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Newbie questions

J

j9070749

New Member
Hi guys,

I’m 25 years old and am looking to invest in a property to rent out in England, Middlesbrough.

I basically need to gather as much information as possible such as:
  • Should I do it?
  • Where to start
  • Tax laws
  • Whats the best type of house to rent
  • What’s the best mortgage to get

I currently have two options:
1) Buy a 2 bedroom street house for around £40,000 which would rent out at £350/400 a month. I was planning on getting an interest only mortgage with a 25% deposit (is this the best thing to do?)

2) I could go 50/50 with my father on a property in the town centre, the downstairs could be rented out as a commercial property and the upstairs could be converted and then rented out as student accommodation (6 rooms which would convert into 4 student pods). My father currently has a 50% share in the property, and his brother/my uncle has the other 50%, however my uncle is looking to sell, which is when this opportunity arose. The property is valued around 80,000 and would need around aproxamtly £20/30,000 spending on the property including full re-wiring, double glazing (I would look in much more detail what needs doing and how much closer to the time, these are rough figures at the moment).

Although a bigger risk I’m currently thinking that option 2 would be the best idea, although the property does need a lot of work doing to it.

My current living conditions are living at parents/girlfriends house (low outgoings)
In full time employment.

Could someone please break down all of the expenses/costs involved in this process, or point me in the direction of where to look. If you need anymore information please ask.

Thanks in advance for your help.
 
Veronica

Veronica

Administrator
If you are considering option 2, take a look at the area to see how many empty shops there are. If there are a lot of empty shops then bear in mind that renting the shop unit might not be easy. If the area is bustling shopping centre with most units occupied then it could be a good option.
 
N

nmb

Well-Known Member
As you will be aware the financial markets are currently in a state of panic with regards to the UK’s decision to leave the European Union. It may be worth researching how an exit from the European Union might impact business in the north-east of England, the cost of finance and indeed the short to medium-term economic outlook.
 
Nicholas Wallwork

Nicholas Wallwork

Editor-in-Chief
Staff member
Premium Member
A lot of questions in there so I'll answer what I can...

Gut feeling is option 2 seems better as it's more flexible and more potential rooms. Also a bit of diversification with the shop (provided demand is good for that). Why go from 6 rooms to 4? Normally us investors are looking to add rooms not take them away! What's the reason for this?

The deal with your uncle could work well as you might be able to agree with him to fumd the deposit for you, perhaps as a payment plan paid out of the rents once developed... Vendor financing works very well if you can form (or have already) a good relationship with the seller...

Also for inheritance tax it might work well with your father's share so something to think about long term.

With regards to mortgages the first option looks like a simple BTL mortgage. Option two has the ability to use more creative financing (vendor, development, bridge, simple remortgage etc) especially as there could potentially be a higher uplift if you can get 5/6 rooms out of it...

Try to break questions down on here please as bundling them into a larger thread like this makes it harder for us to reply to each and every question at once... Thanks.

Keen to hear your thoughts on the 6 to 4 room idea as that sounds like it has room for improvement...
 
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