Investment property or own home first?

S

Seamus101

Guest
Hi.
I am looking for some advise on whether to invest in property or buy a home first.

I have no property at the moment and am renting. I am currenly saving for a deposit for my first house but it will be 2 years until I have the 8%. I am 32 at the moment and earn a reasonably good income and am single.

Now a friend of mine who already has a number of investment properties has come across another good investment property. He is not in a position to go with it by himself as he is currently cash strapped. He suggested we pool together for the deposit.

There would actually be 3-4 friends involved and we would need 4-5k each to cover deposit + costs. The property should be cash-flow positive (or very close) from day 1 using realistic (and slightly pessimstic) forecasts. We would get a joint mortgage between us all. It would be a long term investment with the aim of having the property paid off in 20 years via rental income.

I know there will be issues with me losing my FTB status (and getting around this is another topic and posting on maybe another day). What I am more interested about is whether I should forget about investing until I have bought my own home?

I see some advantages to doing it now. The market is a buyers market and the initial investment is relatively small. Plus it would be a learning experience and maybe a start to building a decent investment portfolio. (If this one worked out we would look at possible adding to the portfolio to build up a number of properties between us.)

The disadvantages are that I would be using up some of my own house deposit for the investment and I am also unsure if there may be implications when it did come to get my own mortgage on my own place.

So what's the thoughts on whether it's better to buy your own home first or does it make a difference? If anyone has any advise or has done this, I would appreciate your thoughts!
Thanks.
Seamus
 
You lose all the advantages of being a first time buyer e.g. stamp duty exemption and better tax relief.

You will not be able to borrow as much either.

If the property goes down in value, you will find it very difficult to buy your own home.

Forget about it.

Brendan
 
While spreading a risk is always appealing, it might be hard to realize a return on this. You would have to discount losing ftb status (stamp duty & trs), there would be awful hassle involved in finding tenants and landlord duties, capital appreciation may be limited (if any) and even after a few years you would need to get agreement from your friends to sell and realize a profit.

Maybe if you were to live in it yourself for 5 years as your ppr it could work?
 
I have to say of all the things i've seen on this site this one has to be up at the very top for steering clear of.

Firstly - Aside from the reasons given above by other posters the market is not in the best position to be investing in right now.

That said - the MAIN reason is this - there are FOUR of you !!
Keep clear !!

The more people involved the greater the likelihood of messing.
At any moment any one can decide to kick up a stink and decide he wants to sell which may not suit anybody - regardless of any contracts yee have written up in advance.
Also - People may have fallings out.

Where does that leave the rest of u?

Personally - i think a good rule of thumb is only go into business by urself.

There are disadvantages certainly - however i think the advantages outweigh the disadvantages if u are in a position to do so.

In a nutshell - buying a property with 3 othetr people is messy !!

And most importantly - In my opinion the biggest advantage with property is being able to remortgae when it suits you to suit ur needs - having 3 others involved completely negates that advantage.

Don't go near it with a barge pole !
 
don't mix friends and money it rarely works! keep the head down, keep saving for your home and don't be swayed by the thoughts of making easy money with property. There's no such thing :) (anymore)
 
i agree with the last 2 coments keep money and friendship seperate!

Property is a pension plan not a quick fix,you get a quick earn once in a while but never count on one
 
Did it before and would never do it again.
If you go ahead with it, be sure to have a clear exit strategy agreed as invariably somebody will want out sooner rather than later.
 
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