23 year old - buy home or a buy to let
Discussion
Hi, I'd be interested in people's opinion on this.
My child is 23, working in a decent job -teaching - and has some savings.
Looking at either a buy to let, as a future investment or buying her own home - probably 10-15% as a deposit and then mortgage the rest.
I can see the arguement for doing either, but my gut feel here is to buy her own home but my wife, who has a couple of invest properties, says buy to let then look at buying her own home in a few years.
Would welcome anyone's thoughts on this? Or we missing something?
My child is 23, working in a decent job -teaching - and has some savings.
Looking at either a buy to let, as a future investment or buying her own home - probably 10-15% as a deposit and then mortgage the rest.
I can see the arguement for doing either, but my gut feel here is to buy her own home but my wife, who has a couple of invest properties, says buy to let then look at buying her own home in a few years.
Would welcome anyone's thoughts on this? Or we missing something?
Im a buy to let investor, but would rather have my own home any day of the week given a choice. Immeasurable benefits over a little more income whilst renting.
I also wouldn’t be dabbling in BTL without a lot more capital behind her. One bad tenant or even a bad of maintenance and she is in big trouble. We also have potential interest rate rises and negative equity coming up.
My advice would be to hold the BTL till after you are properly established.
I also wouldn’t be dabbling in BTL without a lot more capital behind her. One bad tenant or even a bad of maintenance and she is in big trouble. We also have potential interest rate rises and negative equity coming up.
My advice would be to hold the BTL till after you are properly established.
hepy said:
Hi, I'd be interested in people's opinion on this.
My child is 23, working in a decent job -teaching - and has some savings.
Looking at either a buy to let, as a future investment or buying her own home - probably 10-15% as a deposit and then mortgage the rest.
I can see the arguement for doing either, but my gut feel here is to buy her own home but my wife, who has a couple of invest properties, says buy to let then look at buying her own home in a few years.
Would welcome anyone's thoughts on this? Or we missing something?
I'd suggest buying a home that she might want to move into some day and then letting it out until she needs to move in.My child is 23, working in a decent job -teaching - and has some savings.
Looking at either a buy to let, as a future investment or buying her own home - probably 10-15% as a deposit and then mortgage the rest.
I can see the arguement for doing either, but my gut feel here is to buy her own home but my wife, who has a couple of invest properties, says buy to let then look at buying her own home in a few years.
Would welcome anyone's thoughts on this? Or we missing something?
This way she'll be able to pay down the mortgage more quickly, as well as getting a foot onto the housing ladder. if, in the medium term she decides to move elsewhere then hopefully she'll have accrued enough equity to remortgage.
Think it’s nuts to buy a BTL before you’ve got your own home. Especially if you’re still living with parents rather than renting. Moving out of the family home is indicative of a certain amount of “having your s
t together”.
Also, it should be about what your daughter wants. Does she want to essentially run her own small business, as well as being a teacher?
t together”. Also, it should be about what your daughter wants. Does she want to essentially run her own small business, as well as being a teacher?
Muzzer79 said:
Are you saying that one of her options is to remain living with you and buying a home that she won’t live in, to rent out?
I’m firmly of the belief that before one invests in property, one should have your own home to live in first.
I disagree. Me and my siblings stayed with our parents after we were married 9for several reasons). being able to save for much longer enabled us to buy bigger better FTB properties. Investing in a house whilst living with your parents is a triple win (you have rental income/capital appreciation, you save money from living at home, and your parents have you around for a few years longer).I’m firmly of the belief that before one invests in property, one should have your own home to live in first.
Countdown said:
I disagree. Me and my siblings stayed with our parents after we were married 9for several reasons). being able to save for much longer enabled us to buy bigger better FTB properties. Investing in a house whilst living with your parents is a triple win (you have rental income/capital appreciation, you save money from living at home, and your parents have you around for a few years longer).
I have a great relationship with my parents but there is no way I could do that. Once I moved out to go to Uni at 18 I never moved back home and I'd have found it really odd to move back in once I'd experienced having my own homeCountdown said:
I'd suggest buying a home that she might want to move into some day and then letting it out until she needs to move in.
This way she'll be able to pay down the mortgage more quickly, as well as getting a foot onto the housing ladder. if, in the medium term she decides to move elsewhere then hopefully she'll have accrued enough equity to remortgage.
That’s not a bad strategy. You could knock 2-3 years off of a repayment mortgage.This way she'll be able to pay down the mortgage more quickly, as well as getting a foot onto the housing ladder. if, in the medium term she decides to move elsewhere then hopefully she'll have accrued enough equity to remortgage.
Still a bit risky though for a 23 year probably earning less than 30k as a teacher.
dmahon said:
Im a buy to let investor, but would rather have my own home any day of the week given a choice. Immeasurable benefits over a little more income whilst renting.
I also wouldn’t be dabbling in BTL without a lot more capital behind her. One bad tenant or even a bad of maintenance and she is in big trouble. We also have potential interest rate rises and negative equity coming up.
My advice would be to hold the BTL till after you are properly established.
I'd agree wholeheartedly with this.I also wouldn’t be dabbling in BTL without a lot more capital behind her. One bad tenant or even a bad of maintenance and she is in big trouble. We also have potential interest rate rises and negative equity coming up.
