Purchasing an Investment Property

tyroneshoelaces

I was after some advice regarding the purchase of an investment property.

I run a writing business. It has been extremely successful for the past five years but in the last year, Artificial Intelligence has ripped the absolute guts out of it and freelancers are dropping away and the work is drying up. I have managed to continue pushing on over the last 12 months but I have seen a gradual decline.

So, I am looking to plan ahead. I have savings of around £60,000 and I am contemplating using this to purchase an investment property that I think I would like to rent out. I would be looking to use around 20k-30k for a deposit. I do need to protect some savings for obvious reasons, so using it all would not be an option.

Essentially, I am trying to get my money to work hard for me and potentially move in a new direction should my business disappear completely. I don't have any qualifications but a lot of experience in running my business and writing but in terms of getting a job, I do not know where I would go, hence why I am still looking to go it alone!

Obviously, I would research this and look into it more but I was hoping to use some experience from people who might have moved into this area and are making a success of it.

So, does anyone have any advice or guidance for someone looking into moving into this industry?

Thanks in advance.

DE_612183

There is lots of help out there - but a lot of people think being a landlord ( even for just one property ) is an easy business ( which it is not ).

RHemmings

Please don't be this landlord: https://www.landlordlawblog.co.uk/2024/02/28/what-is-the-point-of-an-ast-if-the-tenant-can-simply-refuse-to-move-out-after-the-12-month-period/

TL;DR: Landlord seems to have no understanding of how ASTs work and was blindsided when the tenant didn't move out after an informal note from the landlord that they wanted the property back at the 'end' of the AST. 

FreeBear

tyroneshoelaces said:

I was after some advice regarding the purchase of an investment property.

So, I am looking to plan ahead. I have savings of around £60,000 and I am contemplating using this to purchase an investment property that I think I would like to rent out. I would be looking to use around 20k-30k for a deposit. I do need to protect some savings for obvious reasons, so using it all would not be an option.

Have a chat with a financial advisor - It will cost you a few pounds, but I suspect he/she would advise against property investments. These are illiquid assets that are difficult to get rid of if you need tap in to funds quickly. The returns are not as good as they have been in the past either. And legislation is adding more burdens on landlords with extra costs involved.

tyroneshoelaces

FreeBear said:

tyroneshoelaces said:

I was after some advice regarding the purchase of an investment property.

So, I am looking to plan ahead. I have savings of around £60,000 and I am contemplating using this to purchase an investment property that I think I would like to rent out. I would be looking to use around 20k-30k for a deposit. I do need to protect some savings for obvious reasons, so using it all would not be an option.

Have a chat with a financial advisor - It will cost you a few pounds, but I suspect he/she would advise against property investments. These are illiquid assets that are difficult to get rid of if you need tap in to funds quickly. The returns are not as good as they have been in the past either. And legislation is adding more burdens on landlords with extra costs involved.

This is where I need more clarity, hence looking for experience from people. I can pick up a property within ten miles of me for £95-£110k. These can generate around 600-800 per month in rental and of course, there are associated costs with that, so I am aware of that. Of course, nobody knows what is around the corner and the plan would not be to tap into funds quickly but this could be one of those "what might be" scenarios that I don't want to stand in my way if that makes sense. I am looking long term and I want my money to work hard for me whereby I could potentially build something. 

tyroneshoelaces

DE_612183 said:

There is lots of help out there - but a lot of people think being a landlord ( even for just one property ) is an easy business ( which it is not ).

I am not expecting it to be easy. Running my own little business has not been easy and the last year has been quite tough (thanks to AI), so I have the gumption to face the tough times at least. My father had a few properties that he rented and he found it stressful but I am different to him as he is someone who gets stressed easily. You might ask why I am not going to him for assistance or advice and I will but I want to try and arm myself with as much information as possible first. 

Albermarle

OP- If you asked this question on the Savings & Investments forum.
Savings & investments — MoneySavingExpert Forum
Then probably 9 out of 10 answers, would be do not invest in rental property and instead invest in a pension, or Stocks and shares ISA and keep some in cash savings. 

The main reason is that it is a lot less hassle and less time consuming than being a landlord. In the past a more benevolent tax regime made this hassle worthwhile financially, but not any more.

