I trust that most of you dear landlords are aware of the inflation of 10% We are wondering if it is a good time to buy a property at the moment… the calculation is that we will be getting 5% return (including all expenses for the studio) on the investment £160k. During the viewing the lady said that they have 3 flats in the same building and all of them are on the market without the offer for some time. We bought a similar studio in the same building for £135k 7 years ago… again around 5% return (or 7.4% including the raise in the price £25k). Thinking of offering £152k, but also worrying not to put all eggs in one basket as the prices of flats don’t follow increase as houses do… maybe to sell the flat we have, add some money and buy a small house to rent instead… (with the hustle and costs of selling buying solicitors fee etc) As you can see from our thinking although we are landlords for the last 7 years we didn’t really think much about the returns carefully; I could say we are new to the “business” and would appreciate your thoughts, knowledge and experience. thank you.
I think right now I’d rather stick my money in a fixed 5% bond until things settle down.
Don’t forget capital gains on the profit.
I personally would buy a house rather than a flat
I do not think there is a good time or bad time in buying property. Provided that it is not for a short duration you will always be better of however what you buy is important! Based on what you written I have not seen much capital gain on your purchase. You either bought at a very expensive price or some how that place didn’t see much rise due to other reasons. Not sure why you are still preferring the same spot. As other member said best to go for house if you can. I am not a financial advisor and I am just expressing my own personal views so be mindful regarding what I said .
2 flats can perform better than 1 house. I have found this to be the case and the flats cost roughly equal as a suitable house. I got higher rent return and capital gain. With flats lease length needs to stack up.
I like the idea of spreading risk with multiple flats as opposed to one house.
I have done ok with this method but I am exceptionally careful. Tenants stay a long time. Generally less wear and tear in flats with less tenants, higher wear in family houses.
Having said that Houses are possibly a safer bet overall I would say.
If you need a mortgage they are high right now.
Property Prices expected to drop 10+ % next year, though don’t bank on it.
The longer you leave it the more rent you lose out on. Long term it’s a fairly safe bet i would say.
I have bought flats in an older.property , but as the freeholder, to have the control over it all. The only one I bough. t in a modern block of 4 was with a 999 year lease. I knew the freeholder as a good guy so was happy with that… Then I gave it to one of my girls. I agree with Mark 10. I have done ok out of them.
Property prices are projected to fall in the next 12 months.
Your investment will likely be worth less than you bought it for after 12 months and the value is unlikely to rise for some considerable time ! Interest rates are rising so your costs will increase.! You will need to recover these increased costs in rent!
However there is a massive shortage of rentable property as anti-landlord legislation and a harsh economic climate is making landlords sell up so you may be able to to let it at a higher rent to recover these costs!
But this carries risks - renters are now struggling to pay the level of rents landlords need to charge to break even let alone make any money to live on !
Do your research very carefully.- the days when buying and renting property could be easy money are long gone. You will have to work very hard for every penny you earn.
It’s obviously your choice, but it might not be a good idea to buy another flat in the building where you already rent one out. The usual financial advice is to “diversity your portfolio”. And that might mean looking at other investments.
Many/most lenders won’t lend if it means owning more than 25% of same block.
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