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Buying a show home.

(19 Posts)
FreeNiki Sun 19-Mar-17 20:13:31

What do you think of it. Assuming the rent covers the mortgage is it ever a worthwhile investment?

FreeNiki Sun 19-Mar-17 20:13:48


specialsubject Sun 19-Mar-17 20:18:35

Presumably you pay the extra 3% stamp duty. I suppose the developer wont be like a normal tenant but it could be interesting.

New builds drop value like new cars, so hard sums to do. The small furniture is a minor issue!

EnidButton Sun 19-Mar-17 20:25:10

We live in a new build. Several have sold recently for increased prices consistent with the rest of the town. This has been the case right from when they completed building the estate. They haven't decreased in value at all and it's been over 10 years since they were built.

EnidButton Sun 19-Mar-17 20:26:06

Although ours is larger than that one and detached, if that makes a difference.

Fluffyears Mon 20-Mar-17 00:13:30

At least you get all the upgraded options included, driveway, kitchen, garden landscaped as they put all the upgrades in to show houses at their best. Also decorated well as again it's designed to sell the property...although people will be traipsing through your home for the next year.

JoJoSM2 Mon 20-Mar-17 00:27:10

The rent needs to much more than cover the mortgage payments for you to have a chance of securing a BTL mortgage. You need to co spider the demand and prices in the area and make sure you're covered for void periods.

caroldecker Mon 20-Mar-17 00:44:38

Looking in the area on rightmove, you are looking at £650 a month. Over 10 months a yr (for voids and changeover), £6,500 a year. As a basic rate taxpayer with no mortgage, return is £5,200. Allow £1,000 for repairs etc, return is £4,200 or 3.6%.
A 100% mortgage at 2% is £5,846. Even allowing for a 20% tax allowance on the mortgage it is loss making.
This is a stupid investment.

FreeNiki Mon 20-Mar-17 01:05:21

This is a stupid investment.

where did I say i was doing it?

I never knew this existed and wondered what it was about.

no need to be so damn rude.

feesh Mon 20-Mar-17 01:17:30

I've never heard of this before. Makes me think that particular developer/development is really struggling financially and this is a last-ditch attempt to leverage some capital. I wouldn't do it.

FreeTibet Mon 20-Mar-17 09:08:25

Bit tetchy there Niki. You asked for advice.

specialsubject Mon 20-Mar-17 09:21:51

I would assume no voids on this one( of course all assumptions need to be checked). And also assume that the developer will pay the rent and won't have to be evicted at the end.

Btl rarely makes sense with a mortgage now, but without one it could be worth a go. With returns on savings all negative and stock market high, there isn't anything else.

JoJoSM2 Mon 20-Mar-17 13:22:13

Niki, why do ratty? Are you an EA trying to flog it, then?

caroldecker Tue 21-Mar-17 00:15:09

Nikki My fault, I did not read the agents particulars and thought you were looking to invest in the property.

FreeTibet Tue 21-Mar-17 10:54:04


MissDuke Tue 21-Mar-17 11:30:27

Niki I don't understand why you took 'this is a stupid investment' so personally if you aren't planning on doing it? Surely that answers your op quite well? I actually thought that was really helpful seeing the breakdown of figures and it clearly illustrates that this would indeed be a stupid investment! Be glad you weren't considering it!

NameNotANumber Tue 21-Mar-17 12:04:48

Just to tweak Carol's figures 8% yield = rent of £770ish (and it is guaranteed for 2 years) so £9240pa rental income before costs.

NameNotANumber Tue 21-Mar-17 12:05:26

Oh and as to why I think the developer is trying to put the sale of it through so they can offset the rent costs as a business expense and free up £115k of capital.

abeandhalo Tue 21-Mar-17 12:10:38

I've never heard of this before either and I work for a new build developer! Seems v odd that the company are that desperate to complete on this property they would have a show home for 2 years that they didn't actually own? Very odd arrangement!

Nothing wrong with buying an ex-show home but wouldn't necessarily fancy one that they were going to carry on using, although I suppose it would stay in good condition for those 2 years, probably better than if it was lived in my tenants.

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