You might want to watch a few episodes of this programme ( also some episodes on Youtube)
My5 - Nightmare Tenants, Slum Landlords - Season 1 - Episode 2 / Episode 2 (channel5.com)

RHemmings

tyroneshoelaces said:

DE_612183 said:

There is lots of help out there - but a lot of people think being a landlord ( even for just one property ) is an easy business ( which it is not ).

I am not expecting it to be easy. Running my own little business has not been easy and the last year has been quite tough (thanks to AI), so I have the gumption to face the tough times at least. My father had a few properties that he rented and he found it stressful but I am different to him as he is someone who gets stressed easily. You might ask why I am not going to him for assistance or advice and I will but I want to try and arm myself with as much information as possible first. 

Out of curiosity, would you be thinking of BTL'ing with a mortgage, or for cash? 

And would the purchase price be money that you could afford to lose, get tied up, or generally decrease in value? 

tyroneshoelaces

RHemmings said:

tyroneshoelaces said:

DE_612183 said:

There is lots of help out there - but a lot of people think being a landlord ( even for just one property ) is an easy business ( which it is not ).

I am not expecting it to be easy. Running my own little business has not been easy and the last year has been quite tough (thanks to AI), so I have the gumption to face the tough times at least. My father had a few properties that he rented and he found it stressful but I am different to him as he is someone who gets stressed easily. You might ask why I am not going to him for assistance or advice and I will but I want to try and arm myself with as much information as possible first. 

Out of curiosity, would you be thinking of BTL'ing with a mortgage, or for cash? 

And would the purchase price be money that you could afford to lose, get tied up, or generally decrease in value? 

It would be with a mortgage. I mean no, it would not be money that I could afford to lose if you know what I mean. I wouldn't be out on the streets if I did lose it but nobody wants to lose 20-30k do they! I don't mind tying it up if it was a long term thing and of course, as with property then it could go down but in the long term, property tends to go up doesn't it but it is not guaranteed!

My only thinking is that I have a good lump of money and I want to put it to good use.

tyroneshoelaces

Albermarle said:

OP- If you asked this question on the Savings & Investments forum.
Savings & investments — MoneySavingExpert Forum
Then probably 9 out of 10 answers, would be do not invest in rental property and instead invest in a pension, or Stocks and shares ISA and keep some in cash savings. 

The main reason is that it is a lot less hassle and less time consuming than being a landlord. In the past a more benevolent tax regime made this hassle worthwhile financially, but not any more.

You might want to watch a few episodes of this programme ( also some episodes on Youtube)
My5 - Nightmare Tenants, Slum Landlords - Season 1 - Episode 2 / Episode 2 (channel5.com)

While I wouldn't be against investing in a pension - Which I already do, I  would want to try and earn some passive income from it and then hopefully use that in a couple of years I can purchase again - that is what I am leaning towards. As for stocks and shares ISA, there is a risk with those as well if I am correct?

Albermarle

tyroneshoelaces said:

Albermarle said:

OP- If you asked this question on the Savings & Investments forum.
Savings & investments — MoneySavingExpert Forum
Then probably 9 out of 10 answers, would be do not invest in rental property and instead invest in a pension, or Stocks and shares ISA and keep some in cash savings. 

The main reason is that it is a lot less hassle and less time consuming than being a landlord. In the past a more benevolent tax regime made this hassle worthwhile financially, but not any more.

You might want to watch a few episodes of this programme ( also some episodes on Youtube)
My5 - Nightmare Tenants, Slum Landlords - Season 1 - Episode 2 / Episode 2 (channel5.com)

While I wouldn't be against investing in a pension - Which I already do, I  would want to try and earn some passive income from it and then hopefully use that in a couple of years I can purchase again - that is what I am leaning towards. As for stocks and shares ISA, there is a risk with those as well if I am correct?

Pension is really for retirement, and is not available for withdrawal until 55 ( going up to 57) and even then many people wait yo take them until later. I do not think you have mentioned your age?
S&S ISA is more for the medium to long term ( say 7 to 12 years)
Assuming investments are in the mainstream, the longer you hold them, the lower the chance of loss and the greater the chance of growth. After 7 years the odds are very much in your favour.
Of course the actual choice of investments will affect the result, just the same as any choice of property you buy, but in both cases you only know for sure with hindsight.