First time buyer purchasing BTL property while renting

Hi,

I was looking into the possibility of buying a property (first time buyer) with the intention of letting it while renting a property in another part of the country. I am looking for advice as to whether this is a good idea.
So here are the details:
I live and work in the west, and I eventually hope to purchase a home here. I was thinking of purchasing a property in the midlands where I am originally from and where I have family. Property is much cheaper in the midlands so I could afford to buy a three-bed on an estate there for cash. I was then planning on letting it while simultaneously paying rent on a house in the west, and continue saving using both work and rental income.
Would there be advantages to this as I would not require a mortgage for the property in the midlands? I would plan on eventually selling the property in the midlands, use the additional savings and ultimately pay less mortgage on a house in the west. Or would it a better move to take the plunge and just purchase in the west now, taking out a mortgage of about 50%?
Any advice would be greatly appreciated. Thanks.

Buy the house where you want to live, you can never depend on being able to sell the house you don't want when you need to.

Buying an investment property while renting yourself creates a number of issues.

The rental income you get will be taxed. There is no tax relief for the rent you pay. You would no longer be a first time buyer when you buy the home property. the transaction costs of buying then selling the investment property in the midlands would be lost. You would probably have to pay capital gains tax on any profit you made on it.

If you intended to live in the investment property eventually I could see that it might be worth it, to buy now and rent it out for a while. But I don't see the attraction the other way around.

Looking at the possible permanent home in the west. Are you in a position to buy a house that would suit your living needs for 5 years plus.

You say the west, but there is Galway where the economy, property market and rental market are all strong and there is everywhere else. Would it make sense to buy a property larger than your own needs at the moment and let to sharers. With the rent a room scheme you could earn €10,000 pa tax free.

You don't give a lot of details, age, earnings, possible property prices.

cremeegg said:

Buying an investment property while renting yourself creates a number of issues.

You say the west, but there is Galway where the economy, property market and rental market are all strong and there is everywhere else. Would it make sense to buy a property larger than your own needs at the moment and let to sharers. With the rent a room scheme you could earn €10,000 pa tax free.

You don't give a lot of details, age, earnings, possible property prices.

Click to expand...

Sorry, I should have given some more detail.
I’m currently renting and working in Galway and was planning on buying a home outside the city, maybe heading in the direction of Clare.
I’m 34, earning ~42K per annum and have 150K savings. I’m looking to purchase a property to let in the midlands for ~100K. Current property I’ve looked at around Galway / outside Galway is ~250K.

You can buy a lovely family home in Galway for less than 250K so I've no idea what you're at with the midlands or the road to Clare. Have you looked at property, properly?

You can then earn up to 12K annually tax free in the rent a room scheme. No hassle, no stress, no commute, mortgage instead of rent, mortgage subsidised by rent.

I think Leo that you need to decide if you are looking for an investment opportunity or a home.

While Bronte is right that you can buy a lovely family home in Galway for less than €250k, maybe you would rather a house with a big garden in the countryside.

You don't say if you need a place to live for a single person or a family.

I'm looking for a house for myself and my partner, no children. I have mostly been looking at property in Oranmore, Claregalway and Athenry but I would like to live in Kilcolgan or Clarenbridge maybe. No apartments, and a least some garden. A lot of places I looked at have been ~220K+. I put in an offer on a three-bed semi-detached in Oranhill for 230K about a year ago and it wasn't accepted.
I am in no rush to buy but it seems that prices are continuing to rise so I want think I need to get in soon or prices for what I'm looking for will go beyond what I can manage.