Hey all
Putting this is chat for traffic!
I wonder if anyone can give me any advice.
Me and DP own a house in London with a mortgage (and a help to buy loan). He works full time and earns circa £60,000 with the potential to earn a bit more (middle leadership, public sector). I have an autoimmune disease which made me give up my teaching career, but I tutor and do a few other jobs freelance. Earn about £12k a year.
It may just be middle of the night and can’t sleep chat, but the announcement about 5% mortgages got me thinking. I obviously won’t have a pension if my illness means I never work “properly” in a professional job again, but I’m wondered would it be worth buying something in a cheap area and renting it out. This would obviously be provided we could get finance or save to buy outright.
Landlords of Mumsnet- I want to run some numbers past you to see what you think or if I’ll being wildly optimistic about costs.
So if we brought a house in somewhere like Middlesborough it seems like we could buy a decent 3 bed for about £36,000. By my estimations through browsing RightMove it looks like I could charge £350pcm rent.
So looking at the figures various mortgage calculators have suggested with a 5% deposit of around £2k the mortgage would be circa £180 a month. Then that having a letting agent do everything for the tenants (obviously, because we are 300 miles away) would cost around 15% of the rent, so £60 a month. Leaving us with a profit of circa £110 a month.
Obviously I know that I’d have to pay for anything and everything that goes wrong in the property and gas inspections/certs etc. But if we saved all of that “profit” each year for say... 10 years maybe that would cover all of that and we do have disposable income we could save too and a bit of (circa £5k) savings now.
Here at 3am this seems like a decent plan, keep the house ticking over and okay, never really make a profit for 20years or so if you’re saving it all to reinvest in the house, but then hopefully sell up once I’m retirement age (about 30 years or so) and you’ve got a decent chunk of pension money there.
What are the pitfalls I’m not seeing? This probably all sounds hopelessly naive and the idea of being a landlord sits poorly with my politics, but I know I need a long term plan.
And if this is utterly fanciful, please don’t flame me, as I say it might just be 3am chat on painkillers (I’ve got an inner ear infection, hence being awake!)
Thanks for all your help in advance.