Updating post from Reddit.
Hi all. We have reached a point in our lives where we have some moderate savings and are thinking of the future as we reach an age where it’s becoming harder for us to find work with decent salary’s (and our bodies are starting to creak).
So we’re thinking of buying a second house and renting it for a second income - mostly for when we are unable to work anymore to supplement our moderate pensions.
Any advice? Thanks in advance.
It’s hard work and isn’t passive. The returns are not as good as they once were. The government are out to get you. And you accept all the liability without huge rewards.
Or just stick it in a stocks and shares isa or pension and get probably better rewards without the headache.
If you want to do it then hmo/student let/airbnb is the only way that makes financial sense to me. But that’s even more work.
You cannot get tenants out after Section 21 abolition comes in October. Just let to students who are not staying long air and b is too much hassle and some might stay and you will not be able to get them out.
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It's hard to make money as a small landlord these days tbh. Unless you're in a position to buy a wreck at auction and do it up it's probably not going to make you any money.
How old are you? How big are the current pensions? What tax bracket are you currently in? What loan to value could you get on a good rental with your savings while keeping a good amount of cash to cover you at the moment? Do you have any experience in property?
After paying mortgage and tax I have nothing left over. Youll more likely be better sticking the money in a index fund.
*salaries
I wouldn’t
You will get a better return and less tax if you stick the money in stocks and cash ISA’s while you can. They are sure to get rid of them soon too. The intention of government is to make small landlording untenable.
The government are consulting on lowering or removing Cash ISAs specifically, not stocks and shares ISAs.
Ironically enough, the reason why they are looking to remove the Cash ISAs is to encourage people to invest through the S&S ISAs as opposed to dumping it into Cash ISAs. The S&S ISAs are almost certainly here to stay.
Consider another country and Airbnb? Could have a holiday home as well then :)
Having been a small landlord for the past eight years or so I am winding down. I have sold one property and will be selling the other in a few years. I could not advise anyone to start from scratch now. The obstacles are high and quite frankly the returns are minimal. I could achieve the same returns through astute investments. If you go for it do not underestimate the amount of decorating, repairs, tax returns, agent faux pas and other time consuming issues that will arise. Luckily I haven't had a bad tenant but if you do you can double the angst.
Can't speak about air b and b but I would be very careful with that.
I wouldn't recommend it. The very first thing I would recommend is look at your financial income vs taxation.
You'll be surprised by the effort required against the minimal revenue after tax. It's not worth it unless you're looking to scale up.
Looking at the current market if you can buy it outright, could work well, I would not get a mortgage now though, as debt is no longer desirable, so mortgages are a huge risk that might put you in more debt than you were expecting.
I think we can buy a small property with about 60-70% deposit and a 30% mortgage.
Do research. Banks no longer want to give mortgages as no one is buying the debt anymore. Up until a few years back china was buying debt like there was no tomorrow, but now we are a declining economy, our debt (mortgages, loans, finance) is very undesirable so mortgages are high and rates can go up.
What you need to assess is if you can handle a rate increase without pushing rent up for tenants. Can you still make a profit? If you default the bank will take it outright.
Please listen to others, do research about buy to let and get sound financial advice.
If I had money, I would consider buying abroad outside Europe and use it to get a second residency
> Banks no longer want to give mortgages as no one is buying the debt anymore
Nonsense.
I don’t think it’s the same as what it was back in the day. In a business, and not cheap to upkeep so a lot of the money you make goes back into running costs.
Do your moderate savings buy a property outright? No? Then don't even think about it...
Mentioned to someone else too. We think a 70% deposit and 30% mortgage
But you think if we’re can buy one outright it is still financially good?
I think it then becomes financially viable, but there's still a world of ballache involved that you have to be prepared of - this sub is full of the pitfalls for sure
Understood
A mortgage is one of the only benefits of being a labdlord. Buying with cash is madness with tax arrangements