Buy to Let purchase – financial advisor says No
I am thinking about buying a refurbished property originally valued at £680,000 for £635,000 and now have a purchase dilemma.
The rental is circa £1850 which provides a decent yield. The thing is the Stamp Duty is £40,000 which is a significant up front investment.
My Financial Adviser is advising against buying more rental property and believes I should invest the deposit money elsewhere.
I believe that in 5 to 10 years the property will be worth £700,000 or more and I will have received the rental income (its a strong rental location).
It is going to take all my spare cash to buy it.
What are the risks?
Many thanks
Nick
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Member Since June 2013 - Comments: 381 - Articles: 61
10:36 AM, 12th July 2018, About 8 years ago
As above, not enough info in your article to make a considered answer for you.
As one of Property118’s leading recommended financial advisers, we are here to be your sounding board and our business is focused on being client-centric, so that means that – whether you want to hear it or not sometimes – we also say ‘no’ too.
However, our recommendations (formal, insured and regulated), can only be made based on a proper Fact Find which includes a portfolio, income and credit overview.
Member Since April 2018 - Comments: 3
9:45 AM, 16th July 2018, About 8 years ago
Reply to the comment left by Paul Shears at 09/07/2018 – 21:38
Hi to give you better understanding I have a BTL mortgage of £325,000 at 2.14% over five years fixed, the location is Marlow which has its own property bubble, my future value estimates are low based on the current political turmoil, but there could be considerable upside on house prices once the Brexit debacle has passed. I am a high rate tax payer. I estimate a gross return from rent of 2.47% plus equity growth.
Member Since April 2018 - Comments: 3
9:55 AM, 16th July 2018, About 8 years ago
Thank you to everyone who has commented, you have hit several nails on the head, especially the point about emotional connection with investments. I am crossing that line with this purchase. Have a call this morning with my Financial adviser.
Member Since April 2014 - Comments: 985 - Articles: 2
3:28 PM, 16th July 2018, About 8 years ago
Reply to the comment left by nickh215 at 16/07/2018 – 09:55
Make sure you listen to him!
Member Since March 2016 - Comments: 254
2:32 PM, 20th July 2018, About 8 years ago
Put the money in a SIP if you can.
Member Since October 2016 - Comments: 189
9:08 AM, 22nd July 2018, About 8 years ago
You can’t put residential property in a SIPP.
Member Since July 2013 - Comments: 648
9:20 AM, 22nd July 2018, About 8 years ago
I think it’s the money that is being suggested is pit into a SIPP, not the property.