Is it a Good time to buy a Property?

[Vita]

Hi all, I was wondering if it's a good time to buy a Property. Seen a nice 3bed detached house in a really good location for £140k, was thinking about putting it on rent as it could fetch about £650/month.

My dad is the one who's thinking of buying it. Would you say it's a good time to buy a property, and he's thinking of buying it without a Mortgage. It does need some work doing to it, max I would say about £5-6k's worth.

What do you guys think?

 

[meths]

Good as far as prices go but bad as far as mortgage deals go.

If it's cash in had then I'd say he should go for it.

Edit: Strictly speaking he should compare the return he's getting in rent in relation to purchase price (yield) against what he could get from other forms of investment and make a decision based on that.

 

[Tom0]

It's a buyers market, apparently.

If it's as simple as buying it, doing it up cheaply and renting it out (easily) then it sounds like a good investment to me.

Is there a catch?

 

[Dolph]

If you're not going to rely on capital gains (eg buying property, doing up, selling on) then yes, it's not a bad time. the market, although the prices haven't dropped that much, is quite flat, and cash buyers are a rare thing.

I wouldn't take the risk on making large capital gains at the moment though.

 

[RDM]

Hi all, I was wondering if it's a good time to buy a Property. Seen a nice 3bed detached house in a really good location for £140k, was thinking about putting it on rent as it could fetch about £650/month.

My dad is the one who's thinking of buying it. Would you say it's a good time to buy a property, and he's thinking of buying it without a Mortgage. It does need some work doing to it, max I would say about £5-6k's worth.

What do you guys think?

As you are talking about buying it outright £650 a month gives you a yield of about 5.5% (not inlcuding any expenses though). Which is certianly not bad considering the current interest rates.

 

[Adam]

If you need somewhere to live rather than buying for profit then why not? I bit the bullet in the end after looking for 3 years for a bargain. I paid over the odds somewhat (compared to 6-12 months previously) but I'm very happy with my property.

 

[Vita]

He wants to get it cash, and then rent it out. The area it's in is a good area for renting, it's the only detached property on the road the rest are semi's which go for about £90-110k. So a detached property is a bonus. That inside of the house doesn't really need touching, everythings fine and in working order.

It's solely for rent and not for anything else.

 

[RDM]

He wants to get it cash, and then rent it out. The area it's in is a good area for renting, it's the only detached property on the road the rest are semi's which go for about £90-110k. So a detached property is a bonus. That inside of the house doesn't really need touching, everythings fine and in working order.

It's solely for rent and not for anything else.

In that case what he needs to do is have a look round at other ways of investing his cash and see if he can improve on a 5% yield with an acceptable risk profile. If not then it seems a reasonable idea. However you then need to figure in any possible capital gains issues and how tied up the cash is.

 

[Vita]

In that case what he needs to do is have a look round at other ways of investing his cash and see if he can improve on a 5% yield with an acceptable risk profile. If not then it seems a reasonable idea. However you then need to figure in any possible capital gains issues and how tied up the cash is.

Sorry but can you break that down for me. Don't really understand.

 

[RDM]

Sorry but can you break that down for me. Don't really understand.

Basically as you are only intending to buy this property as an investment you need to think of it in terms of a financial investment rather than a property purchase.

The investment amount is £140,000. With rent of £650 a month that gives a yield (i.e. return on investment) of about 5.5% per year. You do however have to take out the expenses of running the house.

This is the same as putting that £140,000 in an interest account that makes 5.5% interest a year. However there are different risks involved and the ability to get at your money also changes.

In short, stop thinking of it as "buying a house" and think of it as a way of making money from the £140,000 capital. If you can make as much or more money elsewhere for less risk, then do that instead. If you can't then consider the idea. But think about what it means if you need to get at the cash in a hurry (its a house, you can't sell quickly) or what risks are involved (you may not be able to rent it out, the property market may fall) or what costs are involved (maintenance, certain bills, cost of being a landlord and finding someone to rent etc.)

As for capital gains tax, because it isnt a main property when it comes to selling the house at some point in the future any profit made could be subject to capital gains tax. So if you sell it in five years for £200,000 then £60,000 may be taxed.

 

[Vita]

Basically as you are only intending to buy this property as an investment you need to think of it in terms of a financial investment rather than a property purchase.

