Buy to rent and carry on in rented accommodation?

[LaCerbiatta]

We're selling a house we have in our home country and will get ~200K for it.

We now want to buy here (Cambridge) but need to decide if we buy a small flat to rent, with no morgage or a very small one and carry on leaving in a rented house, or buy a house to live in.

Dh is adamant that buying to rent is the better option. Will give us flexibility, we can move to different areas if we want, will give us a nice return every month.

But I feel really sad that now that we're selling what was our dream house we don't have a home that is ours :(. But to buy in cambridge with 200K we would still need a massive morgage and would be worse off every month. Plus, according to dh, we would be spending loads of money on it all the time, decorating, improving, boiler repairs, etc, etc Whereas now, we pay rent and nothing else.

What do you all think? What is more sensible from a money perspective?

TIA :)

[7to25]

Surely, if you buy to rent, then you will be landlords and have boiler repairs, redecoration and upkeep to factor into the equation as well as possible void periods and defaulting tennants.

[LaCerbiatta]

Yes, but we're thinking of buying a new flat (there are lots of new ones being built in Cambridge), which will hopefully have very low maintenance. We're also thinking about something near the station where demand is high and hopefully void periods will be minimal....
That's the plan anyway....

[lalalonglegs]

The problem with having lots of new flats is that lots of people have the same idea and you end up having to compete against a lot of other landlords in the same block. If one person decides to lower their rent, then it's a race to the bottom. It's much better idea to buy in a more established area, imo.

[lambinapram]

You will have to pay tax on the rent you receive from the tenants, unless your interest payments are large.

[lalalonglegs]

You would be much better off buying somewhere crap and grotty using some of your house sale money, doing it up for rental, remortgaging it at its new value and renting it out. You can then use the proceeds from that remortgage plus the leftovers from your house sale to buy a house (plus perhaps a small residential mortgage). Not only will you be in a less risky area but if it is all newly done up, you should have low maintenance for the first few years. It is hard work though.

[LaCerbiatta]

Thanks lalalonglegs. Unfortunately (or in tis case fortunately) there's shortage of rental properties in Cambridge and that wouldn't be an issue - we would be buy in a very good area.

We couldn't possible buy something crap and grotty and doing it up! We both work full time and finding the time for something like that would be impossible. Also, don't think I could deal with the stress!

Thanks lambinpram - we'll need to take that into consideration.