Updating post from Reddit.
Hi all,
I have been wanting to get into becoming a landlord for a while and I want to get your suggestions.
I have a chance to buy a flat here in UK from an old friend. They are selling only because they moved to Australia many years ago and are now certain that they will not come back to UK.
The flat info:
Until now I have been making money passively by investing money in stock and share, but I also think it would be good to buy a property to diversify my wealth, but I am not sure if it is worth it with this numbers.
What I like it that the flat is in very good condition and in a position that is highly in demand.
The actual value of the house has not grown much overtime (it is actually back to yeh same value of 2007!!!!!)
What do you suggest?
(Ps: I am economically well off and do not need this money, it is just for retirement and got my kids in the future)
So you’re looking at a sub 6% return after fees and service charge but before maintenance, insurance, tax etc etc. And little or no capital growth. Why do you want the hassle of being a landlord on those numbers?
Well I was asking if this was a good idea 😂 it seems like you answered my question...
The position of the house is actually good and it will have a good growth in the future (I know the reason why it is what it is, the problem was the initial price was way higher than what it dropped after 2008 cruise, but you are right it is quite a low return given the fact that I also make good returns on my investments (average 7/8)
I see no reason to suppose UK residential property will have “good growth” in the foreseeable future. Prices and rents are already at the limit of affordability, mortgage rates are not going back to the levels of 2008-22 and real incomes are static at best with no obvious sign of growth. On top of that the government is committed to increasing the supply of houses and reducing the rate of population growth(ie immigration). Of course this may not succeed but the intention is there. In these circumstances where are the drivers of real growth in property values?
People have forgotten that there have been episodes of big drops in real property values and, in a few cases, drops in nominaI values as well. There is no rule that says this cannot happen again.
Built in 2006-07, so I'm assuming the kitchen and bathroom are now getting on for twenty years old, which are two expensive bits to replace.
No the house has been kept well and renovated throughout bit by bit, so it's in very good condition, even a new boiler from last year.
It depends a bit on your other investments, is it a good diversification, would buying some equivalent REIT be better?
If you already have maybe 800k in stocks, then 150k into a rental has some merits for diversity (random numbers).
A single rental is a lot of risk, eggs basket and all that.
Also consider you would need to pay additional rates of stamp duty and whether it is worth purchasing into a ltd co for tax purposes if you do proceed.
Sounds like a financial advisor Q really, as they will be able to see your full estate.
Everything you said is what is in my head. I need to search around for a good financial advisor, I had one a few year ago that turned out to be absolutely useless, I knew more than him!!!
Financially an LTD would benefit me the most, but I do not have enough for the 40% deposits required in that case (I have them but all in savings and stock and i am not going to sell them for this).
So I think you are all giving me the right support in saying that I am not ready for this and it may not actually be a good idea for me at this time (I will better continue with the stock 😂)