So confused re property urgent

[user1461609321]

Hi everyone

I can't sleep due to having to urgently make a decision re whether to accept an offer for my flat that has just been made

It's a 2 bed top floor maisonette, I have 2 kids. Flat is on lovely road, nice neighbours (except the one that lives downstairs who I believe has MH issues eg banging during the night and generally just hostile since we moved in 2 years ago)

If we sell now, will have made about 40k in profit and can look to hopefully purchase a house with 3 bedrooms as oldest now 10 and may soon like own room though same gender as sibling

My husband however wants us to keep the flat and take as much equity out plus savings to purchase another flat that we will rent out as an investment

If we do it my way we may get a better quality of life in better property, if we do it my husband's way, we will have 2 properties (with one being rented out)

So...... what would you do?

Yours and your children's quality of life will be massively improved by moving to a 3 bed house. A bedroom each, a garden, no stairs to get to your front door, less immediate neighbours. It's a no brainer for me.

100% your way for all the very sensible reasons offered by previous posters.

What's your husband's backup plan for pay two mortgages if your tenants don't pay or you have void periods?

Your way.

When I moved in with DH I rented out my flat and it was a lot more hassle than I bargained for. I sold it after a few years and paid off some of DH’s (and now mine) mortgage with the proceeds. Best decision I ever made. I dont miss being a landlord at all and was v relieved that I didn’t have tenant issues to deal with during covid. We also feel a lot more secure having a lower mortgage in case anything happens to one of us/we lose our jobs.

Your husbands idea though is the most cash generating. Renting can be very lucrative

I’m assuming he wants to remortgage the flat. Then use the cash to buy a second property, how much would the rental be monthly for the first?

Your way definitely

We tried it your DH’s way and honestly it’s shit. Yes we have more money coming in every month from our rental but I’d give that back to have a garden for my kids. We’re now looking to sell up and buy the house with a garden that we should have done in the first place. If you have a chance to give your children a better living environment, take it.

@user1461609321
Apologies if someone has typed this further up, I've not time to go through them all.
If you keep the flat you'll pay additional Stamp Duty equal to 3% of the property value. On a £300,000 home that's £9,000. How long will it take to make that in profit from the other house? Years. Then if like everyone is saying you hate being landlords (it's shit honestly) you'll end up selling at a huge loss.

Take your profit and run. We've just sold our flat for a £35k loss but it still makes more sense than keeping it.

your way. my fiancé is the same and wants to rent out the place we live in when we move onto the next house instead of selling, i don’t understand it - yes money can be made but it seems more hassle than it’s worth!

We had previously a tenant from hell - wrecked house garden left it filthy & lots of rubbish left behind it took 5 large skips plus many trips to dump - no payment for several months & even before the covid delays over 6 months for eviction.
Unless your dh wants to take over the hassle of managing the property you will have to employ an agents (up to 15% each month cost)
We had an electrical safety check (I agree strongly to the principle of safety) which cost us a shocking large figure (& he misquoted some aspects as essential which when I contacted the authority weren't - soyou can be vulnerable to some dodgy tradesmen) & this has to be done 5 yearly.
Landlord insurance is much higher
You will need annual gas servicing & safety checks
Your tenant will expect instant repairs (which may not be possible even with the best of intentions)
You won't have control of the deposit it needs to be secured & if the tenant causes damage you will have to provide proof & the deposit is limited & may not cover the damage
If the tenant leaves you may have blank periods without income but you still have to pay for mortgage
You will still need to decorate between tenants & suffer normal wear & tear as part of your expenses
you will have to pay tax on your profits & do your annual tax - note you will have to pay tax so don't think all of the profit will go into your bank account
You cannot claim tax rebate on your mortgage
Best advice join NRLA (best investment as they keep you up to date on the many changes in law which are going to be increasing tougher) but it will cost £70 ish & is tax deductible & has a good advice phone line
there are rules in the pipeline about energy standards being upped from D to C which may mean renting some properties won't rentable
I would rent a property that has a mortgage on it because of all these issues

sorry ! I would NOT!

Your way. Being a landlord can be hell and it's getting more and more difficult.

It's quite interesting on this thread to see how many people are risk averse. The few people who have replied with anything other than no, I'm going to take a guess that they have properties, or are self emloyed.

I would do what your husband is planning, but only if it was a solid business plan, with a view to how do we make enough money to be able to relocate ourselves in the medium term.

We were looking at a similar-ish proportions, we have bought a house that is okay but needs modernising. We have enough money in the bank to either fund a small BTL or house to flip, or to crack on and make a start with our house. In our case, we are time poor at the minute, so a house to flip isn't the best option. If we go for a BTL that needs no work, we won't be able to release capital from it for a lot of years. So we are going to start the work on our own house, knowing that our property has already risen in value in the year we've been here, and the works should increase that by a good %. When they are finished, we will look at remortgaging our own property to release that capital amount again, and proceed with our planes.

The moral of that tale is, can you buy a doer upper you can add value too?

Being a landlord doesn't have to be hell, either. The first year can be tough, while you learn the ropes, but if you find good tenants and look after your properties, it can look after itself pretty much sometimes too.

Your way. (Particularly as the neighbour downstairs sounds like the sort of person who will keep driving tenants away!)

Some people (particularly men) can get carried away with seeing property as a financial investment, and only thinking about how to get the maximum financial return. But a property is an emotional decision as well as financial: it’s where you raise your children and where you bring friends and relatives. I would much rather raise my family in a nice sized house and have an ok pension then raise my family in a much smaller place but end up with a larger pension.

@KnobJockey ah there is the nub - finding & knowing if a tenant you take on will prove to be a good one - they can start off OK but things go wrong with them or their lives or their finances or dodgy relationships
you have to be incredibly careful & really lucky - check check & check again
I still wouldn't advise renting a property that has a mortgage or a furnished one

Whichever way I decided to do it, I’d have made my decision with my husband before pissing about people who are now on tenterhooks to know if their offer is accepted and May have had their time wasted in viewing.

@Cocomarine

Whichever way I decided to do it, I’d have made my decision with my husband before pissing about people who are now on tenterhooks to know if their offer is accepted and May have had their time wasted in viewing.

That was exactly my point earlier on in the thread. I seemed to be the only one thinking it!

[quote mumwon]@KnobJockey ah there is the nub - finding & knowing if a tenant you take on will prove to be a good one - they can start off OK but things go wrong with them or their lives or their finances or dodgy relationships
you have to be incredibly careful & really lucky - check check & check again
I still wouldn't advise renting a property that has a mortgage or a furnished one[/quote]
There are absolutely problem tenants, but the majority of people are just normal people, who pay their rent on time. And everyone can hit hard times, but a good landlord can help with that.

I work in the area. At the moment, there are a higher than normal amount of problem tenants. Of about 110 tenants, we have 3-4 who are causing issues or have problems with their rent. Normally, at any given time, we have 1-2 people. Thats a whole lot of good, normal people who occasionally hit hard times who pay their rent.

Meeting tenants in person before choosing, and not just choosing the ones who tick any lettings agents boxes helps. And not being suckered in by a sob story, pretty much every bad tenant we have starts with a sob story (I don't choose the tenants).

I’m a landlord and it is not an easy way to make money. We don’t actually make any profit and we always need access to a few £k for emergency repairs. We have two BTL properties and they are long term investments/pension pots. We move around with OH’s work so it works for us as we won’t live in our own house for another 10-15 years. If I was in your position I would definitely want a bigger house now.

Your way, definitely.

If you fancy being landlords later on, you could release equity to finance a BTL.