Investment property without owning current home

BikingBud

Just give the cash to me I promise to pay you 5% net yield and won't devalue the asset

BikingBud

Go on what's not to trust?

I've also got some good lottery tickets

Comms69

BikingBud said:

Go on what's not to trust?

I've also got some good lottery tickets

There's jokes and there's spam, you're straying into the latter.

BikingBud

Comms69 said:

csgohan4 said:

OP i hope your know what your getting yourself into, so much tax, legal and financial implications for being LL.  Tenants can and will not pay rent, it's expensive and lengthy to evict

Without a mortgage there's less risk though. It's a sensible investment for 3-5 years if the intention is to cash in and buy own home / move in eventually.

You started the comedy show!

Comms69

BikingBud said:

Comms69 said:

csgohan4 said:

OP i hope your know what your getting yourself into, so much tax, legal and financial implications for being LL.  Tenants can and will not pay rent, it's expensive and lengthy to evict

Without a mortgage there's less risk though. It's a sensible investment for 3-5 years if the intention is to cash in and buy own home / move in eventually.

You started the comedy show!

Not sure why that's comedy. 

The OP would have a secure asset which they could utilise if needed. No risk due to job insecurity etc

BikingBud

A secure asset? Yes, if you keep the doors locked! Your opinion, and it is only your opinion may be supported by hope and desire but there needs to be some realism in advice that people give. Perhaps you've missed some of the news. From the Guardian:
 
"In its half-yearly forecasts, the IMF said the “Great Lockdown” would cause a dramatic drop in activity that would be far more painful than the recession that followed the banking meltdown of the late 2000s."
or from the-economic-effects-of-coronavirus-in-the-uk

"Household finances
The deterioration in the economy is affecting household’s finances. As Figure 5 shows, 75 per cent of households have reported falls in income. This is likely to be driven both by falls in employment and the 29 per cent of firms reducing working hours. This has resulted in 27 per cent now using savings to cover living costs, something which is more likely to be an option for better off families; in 2018, more than half of families on low-to-middle incomes reported having no savings at all. This shows up in the 15 per cent of households reporting difficulty in paying their bills."

Keep believing it will all be OK if you want but this is all going to cost a lot of money for many years.

Comms69

BikingBud said:

A secure asset? Yes, if you keep the doors locked! Your opinion, and it is only your opinion may be supported by hope and desire but there needs to be some realism in advice that people give. Perhaps you've missed some of the news. From the Guardian:
 
"In its half-yearly forecasts, the IMF said the “Great Lockdown” would cause a dramatic drop in activity that would be far more painful than the recession that followed the banking meltdown of the late 2000s."
or from the-economic-effects-of-coronavirus-in-the-uk

"Household finances
The deterioration in the economy is affecting household’s finances. As Figure 5 shows, 75 per cent of households have reported falls in income. This is likely to be driven both by falls in employment and the 29 per cent of firms reducing working hours. This has resulted in 27 per cent now using savings to cover living costs, something which is more likely to be an option for better off families; in 2018, more than half of families on low-to-middle incomes reported having no savings at all. This shows up in the 15 per cent of households reporting difficulty in paying their bills."

Keep believing it will all be OK if you want but this is all going to cost a lot of money for many years.

You really should check my general advice before you accuse me of having hope or desire.

A mortgage free property, which the OP will not need to dispose of, or financially support, for a medium duration is not a bad investment. It never has been. There's no risk of negative equity. The OP does not need to live in it, nor does it need to be tenanted. It's really not that different to premium bonds.

I have, numerous times - literally check any recent thread on house buying where i've commented - said that prices will fall, market will be flooded, this is not a good time to buy - 12-18 months will be perfect if you have a decent deposit and no dependants. 

So i'm not sure what you're getting at....

steampowered

Comms69 said:

A mortgage free property, which the OP will not need to dispose of, or financially support, for a medium duration is not a bad investment. It never has been. There's no risk of negative equity. The OP does not need to live in it, nor does it need to be tenanted. It's really not that different to premium bonds.

BTL property over a 3-5 year is often a bad investment choice because:
- There are high transactional costs associated with buying and selling property - i.e. estate agent fees and stamp duty.
- Property is an illiquid asset, particularly if you have tenants that don't want to leave, so you may not be able to sell when you want to.
- Property is a tax inefficient investment for people who are working, compared to S&S ISAs and Lifetime ISAs. 

