To think the best way to invest is to buy a property?

[cultkid]

At the moment we have a 4 bedroom family house and a nice apartment up the road which we rent

The house we live in has equity in it. If we released say, 60k from it and then sold the flat and got 80k so 140 all in, is it a good idea to buy a house in the nearest student town and rent it out room by room?

I can get another mortgage for the house..
Or I could invest say 140 .. but is property the only way?

Aibu to think it's possible to make a profit by renting out property?

It's possible but it's not easy money and the phrase 'past performance is not an indicator of future returns' was made for property investing.

Just because people have made lots of money over the past 10/20/30 years doesn't mean the same trend will follow as a lot has changed in property investment, rules for landlords and how it's taxed.

Are you aware of the rules for HMOs for example?

It really depends on so many things: the house prices and rental prices in your area and what yield that’d give you, whether you want cash-flow or growth for “cashing out” in the future (would another property crash ruin your plans), etc. It’s not a simple binary answer.

Best thing to do would be to do some research and weigh up against normal investing in worldwide ETF/index funds which tend to perform really well over decades (usually what pension investments are).

Also to think about: can you cash-flow repairs/empty months, tax implications (ltd company or not), what happens if you lose your job and have two mortgages?

Definitely possible, but it obviously depends upon house values and rents continuing to rise at least in line with inflation and the ability to keep the property tenanted. Personally I would find it stressful to have three mortgages as I would worry about keeping up with repayments if one or two properties were untenanted for a period of time.

Yabu. You're massively leveraged and have no liquidity at all. If you want a long term investment there are easier and safer options.

student rental is a very specialised area for obvious reasons - HMO plus lots more hassle.

yes, with negative real interest rates and the wobbly stock market, property looks like the only way - but be very careful. More regulation coming (loss of section 21 etc) which will make it much higher risk.

I don't think buy to let is a terrible idea but as you already rent out one place, I would invest in a stocks and shares ISA instead or pension

I think tax rules are pretty much stacked against buy to let these days.

Really interesting points everyone, sorry for not coming back quickly and to everyone I am just chatting to my husband about it

I want to make some more money 🤪

Greedy

Property is an acceptable part of a balanced investment portfolio. Do you have stocks and shares, and bonds?

Wow what a helpful comment fellinglazy

Your question in the op is entirely correct op, which is exactly why those of us in disadvantaged groups - comprising working people on ordinary wages and entire generations under the age of 50 - seriously bloody resent advantaged people leveraging their wealth to prevent the working population from investing in their lives.

That is what you would be doing. That is what buy-to-let landlords have been encouraged to do for the last 25 years or so. I don't think the resentment and anger is fully recognised, and of course it is never considered justified by those who have screwed their tenants over.

Are you someone who has come across any of these "be nice" or "be kind" messages recently op?

The problem with buying student accommodation is that you're up against those private student flats that are being built everywhere now. They tend to be in the city centre and have a flat rate with no extra bills. Renting to young professionals might be easier than students.

An ISA and money in Wealthify but nothing else just the property

If we took 60 out the house it's not loads there's about 350 of equity in it

But I'm worried about stocks and shares my dad worked for a spread betting company and he was very good at it but he did tell me that it's a risky way to make money

student rental is a very specialised area for obvious reasons - HMO plus lots more hassle.

This. I did it for a while and with the best will in the world I found it more hassle than it was worth. And students generally aren't known for their common sense or tendency to care for property.

You do not need the space after all. You do not actually need the money if you already own your own property. It is surplus to needs, and it is taking from those who do not have it. fellinglazy's comment is entirely accurate.

Students are a nightmare that's so true

If mortgage was about 450 a month that's what I'm guessing a btl mortgage is going to be ..
Students to pay approx 475 each a month?

But they are so annoying

Property is how my grandfather got wealthy. But he invested in land, not buildings. Bought cheap in the middle of nowhere and waited for the city sprawl to reach him.

Very interesting @Purpleartichoke!!

I'm interested in strategic planning too.. so buying land with a view to getting planning on it

As Dwayne suggests

As you already own a home, you need (let's say) an equal amount of investment in other non-property assets before you consider increasing the property element of your portfolio.

@PigletJohn that's a really valid point, what would you invest in?

My husband said "do you fancy going halves, pig"

Property can be a very good investment. Unless you get a bad tenant. My DS had one of those who didn't pay rent for nearly a year, then disappeared one night with all the furniture, appliances and kitchen units. It cost her a fortune to repair the damages and redecorate before she could sell it. She lost a substantial amount of money and said - never again.

But you might be lucky.

If mortgage was about 450 a month that's what I'm guessing a btl mortgage is going to be ..

A standard BTL mortgage won't cut it for an HMO with most lenders. It's its own kind of mortgage product, with generally higher rates (because higher risk).

Christ no. And I say this as a landlord who has done extremely well out of it. If you have a time machine and can buy at least ten and preferably 20 years ago - then go for it. If you don't, I wouldn't advise it.

For starters house prices have risen to probably unsustainable levels, in many areas they have increased six fold over the last twenty years, while rents have only doubled in the same time. Prices are already stagnating and the effect of Brexit means they could even fall in the short to medium term. So you would need to keep the property at least 20 years to have any hope of significant capital gains, and even then I wouldn't bank on it.

Interest rates are at record lows. If they increase, what then?

Tenant demand seems to be falling - again - Brexit.

The constant flood of legislation surrounding property renting is making it much more difficult to make money from it. There are so many, expensive legal requirements, and now licences - you really need to know what you're doing and you need a lot of money behind you.

The tax position has changed so that your mortgage isn't counted as an expense for tax purposes. So that means that you can be paying tax on profit you haven't made. Anyone with a high mortgage is likely to have to pay out more money in expenses and tax then they make in rent. And new legislation such as the removal of Section 21 will make it very much harder to be a landlord at all and even more difficult to remove non-paying or difficult tenants in the future (it's already very expensive and difficult).

I'm looking at shares now.

Looking to see who can give the best return in buying the dividends

I don't know if I can do it with a small investment like 140

Thanks all for the help it's been eye opening!