Selling house – looking to invest

by Readers Question

13:55 PM, 29th November 2013
About 7 years ago

Selling house – looking to invest

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Selling house – looking to invest

Hi would be interested in any thoughts on the following.

I split with my partner 2 years ago and the situation at present is as follows …

She lives in our house (joint interest only £250K mortgage), current value estimated to be £700K to £750K.
I live 1 mile away in a 2 bed flat (joint interest only £100K mortgage with my business partner), current value estimated to be £175K. Selling house - looking to invest

I’m spending the next 4 months or so resolving issues on the house with the intention of selling up in spring next year. Its an old house and there are problems with the roof etc which I want to rectify as its important I get top price for the house (naturally), and I don’t want to be knocked down £20K on the roof at sale time which would only need £5K of work etc etc.

Once sold I plan to split the cash from the house sale so that my ex partner can be self sufficient, currently our income and costs are still shared. This would mean me providing her with a larger slice of the equity. Based on her earnings and house prices in our area (a town just outside Brighton), I’m envisaging she will need around £275k. This would leave me with anything between £150K and £200K.

Unlike my ex partner who is ‘house proud’, I’m quite happy to live in my flat and use the cash for property investment.

The rental market I believe is pretty good in the towns and villages around here as there are good rail links to London and Brighton. In fact my flat is amongst 11 others in the same building and they are all rented out, I’m the only flat owner.

So I guess I’m looking for peoples thoughts…my concerns/questions are…

I’ve never been a landlord before so I have some reservations i.e should I use an agent, legal aspects etc etc (I’m still familiarising myself with all the acronyms etc on this forum for example).

Having lived in my flat for a couple of years would it make sense if I invested in other flats to move into one of them? (I understand there is some relief on capital gains tax if you have lived there for a period of time?)

I’m not looking for an investment that brings me a monthly return as such, although I do have some concerns regarding my income source long term so that could change.

Any ideas/thoughts would be appreciated.

Many thanks

Mark Saunders


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Comments

Mark Alexander

13:56 PM, 29th November 2013
About 7 years ago

Hi Mark
I can understand how complex all of this stuff can be to a newbie, it took me 20 years and I still learn new things every day.
However, to make life a bit easier for myself, and to save answering the same questions over and over again, I created a series of article entailed “How To Become A Landlord” which covers all the basic fundamentals including the questions you have raised and much more. Please see >>> http://www.property118.com/how-to-become-a-landlord/60765/
PS – definitely worth you living in as many of the properties as possible if you have that flexibility. There is an article in the series specifically explaining why.
.

raj dhillon

16:12 PM, 29th November 2013
About 7 years ago

Mark,
You are very wise that you want to invest the money and have a source of income as well as being comfortable later in life. Property is certainly a safe bet.
New Landlords need to be very careful and it was only yesterday I had a an enquiry for a new Landlord that regretted going solo as she is faced with problems with her property and tenant and does not have time and effort to deal with it, and she wanted us to manage her property.
There are many Landlords that do take upon the burden but a large percentage of them turn to a agent and the remaining have been a Landlord for a long time and have great experience in the field.
I would be happy to answer any questions you may have.

Neil Gammie

17:39 PM, 29th November 2013
About 7 years ago

Mark - all good luck. Join RLA or NLA and be prepared to learn a lot quickly. Renting is now a professional (or if you're incredibly lucky and find an amazingly good letting/managing agent) semi-professional occupation. Anybody who tells you otherwise is either a fool or intends to make you one.

Neil Gammie

sally lloyd

16:33 PM, 30th November 2013
About 7 years ago

Reply to the comment left by "Mark Alexander" at "29/11/2013 - 13:56":

Hi Mark A,

I was wondering how long and how often you can move to receive capital gains Tax relief. we have currently been living in our present house for about 18 months, have owned it for 2 years. we have just found a tenant and will be moving into our next renovation project while we wait for planning permission to turn it into 2 houses about 2 months

we are thinking of buying another property to live in during the renovation again another 2 months approx, then renting it out and moving back into one of the renovated houses. as these are short periods of time will they still be seen as our primary homes or should we stay in the property in between for longer or just move into a caravan and keep using the renovated property as our main residence are there time scales that the tax man accepts as I know in the old days there weren't.

Mark Alexander

17:15 PM, 30th November 2013
About 7 years ago

Hi Sally

I don't think there are any rules set in stone but I do recommend you take professional advice. See the member profile for Neil Barlow

8:44 AM, 1st December 2013
About 7 years ago

Hi Mark S.

A sensible, safe, and tax efficient way forwards would be to let out your current flat (getting Consent to Let from your lender or remortgaging to BTL mortgage) and then buying another property on a residential mortgage - perhaps one where you can force the appreciation through refurbishment.

There are CGT incentives when you let out a property that you lived in, but seek professional advice on that before making a decision.

If you have a busy day job and you need some support with your properties, then employ a lettings agent to manage it for you.

It is vital that you choose a good agent ... here is some advice on how to do that:

http://www.propertytribes.com/how-vet-lettings-agent-12-questions-ask-t-8765.html

My advice is also to ... invest in YOURSELF. Your education, knowledge, and network.

You can do that by joining, reading, and contributing to various forums and attending networking events in your area, where you can chew the cud with other local landlords.

There is no rush. Property is never a case of "one size fits all". Take your time and grow slowly and safely.

You are in a good area for rentals and if you keep your feet on the ground and make wise choices, you can sleep soundly at night knowing that your properties are working away for you come rain or shine, or holidays, 24/7, 365. 🙂

Mark Saunders

14:34 PM, 3rd December 2013
About 7 years ago

Thanks for all the reply's they have very helpful and informative.

Just taking things back a stage to initial purchase I would be interested in peoples thoughts on mortgage selection.

Having briefly looked, it seems that most of the BLT mortgages come with a pretty hefty arrangement/setup fee. Although with initial interest rates offered being around 2.5% maybe this fee its not quite so unpleasant!? is that the way I should be viewing it?

But I guess that fee rears its head again when the initial (say 2yr) tracker or fixed rate comes to end when you decide to go for another deal rather than sit on there base rate.

I know there is no exact rule as to what offer should be taken at any time, only gut feelings on where rates are going. But I would be interested to know where most current BTL portfolio owners find themselves? ie on base rates or always moving to new deals?

Cheers

Mark.


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