My advice would be to hold the BTL till after you are properly established.
The other thing to consider is that if she does buy a BTL in her own name, when she buys her first home to live in she'll be hit with the extra SLDT.
Easy - buy own home.
Reduced stamp duty for first time buyer.
No CGT (which would be at higher rates) when she sells.
No additional income tax because no rental income.
No rent to pay, although she will be paying the mortgage.
On the other hand if she doesn't want to buy her own home she'll very likely make more money through investing in an ISA than by buying a BTL,
No costs of entry (i.e. solicitor fees, stamp duty etc).
No costs of exit (i.e. estate agent, solicitor etc).
No tax at all - everything grows (compound) completely tax free.
Reduced stamp duty for first time buyer.
No CGT (which would be at higher rates) when she sells.
No additional income tax because no rental income.
No rent to pay, although she will be paying the mortgage.
On the other hand if she doesn't want to buy her own home she'll very likely make more money through investing in an ISA than by buying a BTL,
No costs of entry (i.e. solicitor fees, stamp duty etc).
No costs of exit (i.e. estate agent, solicitor etc).
No tax at all - everything grows (compound) completely tax free.
Panamax said:
Easy - buy own home.
Reduced stamp duty for first time buyer.
No CGT (which would be at higher rates) when she sells.
No additional income tax because no rental income.
No rent to pay, although she will be paying the mortgage.
On the other hand if she doesn't want to buy her own home she'll very likely make more money through investing in an ISA than by buying a BTL,
No costs of entry (i.e. solicitor fees, stamp duty etc).
No costs of exit (i.e. estate agent, solicitor etc).
No tax at all - everything grows (compound) completely tax free.
Reduced stamp duty for first time buyer.
No CGT (which would be at higher rates) when she sells.
No additional income tax because no rental income.
No rent to pay, although she will be paying the mortgage.
On the other hand if she doesn't want to buy her own home she'll very likely make more money through investing in an ISA than by buying a BTL,
No costs of entry (i.e. solicitor fees, stamp duty etc).
No costs of exit (i.e. estate agent, solicitor etc).
No tax at all - everything grows (compound) completely tax free.
No need for me to post.
You have said it all.
Perfect advice.
Whether properties will be cheaper in (say) 2 years time is another question and impossible to know.
Wonder how many BTLers are prepared for CGT when they sell.
Could retain the properties until death though. No CGT then, just Inheritance Tax.
4Q said:
My son who was similar age bought his own place two years ago then rented a couple of the bedrooms to his mates whilst living there which covered his mortgage so best of both worlds. You can charge £7500pa without paying tax.
^^^^ agree, also remember that not all BTL mortgage interest is tax allowable. Also whilst renting a room, the home owner does not fall under the same legislation that a private LL falls under.Edited by 4Q on Saturday 2nd July 15:11
Lastly any potential LL should also refer themselves to HMG's recent White Paper on proposed legislation covering private residential lettings.
Countdown said:
Muzzer79 said:
Are you saying that one of her options is to remain living with you and buying a home that she won’t live in, to rent out?
I’m firmly of the belief that before one invests in property, one should have your own home to live in first.
I disagree. Me and my siblings stayed with our parents after we were married 9for several reasons). being able to save for much longer enabled us to buy bigger better FTB properties. Investing in a house whilst living with your parents is a triple win (you have rental income/capital appreciation, you save money from living at home, and your parents have you around for a few years longer).I’m firmly of the belief that before one invests in property, one should have your own home to live in first.
Once you are financial able, you should move out of your parents’
Staying there and owning a BTL is taking the piss IMO.
“Having you around for a few years longer” is a highly debatable plus-point…..
Muzzer79 said:
Why should parents house adults who have the means to purchase their own home?
Once you are financial able, you should move out of your parents’
Staying there and owning a BTL is taking the piss IMO.
“Having you around for a few years longer” is a highly debatable plus-point…..
From a purely financial point of view it makes far more sense for kids to live at home and let out any property they own. it costs very little for the parents to feed and house them and (in turn) the kids can use the money they're saving to pay down the mortgage.Once you are financial able, you should move out of your parents’
Staying there and owning a BTL is taking the piss IMO.
“Having you around for a few years longer” is a highly debatable plus-point…..
Just because you're financially able to pay £700pcm mortgage doesn't mean you should.
If the parents are happy for the kids to stay at home then why is it taking the mick?
DjSki said:
Interest rates heading up…. interest not fully deductible from income….govt taking more steps against small landlords…high transaction costs….cgt…..small deposit. Stupid idea to buy a Btl in that position.
Not necessarily if you're not buying it purely for investment purposes. e.g. you know you'll need a house at some point, you want to get your foot onto the housing ladder, but you don't need to move in for a couple of years. therefore why not rent it out?Countdown said:
DjSki said:
Interest rates heading up…. interest not fully deductible from income….govt taking more steps against small landlords…high transaction costs….cgt…..small deposit. Stupid idea to buy a Btl in that position.
Not necessarily if you're not buying it purely for investment purposes. e.g. you know you'll need a house at some point, you want to get your foot onto the housing ladder, but you don't need to move in for a couple of years. therefore why not rent it out?Gassing Station | Finance | Top of Page | What's New | My Stuff