Adding girlfriend to property title - can I do it myself?

theoldmiser

Mutton_Geoff said:

theoldmiser said:

my girlfriend of 15 years, who owns her own house and has inherited £400,000. She would like to pay off my mortgage for me (not least because she and I both think her money would be safer in property than in a bank, and would give more interest, as we plan to rent my house out), and become either a joint tenant or a tenant in common with me, so that she owns either an equal share of my house, or a percentage (in this case, £100,000 over £250,000, 40%)

You are possibly confusing investment of your gf's money with savings interest. You only get interest on savings accounts, for most other types of investment (property/shares/funds etc) you get returns on the investment (yield) and possible capital growth.

If she'd hypothetically invested in the stock markets for the last 100+ years, she would have seen average yields of 7%. That's a lot more than a rental property. And a property is a very illiquid asset.

Renting out is a business venture in which you are about to invest a quarter of a million pounds. Are you sure, as Adrian says, you have done your due diligence on this new venture. Tax and legislation changes have decimated the potential for profit in the BTL industry. It's a business, not an easy path to riches.

Have you considered the more normal path of both selling up and buying a place together with equal shares perhaps leaving some money between you in savings for your rainy day fund. She has many other investment options to consider for her cash, not least pension provision.

I don't really see it as investing a quarter of a million pounds, I've been paying the mortgage on the house for over ten years and living there, l'm not buying to let, there won't be a mortgage once my girlfriend has paid the mortgage off. I wasn't expecting to make a fortune, it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments.

My girlfriend owns a house which we have both moved into, so my house is now empty and I thought renting it out for the next few decades would be a good idea.

AdrianC

theoldmiser said:

I don't really see it as investing a quarter of a million pounds
...
it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments. 

It's not really investing - it's having a business asset.
A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return.

Yes, there is the potential for capital growth in the value of that asset... Historically, that's been proven to work well. But that historic growth means that the value of that asset is unlikely to continue to grow rapidly. Again, there's the potential of a fall in value.

If you want to invest a quarter of a million quid in the residential lettings business, would it make more sense to sell this one house and buy two flats? You would be better insulated from voids and bad debts, and you would have lower maintenance costs. I'd lay odds that it would be more profitable.

FTB_Help

theoldmiser said:

Mutton_Geoff said:

theoldmiser said:

my girlfriend of 15 years, who owns her own house and has inherited £400,000. She would like to pay off my mortgage for me (not least because she and I both think her money would be safer in property than in a bank, and would give more interest, as we plan to rent my house out), and become either a joint tenant or a tenant in common with me, so that she owns either an equal share of my house, or a percentage (in this case, £100,000 over £250,000, 40%)

You are possibly confusing investment of your gf's money with savings interest. You only get interest on savings accounts, for most other types of investment (property/shares/funds etc) you get returns on the investment (yield) and possible capital growth.

If she'd hypothetically invested in the stock markets for the last 100+ years, she would have seen average yields of 7%. That's a lot more than a rental property. And a property is a very illiquid asset.

Renting out is a business venture in which you are about to invest a quarter of a million pounds. Are you sure, as Adrian says, you have done your due diligence on this new venture. Tax and legislation changes have decimated the potential for profit in the BTL industry. It's a business, not an easy path to riches.

Have you considered the more normal path of both selling up and buying a place together with equal shares perhaps leaving some money between you in savings for your rainy day fund. She has many other investment options to consider for her cash, not least pension provision.

I don't really see it as investing a quarter of a million pounds, I've been paying the mortgage on the house for over ten years and living there, l'm not buying to let, there won't be a mortgage once my girlfriend has paid the mortgage off. I wasn't expecting to make a fortune, it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments.

My girlfriend owns a house which we have both moved into, so my house is now empty and I thought renting it out for the next few decades would be a good idea.

Also dont forget the potential early repayment charges on your mortgage (probably not that much seeing how its only 100k left)

caprikid1

AdrianC said:

theoldmiser said:

I don't really see it as investing a quarter of a million pounds
...
it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments. 

It's not really investing - it's having a business asset.
A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return.

Yes, there is the potential for capital growth in the value of that asset... Historically, that's been proven to work well. But that historic growth means that the value of that asset is unlikely to continue to grow rapidly. Again, there's the potential of a fall in value.

If you want to invest a quarter of a million quid in the residential lettings business, would it make more sense to sell this one house and buy two flats? You would be better insulated from voids and bad debts, and you would have lower maintenance costs. I'd lay odds that it would be more profitable.

Would it be more profitable ? Higher service charges , potentially less capital growth, flats can often be more difficult to sell and if his relationship ends he cannot move back in with his GF, plus he has to sell and buy.
That said if he buy's two flats under a LTD company it could work out quite cost effective.

AdrianC

caprikid1 said:

AdrianC said:

theoldmiser said:

I don't really see it as investing a quarter of a million pounds
...
it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments. 

It's not really investing - it's having a business asset.
A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return.

Yes, there is the potential for capital growth in the value of that asset... Historically, that's been proven to work well. But that historic growth means that the value of that asset is unlikely to continue to grow rapidly. Again, there's the potential of a fall in value.

If you want to invest a quarter of a million quid in the residential lettings business, would it make more sense to sell this one house and buy two flats? You would be better insulated from voids and bad debts, and you would have lower maintenance costs. I'd lay odds that it would be more profitable.

