I decided a few weeks ago to remortgage my home and buy a second one to rent out. Everything has gone really smoothly until the surveyor came to my home and valued it at 20k less than I thought he would, which leaves me a huge problem! I have already paid out some solicitors fees and valuation fees and it seems such a shame to pull out at this late stage. I can still go ahead and buy the second house but would mean getting further into debt because I need an extra 3k or so, which I could borrow somewhere along the line. I have already occured some debt doing up the house I am living in as it was in a state when I first bought it. Anyway the question is do I really stretch myself and continue with the sale or cut my loses and run?
Would You Invest In A 2nd Property As A Buy To Let With The Market In The State Its In Right Now?
23
Sep
Dominic T
September 23, 2009 at 3:40 pm
If I were you I would wait maybe 1-2 years to carry out your plan. It’s a good idea, but not at the moment because we are just tipping over the edge of the housing bubble and we are about to fall down the other side of it.
I’ve heard estimates that it will be anywhere between 5 – 20 years before housing corrects itself. The market will soon be flooded with properties from the 1m amateur ‘buy to let-ters’ who won’t be able to remortgage in the current climate which will mean there will be loads of cheap properties for you to choose from.
Don’t forget the worst is yet to come, we are only just entering the recession cycle. Check out the graph on the home page of ‘House Price Crash.com” here: http://www.housepricecrash.co.uk/index.p… and have a wild guess about what is going to happen to house prices!! (clue: what goes crazily up, must come crazily down!)
Julia
September 23, 2009 at 4:19 pm
Very easy answer: YES…but
Yes I would buy a second home but not in the UK, I would definitely buy abroad.
UK Banks are offering mortgages to buy property abroad. In some cases, they also offer rent guaranteed income.http://www.financecomparator.co.uk/buy_a…
John S
September 23, 2009 at 4:59 pm
Depends on how long you can wait… OK prices are low now , hope the 2nd property also came down similarly, but after a while the only way is up and you will recuperate your temporary losses .. both properties will increase in value, but might be 4 or 5 years, Up to you,
dels replies
September 23, 2009 at 5:53 pm
Consider making a lower offer for the new property. People are still renting but you need to make sure you are getting a worthwhile yield on the property – at least 7%.
In truth though it’s probably better not to buy another property right now as the market will fall further
Manabu Fan
September 23, 2009 at 6:35 pm
Cut your losses and put it down to experience. What you lose will be more than saved if you buy in a year or two’s time – possibly more – when house values have bottomed out. A friend of mine’s father runs a merchant bank in London and he is expecting the value of her flat to go from £150,000 to £100,000 in the next few years.
Stretching yourself financially is never a good idea. If you can’t keep up repayments you’ll lose the lot. I’ve actually bought abroad recently – Bulgaria. You can get yourself a nice little place to use as a holiday let for very little. And it’s a lot sunnier than the UK!
Best of luck.
Sir Fearnot
September 23, 2009 at 6:45 pm
This is a really bad time to be entering the buy-to-let market. You need to wait until house prices have fallen as low as they’re going to go. Most people think that could take a year or two.
If you’re worried about £3,000 additional debt, you really ought not to be in this business. It’s only a matter of time until something goes wrong for you. You might have a void period (no rental income), need to do repairs, or have to take legal action against tenants. And no one knows where interest rates are going to go.
Please be careful or you’ll find yourself in deep financial sh*t.