buying an investment property - am I crazy

[Goodenoughisgoodenough]

WWYD? I'm 51. very small pension pot. Although recently returned to full time work and have generous employer contribution of 23%, so anticipating saving hard for the next decade. I earn approx £50k in a secure job which I enjoy and anticipate working there another 10 years at leas. I own amodest home with my partner, with no mortgage. I also have £50k in savings. My partner (58) has a low income, and no pension. We live modestly, and I'm able to save around £1000 a month. We have two teenagers who are likely to go to university so that surplus income also needs to support them. I'm considering buying a flat, or small house to give me a rental income and asset to either, boost my pension, or to sell and give the kids a foot on the housing ladder in a decade to come. ie, buy a flat for £150k, with a mortgage of £100k. rent it out, so that rental income covers the mortgage. Either sell in 15 years, or continuing renting to provide pension income. I have no experience of being a landlord! But also trying to work out away of supporting me, my partner and two teens, with my savings and income! Not easy I know. Any thoughts? Is this a crazy plan!

Don't do this Op-too risky if 50K is your life savings

Put 20K into an ISA now and then another 20K in April
Keep 10K in an instant success account
Put your 1K a month into PB
Ditch the useless partner !

I make 3% and I have really nice longterm tenants (10 years - 15 years) who are super-cooperative and wonderful. This is as good as it gets and in reality, I'm really lucky. Many other landlords I know have their profits wiped out every year by malicious minded tenants who want to get their own back on the property owning classes. At 3% return it just isn't worth the return as income and capital growth are now taxed. You would be much better off moving your money progressively into a balanced fund in a stocks and shares ISA where income and growth are tax free.

The only reason I retain the properties is because my tenants are really nice (for now) and its a diversification of my portfolio (although I'm probably kidding myself in thinking this). If any of my tenants were to serve me notice, I would probably sell the house rather than rent them out again. That should probably tell you enough.

Please don't - either for yourself or for your prospectve tenants. Landlording should be left to professionals who understand all the regulations and can fairly and dispassionately handle all aspects of renting. They won't have their lives ruined by disruptive tenants, one off maintenance bills or falling home values. Homes are lousy illiquid assets.

If you really think that housing is the only asset class to be worth considering then think about investing in REIT's (I don't).

Get some advice and maximise your pension benefits first making sure that you at least pay no higher rate tax.

Then read up about investing (not speculating). I always recommend reading The Permanent Portfolio first and then see where that takes you. Good luck!

If you’re worried about tying up all your money in a UK property, have you looked into overseas options? Some markets offer much better rental yields and tax benefits.

Dubai, for example, has no capital gains tax, and short-term lets can be really profitable. Websites like https://wildsdubai.com give good insights into high-yield properties and market trends. Might be worth considering if UK returns don’t seem appealing enough.

Don't do it. It could easily turn in to a nightmare.

Stick it all in index funds. Re-invest the dividends and add money monthly. Much less stressful, and you'll likely end up ahead.

Like so many others I got out of owning rental properties a few years ago. With tax changes, the sums didn’t add up any more compared to investment in bonds. It sounds like you may be assuming that there will be capital gain, but that’s not a given. I sold one property at huge profit, but it had been my own home and I’d owned it for twenty years and caught the SE house price boom. Another sold for a very modest gain and the last at a massive loss. Flats are hard to sell.

I am very glad to be free of the hassle of landlording.

They always say if everyone is telling you to sell thats the time to buy more when it comes to investments.
personally, I would only buy the kind of Property that somebody on benefits would rent. I would make it fully compliant neat and tidy, but nothing special.
Make sure the insurance is included in the calculations if they do trash the place.

Get the council to pay the rent to you directly as part of the deal.

They can change that, but then your maximum liabilities two months because once they’re two months in arrears, you could just go back to the council and get them to pay it directly again.

So your maximum liability here is one month rent because the other is covered by the deposit.

