 yrs experience property is still a good investment for the long term ie 15 yrs plus, granted you don't get the same yields as in the past, you will get people happily quoting all the legalisation but it's not exactly rocket science, your running a business it's just your customers are people and with good communication and common sense you shouldn't have any problems.

Remember rent is dead money you are making some one else rich.

Thank you both for your opinions. It’s good to see the other side and some positive opinions. Obviously I’m not going to rush into anything but I wanted honest opinions which I am getting from here.

I am actually a qualified accountant so I am happy with the financial side of things and I would research the legal rules thoroughly before I did anything.

I do believe that rent is dead money which is why I want to improve my position.

AdrianC

Umm, Mumoffourkids... Your signature... Is that accurate? You owe £17k net? £23k debt minus £6k savings?

Mumoffourkids

AdrianC said:

Umm, Mumoffourkids... Your signature... Is that accurate? You owe £17k net? £23k debt minus £6k savings?

No I paid off my debt in September 2018.

[Deleted User]

Rent is not dead money.  It pays for the roof over your head just like those with a mortgage have to pay interest on the money they borrow.  Is the money I spend on food dead money because I eventually just crap it out?  No it is not, rent is the same it pays for something you need.

AdrianC

Mumoffourkids said:

AdrianC said:

Umm, Mumoffourkids... Your signature... Is that accurate? You owe £17k net? £23k debt minus £6k savings?

No I paid off my debt in September 2018.

That's seriously impressive, clearing £17k+ of debt in nine months while working part-time and providing for six kids.

steampowered

While rent is indeed dead money, it doesn't mean BTL is the best use for a particular post of savings. BTL also involves dead money, here are the main examples:
- Mortgage interest.
- Lender fees.
- Letting agent fees.
- Maintenance costs.
- Void periods.
- Income tax payable on rent.
- Capital gains tax payable on sale.
- Higher rate stamp duty.

Mumoffourkids

Thank you. I was determined and good with budgeting. I also did lots to earn extra money. I have relaxed the budget slightly now but want a new goal to focus on.

AlexMac

As you obviously have your head screwed on, I think the otion of a BTL is a reasonable one. I was well in my 40s when I bought a rental property,  23 years ago and I've never regretted it. I used an agent to find, thoroughly vet tenants and set 'em up, but then, as it was local, I managed it myself, thus saving the 10-15%. Nver had a problem tenant, so, when the opportunity arose, we bought a second little (ex local authority) flat 10 years ago.

However, we've benefitted from unbelievable house price inflation due to a lucky accidental choice of location. We bought at £34k and £153k respectively and each are probably worth getting on for £300k now. That crazy uplift won't  happen again.

If you do buy, location would be critical. I saw an interesting article in last weekend's press about regional differences in rental income ROI on BTL rentals; ranging from 3-4% in parts of the SE to 10%+ in some northern regions. You'd also want to buy in the right  micro-location, in an area of high rental demand. For example my two are in less fashionable but very commutable areas (London Travel Zone 3) close to shops and transport.

Finally,  there's  no tearing hurry. Insofar as you can believe experts, people like Which, Savills and Knight Frank guess that prices will dip 5-10% in coming months, so you'll have time to continue planning,  identify likely areas,  do a couple of recees (nothing beats walking around an area and chatting to local retailers and agents) and using the interwebby to track local markets..
Good luck