Little bit lost and confused

[ricky776]

Evening all

I guess I'm after a little bit of guidance really

Well I'm 33 now and the gf is 30 and we want to start growing up lol it's about time starting a family etc plus she keep talking about getting married so I'm done for lol

So here is why I'm confused at the moment she works full time and I'm self employed and have a ltd company too which is new but doing ok

We are renting at the moment but wanting to buy some thing in the next year or two once she changes her job well becomes a nurse

Now my plan was to stay renting buy a couple of cheap houses out right £40-50k and rent them out and use them to get a better house for our selfs but I'm not sure if we should or in a couple of years etc but would better buying somewhere for us to live and hopefully pay it of in a 5-10 years then buy some one else etc and keep the first one to rent or sell it and use the money for the next bigger house etc

maybe this is me just panicking as I seem to have left it so late to buy and house start a family etc lol

any advice would be great

 

[Scott-Copywriter]

What would £40-£50k get you for a property in your region? What would the rental income look like? If you had no tenants in one or both properties, how long could you continue without the rental income before it starts to become a problem?

This largely boils down to maths. Figure out the numbers in as much detail as you can and then assess the best way to go from there.

At the very least, I would personally not buy a home for myself where being able to pay the mortgage is entirely dependent on the rental income. Many landlords do this with a highly diversified portfolio, but relying on only 2 properties puts too many eggs in one basket for my liking.

You may be fortunate and end up with two long-term tenants who aren't going anywhere, always pay their rent on time and look after the places well, but many landlords aren't so lucky.

 

[ricky776]

Thanks for the advice

 

[Deleted member 268094]

Hi Ricky, there's a lot of variables in your opening post. First thing I'd say is don't panic. You say you've left it late but you do still have time on your side. There's a lot more qualification of circumstances that need to be done but on the face of it both the main routes you propose could work for you. But I suspect a hybrid of the two routes may be worth looking at you may be able to have your cake and eat it!.

The first thing I'd do is speak to a few mortgage brokers and see what borrowing is going to be available to you. Being newly self employed (as I understand it, or are you self employed and have a new ltd company doing something else?) will narrow the mortgage market but it doesn't make it impossible for you to borrow. You may feel more comfortable buying in cash but it will serve you well to understand your options fully before making the decision. Another thing I would recommend is as Scott has alluded to is fully understanding your numbers so you can make a well balanced decision.

There's probably too much information on property investment out there so with that in mind I suggest focusing on investing to achieve the objectives you've stated to start off and read Property Investment for Beginners by Rob Dix. Don't get too bogged down in the thousands of options for now just make a decision on how to get started it sounds like you'll be good whichever route you choose.

 

[tony84]

If you plan on owning more than 1 property, I would have a read up on the recent stamp duty changes and also the changes coming in regarding mortgage interest. Im not saying BTLs are a bad idea (it would be bad business practice for me to do that), but they are not the cash cow they once were.

 

[Deleted member 268094]

Thats a good point but don't but also be sure not to let the tax tail wag the dog or however that saying goes. If you where to buy your own home first then buy two low value properties like you previously mentioned then the new SDLT changes may have no or very little impact on you. Professional advice when planning for this kind of thing is always worthwhile thats mortgage advisers as well as accountants.

 

[Clare@ClarityTaxation]

Talk to your accountant, they should be able to help you with the figures.

If you're thinking of owning more than one house at a time then you need to consider the implications of the stamp duty rise, if applicable, and any capital gains tax when you come to sell.

If you're renting out houses which you'll one day sell on you may want to start by buying a house, living in it for a year then renting it out. There are better tax reliefs available if a house was ever your home (your principle private residence) rather than if it was simply bought, rented then sold.

A previous poster has mentioned changes in mortgage interest that you need to factor in too, plus the fact that the rental income will be subject to income tax. Consider whether you want the houses in your name only, or in joint names. If you're not married you can chose the percentage split between you and your girlfriend, which can be a handy tax planning tool.

In short - talk to your accountant!

 

[Thermodynamic Man]

Well I'm 33 now and the gf is 30 and we want to start growing up lol it's about time starting a family etc plus she keep talking about getting married so I'm done for lol

RUN.... RUN LIKE THE WIND