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  • Buy-to-Let

    Holding onto the family home - agree with me?



    Hello everyone

    Our family home that we moved into 3 years ago has turned out for various personal reasons not to be the fairy tale story I hoped it would be.  However in the 3 years we have owned it, we have spent a lot of money, time, thought and effort doing it up. So much so that if we sold it, we would not make any money, and perhaps even lose a little.

    It is worth £1m and would rent out for £2600pcm.  There is no borrowing on it and the advice I am wanting from my esteemed fellow property tribers is whether to keep it or not?

    Is there any scenrio out there where you would keep a property that yields (with potential finance of 60% LTV ) only 1.8%?

    The thought of selling it after all the hard work I have put into it is heartbreaking, and so I am hoping that someone out there might be able to offer an expert opinion as to why it might be something good to hang onto?  Doesn't the old adage go something like...Never Sell Property?

    But equally if the resounding opinion of fellow members is to get out then I will of course listen to those opinions very seriously.

    On the plus side, it is in a good location where there are very few family homes available for rent and all that might go wrong has already been upgraded ( boiler, mains supply, re-pointing....the agonising list goes on.)

    Yours gratefully

    Al

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    I think i'd ask you to consider how you'd feel about renting out your beloved family home to a family of tenants who *may* or *may not* look after it  as well as you?

    You could get lucky and they'd look after it as you would, but how would you feel about letting your home to people who may also slightly trash it, and only get a 1.8% yield?

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    Exactly my thoughts!

    If a lot of deposit money can be raised from the house and still keep it then its a maybe,  but if not, I'd move it on if you can get a good price for it.
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    I wouldn't sell it.  I would turn it into a BTL property, release the equity, and use that as a deposit on another residence.

     Using residence as stepping stone to BTL 

    Selling now might take months, if not years.  It's a stagnant market combined with school holidays.  I read recently that the average time for a sale to complete is now 7 months.

    By turning it into a BTL, you keep your options open.  You can always sell it later if it does not work out as a BTL, but my instinct would be to keep hold of it and not incur all the costs - let alone heartache and hassle - of selling a property.

    The other option would be to see if it might yield higher as a short term let.

    ​Finally, .... When facing an emotional decision, always allow a bit of time and space for the Universe to give you the answer, rather than rushing in to something. Smile

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    Hi Vanessa

    Thanks for your thoughts.  I had not considered short term lets - is there a good resource / book out there that gives the ins and outs of this approach?

    Regards

    Al

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    First of all I always feel that a home where you live needs to be treated differently from an investment. 

    So if you don't like it and you're seriously considering moving out then focus your attention on that and spend money on that making it how you like it. 

    With the current if you're looking it from an investment point of view then based on the returns you've mentioned I think you might as well sell it and buy maybe a portfolio which pays for itself plus contribute towards the upgrade of your new home. 

    Its difficult to know how much capital gain you may get in future on your current home so I'd move away from speculation and buy your dream. 

    My view is sell it. Keep it if its going to rise in value significantly; otherwise sell and reinvest into something that gives better yields. Even a Stocks and Shares ISA will give a better returns without having to worry abt what other landlords have to go through in the current turbulent market.
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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 


    I'm with vanessa on this one. Take a look on booking.com etc in the map view of where your property is. If there is good demand then rent it out 2 nites min onwards.

    The income could cover your new mortgage with some spare more than likely. Release equity for your new home.

    You will have a cleaner in regularly in between tenants they can keep a regular eye on the place. I'm new to all this so if you think I'm right or wrong please say. Good luck Mike.
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    Hi Mike and welcome to the tribe.  Good shout about cleaner being able to check property in-between guests.  Will definitely give peace of mind if there is any form of emotional attachment. Smile

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    It all depends on where your property is located and whether short term lets are good for you. Lettings is by no means an Armchair investment. You'll end up being quite hands on. Depending on your age and whether you're currently looking to retire Or you might be running your own company Or something else. If this investment requires you to move away from other things then you need to balance yours thoughts.

    Also it depends on what your new property is worth. Remember you'll pay a very chunky stamp duty on your second home if you decide to keep this one. Especially if its over £500k - could be looking over £20k in just stamp duty alone. That might wipe out any 5year investment strategy you might look to get from your current property. 

    It's a good question and I don't think it's an easy answer because it depends on your personal circumstances.
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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 


    Hi Al,

    Whilst I can't personally comment on the yield question, I can confirm that it's possible to raise finance against this property to allow you to purchase your next family home if necessary, with buy to let financing based on the rental expected.

    Please let me know if you do decide to keep the property and need our help in this regard.

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    Jenny Reeves

    Property Tribes Financial services

    You can contact me via Direct Message, or 07581 794922 or call the team on 01206 654444 for personalised quote and advice