My house in the UK has now had tenants in it for a week, and so far I've had no hassle at all!
This is as expected, because I opted for a fully managed service with a reputable local lettings agency, and my main point of contact wears clothes that fit, rather than the usual unfortunate one-size-too-small suit that so many (male) estate agents seem to opt for.
It cost me around £3000 to get the house in a rentable condition, and that sum includes a few 'upgrades' I needed to get done (carpets and shower for example) and the first month's fees, which is pretty much the first month's rent, to the letting agent.
My house.
The house has rented for £650 a month, which is more than I thought I'd get as the people I'm renting too offered to pay extra as they've got a dog, and I'd specified no pets, so there's a tip if you're renting an unfurnished place and fancy getting a 5-10% premium on your asking price!
After agency fees and tax, the former is I think is around 12% and the later 20% of what's left after I've taken that 12% off, I should be getting around £480 a month coming in.
Although once I've taken off around another £50 for the insurance, that's down to £420.
TBH it's not a great income on a house that's worth £170 000.
Especially when my mortgage is £610 a month, I'm ending up having to 'sub' the rental to the tune of £200 month.
But that's only because I'm paying off the mortgage on a fairly rapid term, only 8 years left. I originally took out a 15 year mortgage, I had the option to double the repayment period, but I want to be mortgage free by 55, and I'm roughly on track, except that it'll now be early 56 because I took a Covid repayment holiday for 3 months.
So, is it worth renting the house?
According to the above calculations I'm making a loss, but that's only because of my choice to repay the mortgage more rapidly than I need to.
In terms of yield it's not too great - £420 (net rental income after costs) over a year is £5000 a year, and that's about a 3% return on the value of the house. Hmmm... not great!
However, property is about a secure investment as you can get in the UK, and thanks to Boris Johnson's recent policy announcement to make 95% mortgages available to practically everyone, but with no provision to increase the housing supply, that means the value of my house is very likely to go up.
Especially since I bought my house in a nice area with cheap houses, the kind of place that's going to be appealing to anyone who works online, and it seems a good bet that more people are going to be working online in the future, and it's a damn nice house with no need of major repair work in the immediate or medium term.
Two minutes walk away from my house. The British love this trees and water stuff!
So I think it's a good bet that the value of my house at least won't go down, so as long as I can keep earning enough money to 'sub' that £200, which isn't a great deal of money every month, I can keep up those higher mortgage repayments.
There's also the option to extend the term, of course, but I'd rather not be paying a mortgage into my 60s.
Having the house also keeps my options open
I'm aware I could sell the house, pay off the mortgage, net around £110K and invest that elsewhere, trust me the thought is tempting.
However, I've already got substantial other investments which makes that thought less appealing.
And I like the feeling of having a foothold in the UK still, even though I probably won't be going back!
I might still sell it....
But only to fund a property purchase here in Portugal. I really like it here so far, and if, when I start my land search, I start to see properties I like around the £40-£70K mark, which my savings won't stretch to (I'm not cashing in my crypto to buy land!) I might just sell it to buy something more substantial here and put a few tens of £K in the bank, then I could probably quit working online all together, now trust me THAT IS TEMPTING!
The problem is I REALLY LIKE THAT HOUSE IN THE UK, It's so damn CUTE, and it's in such a NICE area!
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I would certainly do that. One reason is that 2020 is like 2008 and house prices are sensitive to economic downturn. Second reason is Crypto investment gives you more option than property investment because it’s the new game in the investing world with less competition
Although to date property prices have shown to be amazingly resilient - I think that's due to the restricted supply, and that doesn't seem to be changing.
As to crypto - I think I'm well enough invested already - if we have a repeat of 2017, I'll be set for life with what I've got!
I think I'm just too attached to that house to sell it!
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Do not sell the house !
I am surprised how small the rent is compared to the price, though.
Yes me too TBH!
I guess it's just the market around there - buying compared to renting.
As long as it almost pays the mortgage, that's fine for a year or two!
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Unlike crypto, a house's value can never drop to 0, though.
High risk high reward
At least you end up owning the house by paying the mortgage and that may prove to be a good investment. Still got a few years left on ours, but there's a chance we can pay it off earlier. A decent house in a good area will hold value and possibly gain.
I have no idea what the property market is like in Portugal. Buying a plot of land is a different thing altogether. Take your time to find what you really want.
Hey cheers for the sage advise!
I do like a bit of security, and don't worry I'm not going to rush with the land search! I'll know when I find what I'm looking for!
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I know I'm stating the obvious above, but I am actually quite excited for you.
Decisions, decisions! (Thought not urgent, I gather.)
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Thankfully not urgent at all, kind of goes with property!
dont sell the house. It will keep you rock steady in a few years.
Yes, I am certainly leaning that way!
The only reason I would sell is if I wanted a house here in Portugal. I haven't really looked into it properly, but I've seen several nice options locally for around 60K EU with about 1 HA of land, it's tempting!
The additional 50K I'd be able to bank would last me a long time if i were mortgage free!
you'll get your house in portugal in the end, just work at it and you will have both.
Yes cheers! Not quite done with the grind yet I guess, I would like land here and a house back in the UK.
As someone who basically 'been on the road' one way or another for 3 decades or so - one bit of advice I've given over the years (and mostly ignored, much to the recipients of the said advice, downfall)
...Don't do jack shit in a new country - for at least 2 years.
I've lost count of the amount of people who've gone all 'gung-ho' when relocating - to majorly regret it later (financially, mentally, emotionally).
....here endeth my sage like wisdom! lol
You know that's actually really good advise, it sits easily with me as I've managed to find such a NICE temporary place to stay in, I could easy do a few years here!
I agree it's always good to keep a foothold back home even though you say you probably won't be going back again, but you never know what may happen in the future.
My personal experience, after being in the Taiwan for four years, is that unless you get residency somewhere else (not sure how you're managing that in Portugal), having UK as a return base is vital for things such as medical, old age issues and shit storms like covid where I now many nomads had to return home. I know many people don't like their own country (not referring to you 😄) but at least you have rights and access to services which a nomad won't.
Anyway, enjoy your new life in Portugal... Seems like you are already
Yes it's good to hear sensible words to confirm to me that I should hold onto the house!
TBH I should be able to buy land here anyway for around $10K and I can do that with my savings easily enough, so I should be fine!
I do want a foothold in the UK.
I'm quite fortunate that I've got my Dad's address to use too, once I've been out of the country for a year, I can't get mail forwarded from my rented house anymore!
Oh with the residency, it's quite easy, assuming part two goes smoothly on Monday!
Am interested to find out what you're up to, not that I'm planning to move to Portugal, I'm nosey really 😂
Nose away, fine by me!