The investment amount is £140,000. With rent of £650 a month that gives a yield (i.e. return on investment) of about 5.5% per year. You do however have to take out the expenses of running the house.

This is the same as putting that £140,000 in an interest account that makes 5.5% interest a year. However there are different risks involved and the ability to get at your money also changes.

In short, stop thinking of it as "buying a house" and think of it as a way of making money from the £140,000 capital. If you can make as much or more money elsewhere for less risk, then do that instead. If you can't then consider the idea. But think about what it means if you need to get at the cash in a hurry (its a house, you can't sell quickly) or what risks are involved (you may not be able to rent it out, the property market may fall) or what costs are involved (maintenance, certain bills, cost of being a landlord and finding someone to rent etc.)

As for capital gains tax, because it isnt a main property when it comes to selling the house at some point in the future any profit made could be subject to capital gains tax. So if you sell it in five years for £200,000 then £60,000 may be taxed.

Ah I see. Thanks for clearing that up, will have a think about this then. Really appreciate your input, thank you.

 

[Scam]

Yay. Let's all buy houses to rent them out

 

[Maccapacca]

Buy it turn it into three flats rent each one out = better return

 

[Stupot_]

Yay. Let's all buy houses to rent them out

Jealous much?!

 

[aardvark]

buying without a mortgage may be ok - certainly don't buy if you need a mortgage.

 

[Citizen420]

it is a good time to buy, interest rates are low so your pops won't be earning much if that 140k is in the bank, will earn more in property.

Although 140k for a 3 bed detached seems very cheap to me.

 

[Vita]

it is a good time to buy, interest rates are low so your pops won't be earning much if that 140k is in the bank, will earn more in property.

Although 140k for a 3 bed detached seems very cheap to me.

The rooms are quite small, and the property doesn't really have a garden or anything to maintain. Comes with a garage and cellar. That's why my dads interested as he knows he won't be able to get one for that price in the future.

 

[Scam]

Jealous much?!

Of course I am. I live in a generation that's been totally priced out of ever being able to afford a property. Consider the house the OP is speaking of, which in fact is pretty cheap. Any FTB would need at least a 20% deposit, which is 28k. That's a huge amount of money to amass. Even if you could save £500 per month (which is pretty hard going when you're paying rent to the guy who has it as his second income), it'd take 5 years to save that. Once you've saved for 5 years, the price will have increased even more, so let's call it 6-7 years of saving. If you started saving when you're 25 you'll be over 30 before you can buy your first home.

Jealous? Of course I'm jealous. And bitter. Anyone in my generation (kids of baby boomers, technically) should be. With flats going for over £300k in my area how on earth is anyone going to be able to buy their first home?

Encouraging people to buy second homes and therefore propping up the market/bubble even more will just make it harder for this FTB generation to ever afford anything. I'm merely thinking of the future.

 

[Fubsy]

Of course I am. I live in a generation that's been totally priced out of ever being able to afford a property. Consider the house the OP is speaking of, which in fact is pretty cheap. Any FTB would need at least a 20% deposit, which is 28k. That's a huge amount of money to amass. Even if you could save £500 per month (which is pretty hard going when you're paying rent to the guy who has it as his second income), it'd take 5 years to save that. Once you've saved for 5 years, the price will have increased even more, so let's call it 6-7 years of saving. If you started saving when you're 25 you'll be over 30 before you can buy your first home.

Jealous? Of course I'm jealous. And bitter. Anyone in my generation (kids of baby boomers, technically) should be. With flats going for over £300k in my area how on earth is anyone going to be able to buy their first home?

Encouraging people to buy second homes and therefore propping up the market/bubble even more will just make it harder for this FTB generation to ever afford anything. I'm merely thinking of the future.

Hear hear!!!

 

[toshj]

I'm a FTB in London, and having just had my offer accepted we're being torn apart by the mortgage offers. Best one we've been accepted for was 4.7% interest only waiting to hear back on 3.5% on a 30% deposit!

on the OP, I'd definitely have a look around the investment space to see if there's anything worthwhile to whack that amount of money in. if you/your dad can't find anything else, then it's not neccessarily a bad idea in principal, but you'd obviously need to take into consideration running costs and any CGT that might hit your dad should he chose to sell.