Selling and then renting until you find ‘the one’ ?

Davesnave

fishfingerbutties said:

 Money is important and the financial impacts of course, but it's not always the only thing.

Indeed not. We were after a smallholding, where the land is usually the stumbling block due to it's variability and the random nature of it. It's harder to change land than fix a house, or sometimes impossible. For example, you can't make a north facing slope south-facing to grow grapes.

So, we envisaged waiting up to 2 years in rented, but we only needed to stay for 9 months as we accepted a pretty weird house!

NaughtiusMaximus

Newnoel said:

GDB2222 said:

Davesnave said:

GDB2222 said:

Newnoel said:

Davesnave said:

Newnoel said:

Time out of the market is always risky... 6 months from now house prices could be a lot higher than today

Well, they could be, but most of us look for evidence when considering the likelihood future events and I doubt if many see a rosy picture in the year ahead!

That's not to say some kinds of houses in particular areas won't buck the general trend. Covid has so far been kind to the area where I live, but it hasn't put lots of well-paying jobs here.

You could have said the same thing in late March, and house prices are up by more than 5% in many area so far this year.
Lots of people have been burned by thinking they are clever enough to time the market

Newnoel said:

Davesnave said:

Newnoel said:

Time out of the market is always risky... 6 months from now house prices could be a lot higher than today

Well, they could be, but most of us look for evidence when considering the likelihood future events and I doubt if many see a rosy picture in the year ahead!

That's not to say some kinds of houses in particular areas won't buck the general trend. Covid has so far been kind to the area where I live, but it hasn't put lots of well-paying jobs here.

You could have said the same thing in late March, and house prices are up by more than 5% in many area so far this year.
Lots of people have been burned by thinking they are clever enough to time the market

It’s  a massive risk to climb off the property ladder and go into rented.

But there are better and worse times to do it.

When we did it, we had £400k in the bank earning 6% so we made a profit, which is no longer possible.

Prices also fell, and in  one area where we were looking, they continued to do so for some years after we bought. Here, where we live now, they recovered slowly, and where we used to live, very fast. Variables of location are disguised within the big picture.

Currently, you'd earn essentially no interest on your £400k. If you rented a £400k property for a year, the rent would be around £20k (5%). So, at the end of the year, your new property would need to be £380k for you to break even.

Obviously, you'd be quids in if prices drop more than 5% over the year. But, it only takes some weird political moves for all bets to be off. The Bank of England is clearly thinking about negative interest rates, where the banks might pay buyers to take out a mortgage, rather than the other way round. 

Add to that two sets of moving costs, and the foregone  capital repayments on the mortgages this Sell to Rent gamble starts to look very foolhardy

That's why you balance the financial risks against the advantages discussed in this thread, the biggest of which is having the freedom to wait until the right house for you comes on the market rather than having to settle for one which is merely okay for fear of your buyer getting fed up with waiting and pulling out.

Money is not the be all and end all.

spakkaman

Interesting thread.

Im considering renting to facilitate a sale and make the buying effective.  Its very hard  to find the right property and when you do it goes to someone in a better position (no chain).    

I can cope with the risk of property price variation and can see it likely we would be in rented for at least a year. 

 Its the cost of renting ( £20k per year) and how you can obviate this by investing the capital from sale that interests me. Our house is worth +£800k.  It will earn nowt in bank or build soc.... arguably it will erode due to inflation.  If i managed 4% return on 800k i would cover costs....

 Have others invested the capital and if so how/where?
Thanks

badger09

As said in my posts on previous page, if our intended purchase fails, we're resigned to renting rather than lose our current sale.

Not quite in your range (£500k+) but there is no way I would consider investing over such a short period. 4% would be great, but for that you need to put capital at risk and I wouldn't risk a substantial drop in the value. So, it would go in the highest interest paying account I could find at the time. Inflation is not likely to be a massive factor over that short a period. Just another cost of buying some time.  

GDB2222

spakkaman said:

Interesting thread.

Im considering renting to facilitate a sale and make the buying effective.  Its very hard  to find the right property and when you do it goes to someone in a better position (no chain).    

I can cope with the risk of property price variation and can see it likely we would be in rented for at least a year. 

 Its the cost of renting ( £20k per year) and how you can obviate this by investing the capital from sale that interests me. Our house is worth +£800k.  It will earn nowt in bank or build soc.... arguably it will erode due to inflation.  If i managed 4% return on 800k i would cover costs....

 Have others invested the capital and if so how/where?
Thanks

You can only earn 4% by taking significant investment risk, to add to the risk of being out of the housing market.