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!

In a lot of places, demand is so high that renters have no choice unless they want to live in a hostel. When my son got his first job in another city, we couldn't even get him a viewing for flats as the viewing slots were filled almost immediately it was listed. We tried for six months, but didn't get a whiff of a viewing. When we finally got a viewing, we barely looked at it, we were desperate and offered to pay a year upfront and 10% extra above asking price, just to secure it. Finally managed to get him moved in the week he started work, we had to live in a holiday rental that week. If we hadn't secured it, he'd have been living in a hostel, like several of his cohort of new starters - some didn't manage to secure a flat until they'd been in the hostel for six months!

So, new, when it's a landlord's market due to high demand and low supply, the landlords really don't have to make any effort at all.

As for nice houses attracting nice Tenants I mean that’s actually laughable
We rented out a family home to a Dentist who shat in the fridge before they left.
No arguments, No dispute nothing whatsoever just a nice shiny shit for us when we opened the door.

You're probably right. But I would feel too embarrassed to offer anything grotty. Also it does tend to give you a higher quality pool to choose from.

You really need to consider all the costs before doing this very carefully. Example of costs include:-

• Stamp duty (I think this is now higher on second houses).
• Buy-to-let mortgage repayments (these are often higher than normal repayments).
• Tax on rental income (need to complete self assessment form or pay an accountant).
• Letting agent fees (it is possible to do it yourself if you know what you are doing but it is a lot more work and there are some things you will need legal assistance with).
• Missed rent and tenancy gaps – it is important to have a fund of three months mortgage payments to cover these.
• Landlord house insurance (annual payment).
• Maintenance costs/gas checks, etc.
• Capital gains tax if you make a profit when you sell your buy-to-let property you will pay tax plus estate agents fees (if you use them to sell).

Another landlord here exiting the market shortly. And I tend to be quite selective in the properties I buy, where I think I can make improvements to add value so I can sell at a profit. I would consider renovating properties again but the figures need to stack up and this is more effort in the short term.

As everyone else says, the returns are more limited for BTLs and certainly do not compare to a global investment fund, compounding with 0 effort on your part. This is especially true if you are hoping to leave something for your children. Even £10K now in a SIPP will produce huge returns for them when they are retirement age.

I think being a LL to 1 property would be difficult. I have 11btl houses and manage them all myself. You have to be on top of all new legislation so latest How to Rent booklet given to tenants on day theyove in. Gas certificate and boiler service annually, must never be allowed to expire even for 1 day, and a copy given to tenant, electric certificate every five year but copy must be given to tenant on day they sign contract, EPC certificate also printed out and given to tenant on day theyove in. Deposit into DPS. I give tenants a checksheet and make them sign as I give them each document. I also take photos of house on day they moved in, print them out and get them to sign on to print outs of images to say this is house as they moved in. Tenants get a copy of photos in their pack. You'll need to vet tenants on their earnings. If not UK citizens you'll have to get a share code from them to prove they are in the UK legally. Professional contract given. I do a check after 3 months then 6 months, then thereafter once a year. You have to be confident you can get repairs done quickly. With 11 houses I have my own plumber/general repair and maintenance man who always gives me tenants fast service. You'll need good insurance to cover a tenant who doesn't pay rent for 2 months. Not always easy to get as depends on the status of the tenant. I get an average yield of 9 percent but that's based on purchase price and I've had several of the properties for 19 or 20 years. You'll have to do self assessment. If you think any profit from house let will put you in higher rate tax you'll need to buy through a limited company.

This is really useful to know. I run a Golden Butterfly Portfolio in my son's SIPP and his fund grew by 13% this year - with minimal effort (zero really) on my part - just rebalancing when I add each year's contribution. You could do the same in a S&S ISA.

https://portfoliocharts.com

You have picked the worst time possible to contemplate it. One bad tenant and you can wipe out a few years profits. Get yourselves stocks and shares ISA products, fixed term give better rates. That will be 40k between you, then after the start of the next financial year chuck as much in as you can. I just saw that it’s a partner and not a spouse. I’m unsure about chucking him 20k, I know it’s harsh and maybe he is a delight but currently the pension and savings are all yours and he can't touch any of it. Plus I’m unsure how easily money can be moved about if not married without attracting tax. I would put 20k in my name and then after the start of the new financial year another 20k, not long to wait.

I get capital appreciation of property too. I've got some properties that have doubled in value as well as 9 percent yield. Do I've gained over £150k over 20 years, on top of yield and only have tiny mortgage of under £40k left to pay with a house in excess of £320k. That's just one house. Other houses have appreciated too but I've added them along the way so not appreciated as much. Capital gains would be crippling on the 4 early bought houses, less so on new purchases in last 6 years. I plan to keep letting them. I'll sell 4 of the newer ones in 2028 ahead of EPC C because they are single skinned Victorian terraced and would cost £13.5k each to add internal cladding to reach EPC C so tenant could save about £127 per year. It's not financially viable. They are a few of points off. Other houses are already EPC C. I've worked hard to build up portfolio.