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In recent conversation with my brother about investment returns, he revealed that in addition to his long-term investments, he had a sum in an ISA that was paying him £35 per month.
Whilst quite content to let it sit there, news that interest rates would be reducing in the near future had made him think of what would give him a better return. He spends about 12 weeks of the year holidaying in Thailand and has a property there; he had been offered a modern studio apartment for £30,000. He decided to buy it and rent it out for £250 per month.
He is my younger brother, so decided he needed some big sister advice.
- Buying abroad has some risks; his answer was: I own my own place, so have contacts for the legal side of things; I am there every few months so can keep an eye on it.
- What if things go wrong after you have returned home? I have friends who I trust; they will be a contact for emergencies in my absence (always recommended, wherever the property is if you are not able to be on-site).
- £250 per month seems quite cheap – is he intending it as a holiday let or long-term accommodation? May be better looked after as a holiday let as deposits will be paid for each holiday period. He wasn’t bothered whether it became a holiday or long-term let; he’d get references for a long-term let, rent in advance and a deposit. He would not need it to be available for family so they could settle happily, if he got the rent.
My last suggestion was that he buys in our local area, but even I had to say that the maths did not add up. Ours is not an expensive area, compared with many, but terraced houses selling for in the region of £140,000, or more, are being snapped-up. Though the return, of £500-ish pcm, is double the rent he expects from Thailand, the properties are about 5 times as much. His returns with a foreign property, as compared to the £35 pcm he is gaining from the ISA, was no competition – it seems the deal is done.
I thought this was worth bringing to the attention of landlords. They seem to have little encouragement from the Government; investment returns are low; expenses are high, property maintenance and compliance with Government legislation is reducing profits.
Not all landlords are the rogues beloved of the media – if they were, landlords would have a far more luxurious lifestyle than some of them have. They strive to keep their properties in good repair, often with no help from the tenants, who seem ignorant of how to live in a tenant-like style and with common courtesy.
Most landlords want to make a living, not a fortune and perhaps looking at other investment opportunities will give them better returns for a steadier income and show the Government that if they are not supported, they will go. What will happen then to the millions that rely on the private rental sector?
For advice on buy to let issues – Ask Sharon