Student Looking For Advice.

S

scooby doo

Guest
Hello....my first post.... yayee.
anyways.

my moms accountant is advising her to get me to buy a house or an appartment and rent it out?!?!?
im only 20, and earn 125 a week (im in collage).
the plan is to get a loan, the parents will back me, and let the rent pay off the loan.
is it a good/bad idea??
what should i look out for or stay clear of?
what may i be entitled to?
any other advice.

Much Appreciated.
 
If you buy now, you lose your first time buyers exemption-may or may not be an issue in the future.

Can your parents afford to subsidise the mortgage if the rental stream isn't as anticipdated?

Are you ready and willing to be a landlord?

Will you be renting out more than one room?

Also, some of the points made in this thread may be relevant.
 
scoob,

I think a lot will depend on where you're gonna be, and what you can afford. There is a general principle (which I believe, but some might not) that its better to spend on your mortgage than on your rent: at least you will have something at the end of it. On the money you say you are making, I am going to be brutally honest here, I cant see what you will be able to get. That said, Im speaking from northern experience, where you can get a mortgage for the amount of 3x your annual salary: I cant remember what you said you make, but for example if you made 1000 a month, you could get a mortgage for 36000. Actually, there are places that would lend you more, but do you really want to get into something like that?
Now if your parents are backing you, and they have the wherewithall to do it, then I would say its potentially a good move to buy and act the landlord

good luck
 
Ok - firstly - it depends on what percentage of the apartment price the parents are prepared to put in.

In todays climate they would probably have to put in around 20% of the purchase price along with any other initial costs.
That way whatever rent you receive should probably pay off the interest on the mortage.
If you want to pay back the capital as well then that will be significant extra monthly cost. As in - the rent won't cover it.

Secondly - it may well be worth you while holding off for another year in my opinion. According to the Goodbodys report that came out last month,property prices are expected to drop 8% in '08.
Most analysts believe that we are not yet at the bottom of the housing slump.
And even if they are wrong,at best prices will remain static or else very moderate increses.

So - in a nutshell - my advice would be this:
Hold out another 12 months and review it then.

In general though,buying a property at a young age,given that your parents are in a position to assist you financially,is definitely advisable.

So - I think the accountant is right - I would hang on 12-18 months before acting though.
 
Your IP address (I'm a moderator so can see it - regular users cannot) suggests that you may be based in the US? Is this the case? If so then note that Askaboutmoney is an Irish website geared primarily towards Irish personal finance and related issues. As such people may not be able to offer advice applicable to a US situation.
 
thanks a million for all that. iv a feeling myself that the house prices are going to drop furhter too.
my father is self employed and is doing fairly well for himself so there wouldnt be any problem with them backing me.

qwertyuiop: so your saying i should get them to put in +20% (or enough) of the starting price so the rent will cover the loan.

Whats the story about the first time buyers lark?? would it apply to me here??
 
scooby doo said:
my moms accountant is advising her to get me to buy a house or an appartment and rent it out?!?!?

the plan is to get a loan, the parents will back me, and let the rent pay off the loan.
Click to expand...
Why does the accountant think that this is beneficial to your mother?
what may i be entitled to?
Click to expand...
If it's a rental property and not your PPR (Principal Private Residence) then you should look at the Property Investment FAQ for a brief summary of the tax and related issues that arise.

FTB issues related to stamp duty full or partial exemption and mortgage interest relief for owner occupiers. These are irrelevant to the purchase if you are an investor purchaser. If your first property purchase is an investment property then you lose your FTB exemption from SD on the purchase of an owner occupied second hand property. FTB and non FTB owner occupier purchasers of new builds under 125 sqm are always exempt from SD on the purchase.
 

WHen you say "would it apply to me here" - does that mean your geographical location? (Clubman suggests the US)
Or does it mean your current predicament?

Your folks don't have to put in 20% - but if they don't then they will probably have to top up to pay the monthly interest on the mortgage.
They may prefer that option which means they will have to get a bogger mortgage - they will have to decide that themselves.

They will also have to decide whether to put the name in your name or their own name.
If they put it in your name then you will lose your first-time buyer status (Obviously this only applies the first time you buy)

But really you'd want to talk with your accountant about the advantages/disadvantages of putting it in your name (and possibly transferring to your name in the future) - or else your parents name.
 
scooby doo said:
(im in collage)
Click to expand...

College ?


ClubMan said:
Who??!
Click to expand...


Perhaps the accountant ?


You need to do projections about whether the cost of capital versus the rent over time will compensate for your loss of valuable FTB stamp duty exemptions when the time comes for you to finish full time education and purchase a home of your own . I wouldnt enter the situation of becoming a landlord lightly. Perhaps your parents should buy the house themselves and then gift it to you with or without a mortgage attached. That way you will not lose your valuable FTB status. You will also be exempt up to the inheritance tax threshold.
 
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