Would it be more profitable ? Higher service charges , potentially less capital growth, flats can often be more difficult to sell and if his relationship ends he cannot move back in with his GF, plus he has to sell and buy.
That said if he buy's two flats under a LTD company it could work out quite cost effective.

Higher yield, better insulation against voids and bad debts, lower maintenance costs.

theoldmiser

So I've been renting my property for about six months now. No boiler problems. Because I haven't got gas.

No problems at all. I know the property inside out, I did it all up last year myself, I know what needed doing, 90% of it was redecorating, installing a new bathroom, and redoing pipework in the kitchen, all soldered joints. No maintenance costs whatsoever.

No doubt somebody will chime in "So far...", but you don't know my house, I do. Yes, a water pipe could potentially leak - that can happen in any house, and is highly unlikely. My tenant is very reliable and trustworthy, I had 30 people interested in renting the house within three days of it being advertised.

So for the forseeable future I get monthly rent payments and have to do virtually nothing for it. And the house is increasing in value every year. (Not that that matters at all to me, I may sell it in twenty to thirty years' time, to get the money, but not before then.)

This is mainly in response to AdrianC: "A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return."

What high potential does my house have of giving me a negative return? You're suggesting that over the next twenty years it will cost me more in repairs than I take in rent? Like more than £200,000 of repairs?

I do see a lot of landlords bellyaching about how hard their lives are, all over the internet, I didn't believe them then and I certainly don't believe them now I am a landlord. (Yes, I know, the sky could fall in and my tenant could burn the house to the ground. I've got insurance...)

hazyjo

Don't forget capital gains tax...

letsbetfair

Glad things are going well so far! I'd be curious to know what it did rent for?

Over a 20-30 year timeframe, a negative return does seem very unlikely (assuming the business is well-managed and the house is suitable for rental). The question I'd have is how the net income and capital gains would compare to what you'd get by paying the money into a pension/lifetime ISA/stocks and shares ISA over the next few years and leaving that for 20-30 years...but if I had certainty about how investments would perform I'd not care about money saving!

Tokmon

theoldmiser said:

So I've been renting my property for about six months now. No boiler problems. Because I haven't got gas.

No problems at all. I know the property inside out, I did it all up last year myself, I know what needed doing, 90% of it was redecorating, installing a new bathroom, and redoing pipework in the kitchen, all soldered joints. No maintenance costs whatsoever.

No doubt somebody will chime in "So far...", but you don't know my house, I do. Yes, a water pipe could potentially leak - that can happen in any house, and is highly unlikely. My tenant is very reliable and trustworthy, I had 30 people interested in renting the house within three days of it being advertised.

So for the forseeable future I get monthly rent payments and have to do virtually nothing for it. And the house is increasing in value every year. (Not that that matters at all to me, I may sell it in twenty to thirty years' time, to get the money, but not before then.)

This is mainly in response to AdrianC: "A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return."

What high potential does my house have of giving me a negative return? You're suggesting that over the next twenty years it will cost me more in repairs than I take in rent? Like more than £200,000 of repairs?

I do see a lot of landlords bellyaching about how hard their lives are, all over the internet, I didn't believe them then and I certainly don't believe them now I am a landlord. (Yes, I know, the sky could fall in and my tenant could burn the house to the ground. I've got insurance...)

Being a landlord can be a lot of work if you have difficult tenants. If you have good tenants who look after the property and are reasonable and your reasonable too then being a landlord can be easy and a good investment.

But you could have bad tenants that suddenly stop paying rent, damage the house and then spend 9 months paying legal bills to get them out with no rental income and no chance of getting it from them when they leave and then having to spend more money doing repairs to the house. If that happened and after all that stress you finally got them out would you just fix the place and put new tenants in and think of it as just a business loss?. Some landlords give up when that happens and sell the house and end up making a loss overall compared to if they had just sold the place to begin with.

theoldmiser

You avoid bad tenants by interviewing people, getting references, OpenRent does excellent referencing, and make sure your house isn't a dump. If you don't bother decorating your house and making it look immaculate, then you can expect to attract people who don't care about living in a dump, which are just the type of people who are going be bad tenants.

I realise that it COULD happen - my lovely tenant could turn out to be a bad person who stops paying their rent and won't leave the property, but they have been working in the same job for 15 years, a very responsible profession, and I have no worries whatsoever about them. I had huge interest in my property because I was asking a reasonable price and I spent months and months doing it up, to make it highly desirable, so I had a lot of choice when it came to tenants.

You act as if bad tenants just magically arise out of nothing and can't be screened out at the interview stage - or before. I screened out loads of potentail tenants from the messages they sent me, asking about the house when I advertised it. I had over 30 interested people in three days, so I had to screen people out, I couldn't have seen them all.

So again I say - landlords who make out that being a landlord is somehow hard work are bellyaching and basically LYING... That comment is addressed to all the tenants reading this forum, and also to potential landlords who are being offered advice here, by SOME, that you shouldn't be a landlord and should invest your money in the stock market/ISAs etc. The money system could collapse at any moment, we can have hyper inflation at ANY time, but your house is not going to cease being a house because of that. 

AdrianC said:

theoldmiser said:

I don't really see it as investing a quarter of a million pounds
...
it's much more to do with having some money in bricks and mortar, rather than all in savings or financial investments. 

It's not really investing - it's having a business asset.
A very expensive and illiquid single business asset that forms a very large proportion of your net wealth, yet best case will only give a return slightly higher than inflation (in return for work on your part), and has a high potential of giving a negative return.

Where is this "high potential of giving a negative return" that you speak of? Where is the evidence for this?