The courts are back up to full speed
You can serve a section 21 and have them out within four months.
As for you never see the money again well that’s up to you to chase it. Personally, I’ve never had to do it but if I did, I’d be asking for a CCJ. And I would pursue it until the ends of the Earth even if they paid me a pound a week out of their benefits I would get that money back.

It will also make it incredibly difficult for them to buy or rent in the future so it might not affect them immediately but I think you’ll find that CCJ will get cleared within the six year period.

Leave Landlording to professionals who know exactly what the law is, have no emotions, and can absorb losses and voids.

Buying one property to rent out is not an investment - it's speculation. An investor doesn't buy the shares of only one company. They buy many companies diversified across many industries, and then diversify further into other asset classes like gilts, bonds, REIT's, physical metals, etc.

You would be the equivalent of someone solely speculating in Enron or Worldcom. Massive companies that lost it all.

You probably need a financial advisor although more confident people can research and DIY.

I agree with people like @XVGN saying it’s too risky and better to leave being a LL to the professionals who can absorb things going wrong.

You sound a little financially vulnerable so personally I would prefer to play safe with the money and not invite stress into my life. I think the first step would be a chat with a financial adviser.

This. As a landlord of over 30 years I would say don't do it. If I could exit easily now I would. Things have got too difficult and are only set to get worse (Renters Rights Bill). Also of course you won't be able to rent out a property under EPC C in three years time, and they are planning to change the goal posts on what qualifies as a C. Also don't underestimate maintenance costs - mine average £3,500 per year per property. On top of that insurance etc. And if you have a mortgage then the interest is no longer tax deductible and you will need advice on how to handle that or you will make a serious loss. Then there's the HASSLE and frequently stress. Don't do it.

In short yes.

Well I’ve rented mine out for six years and have spent a grand total of £7000 in Maintainence for the whole time which the profit more than covered.

And actually, it wasn’t Maintainence. It was replacing a bathroom which was my choice to do so because I’m related to the Tenants.
it was a want not a need

Holiday homes have most of their tax benefits removed from 6/4/25, so not really good advice now.

Even with a CCJ you wouldn't get the money back. The costs of trying to get it would far outweigh the amount you're ever likely to get and costs of one bad tenant can easily be £20000. You'd all have to live a hell of a long time to get that back at £1 a week.

@thecatneuterer

And if you have a mortgage then the interest is no longer tax deductible and you will need advice on how to handle that or you will make a serious loss.

Basic rate tax relief remains available on mortgage interest.

Replacing a bathroom is maintenance. I generally need to replace kitchens and bathrooms every ten years.

We will have to agree to disagree because actually it didn’t cost very much money at all to recover the £2000 less than 200 quid which were of course added to the original Debt - this wasn’t recovering it through a tenant. This was recovering it through a business transaction but with the tenant you have the added Advantage that they’ve already made payments into your account so you have their bank details.
And actually with a CC J you can take it to the High Court which would cost I think £500 again added to the costs
And you can freeze their bank account and all of the money that is in it goes to you.
If you happen to know when their payday was that could work well.

I understand but think it's a bit more complicated than it used to be (I'm no expert on this as I'm mortgage free), and it's certainly something to look into.

The last property I bought had been rented out for 20 years in the Bathroom was the same one in the photograph 20 years ago
As was the kitchen

I think landlording works if you have a portfolio and it's your full time job (and you're personally handy with a drill!), but doing it with one property is stressful and not massively profitable.

I DEFINITELY appreciate the fact that property goes up in value, and am delighted about what has happened re. the investment property I bought 10 years ago though, and I have been very very lucky with tenants, but if I was doing it again, I'd probably just buy a bigger house for my family.

Where will your teens be likely to go to uni? It could be an idea to buy a property where one of them is (even better if you can persuade them both to go to the same place!).

Well the kitchens and bathrooms of most tenanted properties tend to look shabby after ten years. And if you want to attract good tenants you generally need to offer nice houses.

Okay

The ship sailed, particularly as you aren’t buying it outright and your age.