sell house then rent?

confused31_2

We have our house up for sale at 170000, its a 3 bed roomed house in a village and seems reasonably priced for the area.

We are willing to drop the price but we havnt had much interest, what i was thinking of doing was if i do sell rent another house short term and try and save, and hopefully in about 12 months the prices will have came down.

I have looked and if we sell at 150000 we will still have over 105000 pound equity, what i have suggested to the wife is bank this and rent of the interest short term.

Mind you she dont seem to keen, but i think if we sell this is a good idea and we have got nothing to loose.

Ive worked it out that if we put 35000 in each savings account at a rate of 6.5 we should clear over 550 pound and we can get a 3 bed roomed house for that.

what do you people think?

confused

BruTamUK_2

Thats just what we're thinking of doing.
Just sold our house and will be moving out next week. Going to be stopping at the parents for a few months rent free and saving like mad, then we'll look to rent and save for 12-24 months. See where the market is then, and hopefully we'll be in a good position.
Bruce.

confused31_2

My missus aint to keen on the idea,were expecting our 3rd child in October and i think she wants to be settled by then.

Mind you we havnt sold our house yet i was going to borrow another 40000 if we would have sold earlier, but now i dont think im going to have to borrow that much even if we have to buy straight after we sell.

If we dont sell by October it looks like the bunk beds are coming out.

confused

Phill_555

I can't say that I follow you're logic confused. Why someone would want to get off the housing ladder once they have got on it is beyond me? Unless you are doing it to clear loads of unsecured debt you have on extortionate rates of interest I cannot see how you will financially gain from this in the medium term.

Your logic is flawed regarding the 6.5% interest gained from the £105k in the deposit account as this will be taxed giving a lower return than you predict, surely? Also you will lose out with arrangement/solicitors/survey fees for the new house.

If you are buying a house for a home (as opposed to an investment) then who cares where the value is in the short-medium term? It will always rise in the long term. You are not actually losing out if house prices crash...you have far too much equity already to go into negative equity.

owitemisermusa

Phill, there are lots of people STRing right now.

It's done in the belief that the market will fall significantly so they sell relatively high now, rent and live off the interest on the profit and buy a bigger, better house when the dust settles.

It's all about perceptions of the housing market. Time will tell if it's a good strategy or not. IMHO, the risk is that the economy enforces continued instability in the financial and banking sector and mortgages are even harder to come by in a few years' time when they are prepared to re-enter the housing market.

confused31_2

Phill_555 wrote: »

I can't say that I follow you're logic confused. Why someone would want to get off the housing ladder once they have got on it is beyond me? Unless you are doing it to clear loads of unsecured debt you have on extortionate rates of interest I cannot see how you will financially gain from this in the medium term.

Your logic is flawed regarding the 6.5% interest gained from the £105k in the deposit account as this will be taxed giving a lower return than you predict, surely? Also you will lose out with arrangement/solicitors/survey fees for the new house.

If you are buying a house for a home (as opposed to an investment) then who cares where the value is in the short-medium term? It will always rise in the long term. You are not actually losing out if house prices crash...you have far too much equity already to go into negative equity.

thats why im asking for advice, if houses fell by 30% by next year and then i bought one, i would not have to borrow as much. money to buy my house.

Say for instance i sold my house now for 160000, and then if only "gamble" its a gamble houses that i am looking to buy now drop 30%.

So say im looking at an house at the moment for 225000 im hoping it will drop 30% and i wil get it for 157500.

Which would mean me keeping a small mortgage and saving over 50000 pounds surely you can see that?

I know i have a lot of equity, but why not try and make the best of something while i can everyone else seems to be trying to get rid of their debts.

If i sell my house and buy my morgtage will be over 100000, if i take the gamble and it comes of i will have a 50000 pound mortgage, as for arrangement fees i would have to pay them anyway to buy and sell.

i also think you can ssave 96000 pouunds tax free in certain accounts.



Plus i will be able to jump back into the housing market as i would have about 105000 sitting in the bank as my deposit.

confused

confused

dopester

confused31 wrote: »

if i do sell rent another house short term and try and save, and hopefully in about 12 months the prices will have came down.

Genius idea ! That way you could sort of make like 200% profit and then get out before the crash.

confused31 wrote: »

Ive worked it out that if we put 35000 in each savings account at a rate of 6.5 we should clear over 550 pound and we can get a 3 bed roomed house for that.

That looks sensible, what with house prices no longer rising £45 per day and in many areas dropping £hundreds per week... yeah, I can see your logic.

confused31 wrote: »

thats why im asking for advice, if houses fell by 30% by next year and then i bought one, i would not have to borrow as much. money to buy my house.

Smart thinking.

confused31 wrote: »

Which would mean me keeping a small mortgage and saving over 50000 pounds surely you can see that?

Yes yes yes yes yes.

confused31 wrote: »

i also think you can ssave 96000 pouunds tax free in certain accounts.

WTH? That is a few decades of ISA allowance isn't it?

confused31 wrote: »

Plus i will be able to jump back into the housing market as i would have about 105000 sitting in the bank as my deposit.

You're a smart capitalist. Sell high, buy low.

All very clever thinking, but surely most buyers are fearing house prices might drop significantly in price as well? After all, we have had one of the most insane decades of house price inflation ever known in history - a real estate bubble beyond anything known before.

It's called a liquidity trap: those who have liquidity, and those who's wealth is trapped in bricks and mortar... hoping beyond hope someone will trade places with them before the squeeze gets too tight. There are still a few people crazy enough to trade places with you so GL. (Sell to rent is a good idea imo)

Davesnave

i also think you can save 96000 pouunds tax free in certain accounts.

If you get around to knowing it, please tell the rest of us idiot tax payers what they are, please!

webmuppet

We have been thinking of doing this but for a slightly different reason:

We want to sell then rent - my logic is : we would not end up in a buying chain, sell when we want at the price we want and not get panicked into selling low because we need to close the house we want to buy. After we sell and have a huge deposit in the bank, rent for less than our mortgage is at the moment and sit on the cash allowing us to house hunt at our leisure. Then while the market is stagnating be able to put in below asking offers but be able to move quickly and secure a mortgage easily (big deposit) making us a good choice for peeps that need to sell in a hurry. Also if the market does go down we get a cheaper deal but with bags of equity from our current house so we could still survive a potentially steep fall. Another bonus is we want to move out of the city to a slightly more rural location but can't decide where. This way we could rent in a potential area to evaluate it before making any kind of jump.

What does everyone think? Don't want to suggest it to the missus until I'm sure...

owner

Yes, yes, yes all wonderful ideas. But you need to actually sell your house first which is not going to be easy at the moment.

dopester

I just can't understand some people.

They reckon their house is worth stacks of money and come here with the big fresh new idea of trying to sell at near top money - then rent until the market crashes hard - then buy back in very low and bargain hard.

Next they'll be here slagging off their EAs for no getting no viewers and blaming FTBs for not spunking hundreds of thousands of pounds on some hell-hole, those few with an actual deposit and mortgage financing for not buying their BARGAIN house and doing the same as they want to do.

They just don't understand they are caught in a trap - it's mostly too late to STR - the smart did it last year or before. Good luck finding your mug buyers. I think alot of you are now tightly strapped in for the full steep ride down -50% +.