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Advise on inherited property please...

(7 Posts)
samcroreaper Tue 27-Dec-16 18:48:54

We are in a bit of a quandary... my DGran passed last year, leaving her house to my mum & I (both only children) in an equal share so 50% each.

We don't want to cash in completely & sell so have decided on renting, however we don't know whether to rent DG's property or sell it & buy two smaller properties on a buy to let basis.

There is high demand for private rents in our area so we wouldn't struggle to find tenants, here are details:

Gran's house is 3 bedroom detached valued at £235k & would fetch £700pcm rental (according to agent)

If we sold for £200k we could place £100k deposit on 2 x 3 bed semi detached house on a buy to let basis valued at £180k each with a rental of £550pcm

Obviously we know we would have a mortgage on those & pay tax on the rental.

We've no experience of renting previously so not really sure which is the better option. One concern I have is that DG had lived in the house for 50 years since it was first built & it was DM's childhood home so if god forbid we had bad tenants etc it would upset DM more in DG's house.

In the greater scheme of things which is the better option? WWYD?

gillybeanz Tue 27-Dec-16 18:56:09

Is the house done up to sell or will you need to spend money to update for a Tennant?
Selling it in less than perfect condition isn't a problem as you'd just get knocked down a bit, but to rent it needs to be done throughout and also tip top condition.
it's business and as much as you and your mum get along fine, each having your own property would be safer ito being your own boss.
It's not a hard job being a ll but you need to know the business, laws and have a bit of savvy.

samcroreaper Tue 27-Dec-16 19:31:23

We would still do the 2 but to let's as a joint venture though gilly. Tbh we wouldn't have to do anything but cosmetic for renting, gran had a new kitchen about 4 years ago, the bathroom is a plain white suite all fine & it has a recent boiler, central heating system & new windows so we wouldn't have to spend a great deal either just decorate to a more modern finish or allow tenants to decorate & come to some arrangement.
It's definitely proving to be a head scratcher, it changes day by day to which is our preferred option.

caroldecker Tue 27-Dec-16 19:51:57

so home 1, £700 at 11 months is 7,700, agent fees 10% (770), repairs/maintenance (1,000). Income 6,000 tax at 20%, net 4,800.

2 homes (assume Stamp duty paid) £1,100 at 11 months is £12,100, agent fees 10% (1,200), repairs/maintenance (2,000). Income 9,000. tax at 20% net before mortgage 7,200. Mortgage (800 x 12) 9,600
Net loss 2,400.

No brainer for me

Aftertheraincomesthesun Tue 27-Dec-16 20:05:11

We are landlords. Factor in that any property you rent out will have periods of not earning any rent (void periods). Never budget for receiving rent 12 months of a year.

samcroreaper Tue 27-Dec-16 21:27:53

Wow carol when you look at it like that it really is isn't it. Geez think we need to go back to the drawing board & look at our sums, really we were just looking at the end portfolio value & that the rent would pay the mortgage repayment but when you actually look at it wrote down blush

caroldecker Tue 27-Dec-16 21:32:45

Notice I have put tax before mortgage payment because interest is becoming not deductible.
Also take into account risk - if you get a bad payer who you have to evict and repair the house, you may be down 6-8 months income. With no mortgage, this is annoying - with one it could be fatal.

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