13:09 PM, 15th April 2014, About 10 years ago 15
I see myself as being more of a property speculator than a property investor or a landlord. I would very much appreciate your views on my considerations and deliberations.
I have seen some very nice leasehold flats which I can buy new build, fully furnished for £183,000 each. This represents quite a significant discount on the recorded sale prices at land registry. I think the developers are keen to get sales agreed before the half year results period, hence I also managed to negotiate a quality furniture pack to be thrown into the deal if I am able to complete of all three by the end of June.
I can comfortably afford to buy three of the properties outright.
My thought process is a very simple one. The pundits are expecting the property market to grow by 30% in value by 2020 and based on my own research I concur with this view. On that basis I would stand to make £164,700 before CGT if I simply buy them and lock them up for 6 years. I appreciate that I will have to pay Council Tax, ground rent and service charges in the meantime and that adds up to around £18,000 X 3 over the period. I will also have to factor in legal costs of purchasing and selling as well as estate agents fees but nevertheless the return, even after CGT is likely to be far greater than I would get if I left the cash in a bank account.
The alternative I have considered is to let the properties. However, I would then have to factor in wear and tear as well as the associated hassle of dealing with tenants, collecting rents and a whole plethora of other legal matters. I don’t really know whether I’m cut out to be a landlord.
I have been advised that if I do decide to let the properties I should receive around £875 pcm of rental income. However, this would be reduced by around 30% to 40% after factoring in letting agents commissions, inventories, gas safety checks, rental void periods and ongoing maintenance.
If you were me, what would you do?
Thanks in anticipation.
All the best
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