It's more of a long term investment.

This is doubly true if the Op is a first time buyer, since she would be giving up the benefits associated with being a first time buyer (e.g. lifetime ISA bonus, first time buyer stamp duty relief, access to help to buy schemes). And she would be facing higher rate stamp duty when buying a first property of her own to live in.

Over a short timeframe the vast majority of people are going to be better off putting their funds into stocks & shares (for those willing to accept an element of risk) or bonds/fixed rate savings (for those who are not).

It is a mystery where the money is coming from - looking at the Op's signature she has £11k of savings and £9.5k of debt, so really only £1.5k of savings. 

Comms69

steampowered said:

Comms69 said:

A mortgage free property, which the OP will not need to dispose of, or financially support, for a medium duration is not a bad investment. It never has been. There's no risk of negative equity. The OP does not need to live in it, nor does it need to be tenanted. It's really not that different to premium bonds.

BTL property over a 3-5 year is often a bad investment choice because:
- There are high transactional costs associated with buying and selling property - i.e. estate agent fees and stamp duty.
- Property is an illiquid asset, particularly if you have tenants that don't want to leave, so you may not be able to sell when you want to.
- Property is a tax inefficient investment for people who are working, compared to S&S ISAs and Lifetime ISAs. 

It's more of a long term investment.

This is doubly true if the Op is a first time buyer, since she would be giving up the benefits associated with being a first time buyer (e.g. lifetime ISA bonus, first time buyer stamp duty relief, access to help to buy schemes). And she would be facing higher rate stamp duty when buying a first property of her own to live in.

Over a short timeframe the vast majority of people are going to be better off putting their funds into stocks & shares (for those willing to accept an element of risk) or bonds/fixed rate savings (for those who are not).

It is a mystery where the money is coming from - looking at the Op's signature she has £11k of savings and £9.5k of debt, so really only £1.5k of savings. 

I tend to agree but usually on the basis that a BTL mortgage is an additional cost to a landlord, should tenants not pay, and the risk of negative equity. As those are removed, the risk as you say is in effect the deminished returns. 

Premium bonds are a favourite suggestion, so i do agree.

And yes i asked that question also. I suspect it's a cheap family rate, but probate may not like that!

Retireby40

Comms69 said:

steampowered said:

Comms69 said:

A mortgage free property, which the OP will not need to dispose of, or financially support, for a medium duration is not a bad investment. It never has been. There's no risk of negative equity. The OP does not need to live in it, nor does it need to be tenanted. It's really not that different to premium bonds.

BTL property over a 3-5 year is often a bad investment choice because:
- There are high transactional costs associated with buying and selling property - i.e. estate agent fees and stamp duty.
- Property is an illiquid asset, particularly if you have tenants that don't want to leave, so you may not be able to sell when you want to.
- Property is a tax inefficient investment for people who are working, compared to S&S ISAs and Lifetime ISAs. 

It's more of a long term investment.

This is doubly true if the Op is a first time buyer, since she would be giving up the benefits associated with being a first time buyer (e.g. lifetime ISA bonus, first time buyer stamp duty relief, access to help to buy schemes). And she would be facing higher rate stamp duty when buying a first property of her own to live in.

Over a short timeframe the vast majority of people are going to be better off putting their funds into stocks & shares (for those willing to accept an element of risk) or bonds/fixed rate savings (for those who are not).

It is a mystery where the money is coming from - looking at the Op's signature she has £11k of savings and £9.5k of debt, so really only £1.5k of savings. 

I tend to agree but usually on the basis that a BTL mortgage is an additional cost to a landlord, should tenants not pay, and the risk of negative equity. As those are removed, the risk as you say is in effect the deminished returns. 

Premium bonds are a favourite suggestion, so i do agree.

And yes i asked that question also. I suspect it's a cheap family rate, but probate may not like that!

If you dont have a mortgage. Have a secure job and get abit of luck buy to let can still be highly profitable. Theres things you need to watch out for like everything else but theres no risk free solution.

Obviously things that impact risk are things like where the property is. What kind of tenants would it attract? Students, professionals, elderly, 16 year olds Mums who have been living in hostels? 

You need to think about who would do the maintenance and who would manage the property.

I have a property that is in a good area, typical for young families and have no mortgage on it now. Generates much more profit after expenses than any savings account my bank can offer me.