You are reading a single comment by @hesa and its replies.
Click here to read the full conversation.
-
https://monevator.com/its-too-late-to-get-into-buy-to-let/
Someone's long term experience with numbers
https://monevator.com/its-too-late-to-get-into-buy-to-let/
Someone's long term experience with numbers
London Fixed Gear and Single-Speed is a community of predominantly fixed gear and single-speed cyclists in and around London, UK.
This site is supported almost exclusively by donations. Please consider donating a small amount regularly.
hesa
skinny
I still like the idea of putting money into residential property as a zero risk way of helping your offspring with a deposit on their first property.
Get a buy to let mortgage, putting down 25% on a property, and you get the value increase on the 100%, plus possibly a bit of a profit from the rent above the mortgage interest. So a modest 4% house price rise is actually a 16% return on the cash you put down.
When said child is ready to buy a house you’ve got them the perfect deposit gift. If house prices have gone up madly they’ll have a bigger deposit, if they haven’t it doesn’t matter as they can buy more easily.
The issue is the cost of stamp duty at the point of purchase, so you need a significant rise before you reach break even, but unlike fund management costs it’s a one-off so if you’re investing over a long period it can still work out well.
Depending which survey you believe house prices have gone up about 70% over the last 10 years. If you’d put a 25% /£40k deposit on an average £160k house you’d get back £112k now, a 280% return before you include any rental income. £40k on the FTSE 100 over that time would have given maybe 25% / £10k increase.