RoShamBo

iTrader: (1)

All

I have paid off my mortgage & therefore have a £200k property fully paid for.
I was thinking the other day that surely having £200k in property - I can make this "work" for me.
I would appreciate any advise on how to make the most out of my lucky financial position.
I dont have a lot of free-flowing cash so should I ......
Buy another house (big mortgage) & rent it out....
Borrow money against the property & invest on the stock market....
Surely I can make the most of the position I am in....any financial whizz kids out there can advise me ???

Ro

GavinP

Taking a purely financial look at it, with the recession looming according to a lot of people, taking a "bear" view - if you can sell the house you will have £200K.

If house prices drop as sharply as they did in the last recession, you could find that you can buy the house back in a year for £120K.

If you can rent a house for six months, you will probably be quids in - with a lump sum to buy another house.

Obviously, this takes no account of pressures from spouse, upheaval etc.

I would steer well clear of the stock market at the moment....

Thanks

Gavin

Yex

Ro,

Can't give you specific advice, but at the moment the stock market doesn't know where it's going but mostly down for the short to medium term Until a clearer picture of the effect of a sustained downturn in the US and Japanese economies is available I wouldn't want to put any money in. Although a chunk of money in a FTSE tracker should perform well when it begins to rise

If you read the Sunday Times there are frequent adverts for properties in your part of the world being offered for sale as holiday lets. These show potential income rates and yields etc. If you want a "buy to let" mortgage against your current property I'll give you the number of a good mate of mine who runs his own financial consulting company. He can explain income yields against mortgage costs and expected capital gains from rented properties. Corwall is a great place and I come down every year with my wife and dogs, Herods Foot this year

Regards

Yex

DavidBrown

Keep the existing house.

As you appear to have an income, use that income to buy another house and rent it out.

ed the dead

Errrr I'm no expert, but the stockmarket and housing market are both predicted to drop sharply this year.

With interest rates as low as they are at the moment, if it were me (I wish ) I would partially re-mortgage the house and buy something smaller i.e. a flat (in a good location) to rent out looking for a regualar income and, in the long term to sell for a profit. Also use the re-mortgage ammount to pay off any other debts since the interest rate on the mortgage is bound to be lower!

I would also steer clear of the stockmarket and only buy property with a long view....

RoShamBo

iTrader: (1)

This is great advice guys - many thanks indeed. Some food for thought here. One point GavinP raises which is very relevant is upheaval - I have wife & 2 kids so for me, buying another property - renting it out & staying put - seems the best option.

Thanks again for the advice !

Ro

[This message has been edited by RoShamBo (edited 27 July 2001).]

Tom Evans

Don't know much, but if you were to buy a house you'd have to hold on to it for a while to benefit. Like shares, you won't make much if you buy one day and sell the next. If you do buy another property, then you will have to spend £5-£10K in fees to estate agents, etc.

I personally wouldn't bother with the stock market at the moment. My old man has about a grand in 8/9 shares and they are all doing s**t. Some have halved in value, and they're not all one type. He has shares in computer software, education, pharmaceutical, etc.

Personally I'd buy a house and rent it out, ideally so that it covers the morgage, or a large chunk of it. Hold on to it for a few years and sell (hopefully) at a profit. If the worse came to the worse and there was another recession, then you will just have to hold onto the house. You will only lose out if you sell it. Wait until housing market recovers, then sell and you haven't lost anything.

Cheers,
Tom

Bajie

There are some pretty good Buy to Rent mortgages available nowadays. I think you need to pay down 20% of total value. Buy somewhere in a nice area, or two places as investments for your children.

KF

Erm, two things.
I don't know how anyone can say with any degree of certainty what is going to happen in the next couple of months, yet alone years.
You would be well served to have a look here, for more diverse opinions and guidance :

kav

I wouldn't write off the stock market - you can make impressive gains when prices are falling by spread betting. This activity doesn't deserve the bad press it gets. Just don't gamble what you can't afford to lose.
Cheers
Kav

camk

The best time to buy in the stockmarket is when its down(now), FTSE is at a 2 year low at the moment, sure it could go lower but your guarenteed to be better off than most of the other investors(Toms Dad for a start).Therefore today seems like a good point to get in, if not then why has Tom's dad not sold, he also thinks it will improve. If you remortgage 100K you only need to earn 10-12% PA to pay your mortgage payments.
As someone said earlier think long term on the stock market(10 years minimum)and you'll be fine.

Regards
Cammy

robski

Stock market is a LONG term investment.

Too many people have been making fast money, thats all stopped now (virtually). A lot of people have now been burnt by falling share prices.

Buy to rent isnt as good as it once was either, too many people are trying to move into the market as there seems to be good money to make from rent a low cost house.

Would you really want to sell your house and go into rented? What if houes prices actually go UP!? Would you be willing to move into a smaller house?

If your happy to risk say 20K then borrow that money as a mortgage against your house. Britannia are offering 5.69% fixed for 5, 10 or 15 years. Do you think you could invest the money and make more than that?

robski

Aero

Don't forget that if you sell a second property you pay capital gains on the profit to Shylock (sorry, Brown) and his cohorts.

KF

Gearing. It's gotta be a mortgage.