Would you follow this advice about buy to let?

[Jamfirstest]

i inherited a tiny cottage couple years ago in a touristy area. It’s currently a holiday let and it does ok but it’s not making big money. I’m getting it valued this week and I think it will be valued about £190k. I’m thinking of selling it and buying a house locally to put in long term let. It will be less work and more income. I will have some change for a new care and a holiday as property in my city is much cheaper though rents are high.
my colleague thinks I should split the cash across 2 houses and take out v small mortgages. This is what he did and he built nest eggs for his now adult children. I’m tempted by this idea but is it more hassle than it’s worth?
any similar experiences? My work life balance is already grim would this be better?

Would depend for me whereabouts you are, how small these mortgages would be, what the rental yield is. Are you a high rate taxpayer?

Not a high rate tax payer but not far off the threshold. Would likely set up a limited company. So maybe a 50% mortgage on a £120k ish property. Thanks for the reply

Why would you set up a Ltd company, it's a lot of hassle for that scale investment. If you buy two cottages you could look at a discretionary trust if you want the children to benefit now, or just take the income and give them to your children in the future.

It’s only really worth setting up a company if you have multiple properties and are a higher tax payer- otherwise you’ll likely have admin and higher stamp duty and no CGT allowance on selling for nothing. The colleague possibly did what he did when interest rates were v low and mortgage interest could be offset against income for tax purposes. Now neither is the case. Also if you don’t have time to manage them yourself you need to pay an agent which is probably 10-12% of income.

The days of the small private landlord are over. It is madness to get into this sector at this time. Sell the existing property. If you are risk averse invest the equity in NSI. Otherwise in a medium risk stocks and shares ISA. Minimum hassle, regular income.

As per @Ernestina123 , you can get £8k interest with very low risk. Max out your ISA then put the rest in a low risk ETF.

@Ernestina123thank you I need perspectives like this

This. I’m an ex-landlord and it’s a hostile landscape for the small private landlord. My returns in the latter years would have been better in low risk stocks or even cash, and much less hassle.

If you get anything wrong even accidentally, you can face punitive fines that would wipe out your profits for years. One bad tenant could end up costing £££££s. Control of assets- if you evict to sell, you can’t relet for a year. You face double council tax for empty periods.

IMO it’s not worth it, but if you still want to go ahead I recommend joining the Landlords UK group on Facebook and reading through posts and asking advice.

@TheMagicDeckchairthis is such good advice I appreciate it I think I will look into other investments as alternatives

Good advice.

https://www.mortgagestrategy.co.uk/news/lenders-continue-to-hike-rates/

https://www.mortgagestrategy.co.uk/news/renter-demand-falls-14-in-last-12-months-zoopla/

Thanks everyone. The other option is that I just buy a rental property outright which was my first thought. I’ve had the original property valued again and after my cgt I will mostly recoup what I spent on Reno which I’m quite happy with