Would you invest in a small studio flat?

[TheWeeWitch]

We have about £120,000 sitting about doing nothing - we sold our london property, have paid off our debts, invested some of the residual money in a property in Australia and are renting where we live at the moment because, in the area we need to live in, we can't afford to buy the kind of lovely house we can comfortably afford to rent.

We have found a very nice teeny tiny studio near to where we live and are considering buying it as a buy to let or holiday let, as it's in a very desirable holiday area. I'm a SAHM and have family experience running a B and B, so it's a viable option.

The issue is that it's only 13sq m, and we are concerned about issues with selling it on in the future because of the stipulation that most lenders have for at least 30sq m of floor space.

Would you do it knowing that resale might be tricky? It comes with a share of freehold (with only 4 other flats in the building) and a new 999 year lease.

Thirteen square metres is the legal minimum for a double bedroom where I live. I can't imagine how you could get a whole dwelling into that. I'd advise you to keep looking. With that amount of money you'd certainly have a good deposit for something bigger that would pay for its own mortgage.

Thank you for taking the time to reply . That's my feeling too!

If you can't afford to buy, I don't understand the 'residual money' bit. How long will you be in your current location?

We're not sure how long we'll be here. We are fortunate to be renting a beautiful house on a country estate where my OH works. So it's a rent-only situation for us for now as we can't afford to buy in the village or nearby. We love it here but will likely move on in the next 5 years or so. The residual money is what we have left over after buying an investment property in Australia and paying off all of our debts. We just want to make it work harder for us and to lock it up so we don't fritter (we will certainly do this!).

I can see why 5 years is off putting. However, you've effectively jumped off the property ladder, which 'could' be genius, or possibly not.

Are you planning to move to Oz in the long term, is that your backstop?

I'm wondering why you've tied money up there and you've stepped off the property ladder here.

£120k is a LOT to have sitting about, but I'd be reluctant to invest it in any other asset class if in 5 years you need it for property.

Thanks @dontcallmethatyoucunt for replying!

We will live in Australia at some point in the future, but the main reason for investing there is that we are currently getting 8% net return on the apartment we bought there, so we are building up a good amount of savings out there that we don't have ready access to. Savings interest rates are also higher there, so it feels good to have all of that going on. I agree that tying the rest up isn't perhaps wise if we need it for a deposit in the future. That's what is making us baulk at the studio we've found. We're pretty sure we are going to need to find a cash buyer to take it off our hands when we want to sell.

Hmmm. Lots to consider.