Reluctant investor in rental property - thoughts?

[Marge]

Hello all,

I have a particular family situation where a member requires accommodation. Without getting into to much details, they are currently in retirement age and in receipt of rent allowance.

My motivation here is to investigate whether I can find a solution to help with the situation by purchasing a property - in general though, I am not interested in becoming a landlord nor to invest in a rental property.

I equally do not wish to make any obvious mistakes which the more experienced rental property owners of you out there may spot right away so appreciate your feedback or comments.
My biggest concern is the exposure of financial risk to myself and my husband.

The jist of the situation is as follows:
married, mid 30's with no children as yet.
home owner (well, the bank owns it) with no other debts.
Both husband and I are as secure in our jobs as you can be in the private sector currently. I don't like high risk and am good saver and have been adding to a nestegg over the years.

My family member would be living in the house long term and in receipt of rent allowance. That said, if their health dis-improved, living alone may not be an option, so I could end up with an empty house to rent or sell in a very tough market which worries me.

What are your thoughts on the pros & cons of the following?
I could invest part of the purchase price from savings (say 50%) and mortgage the rest. Are there any rules of thumb as to whether its better to invest more or less savings versus mortgage?

Marge

 

[tiger]

I don't see how this would be a good investment (you haven't given any numbers).
I also don't see how this helps your family member.

 

[Horatio]

I have some personal rules that I think you should consider.

Never ever mix family & business - never. Same goes for friends & business.

You are in an enviable position at the moment in that you are stable & debt free - why compromise this? Don't risk the stability & comfort of your immediate family for no good reason.

Use the relations rent allowance to rent out a place- end of story.

 

[Marge]

Thanks for the comments.

Tiger, I appreciate that I may not have been clear in my original mail. Basically, it would help my elderly family member get somewhere decent to live. They are currently in rented accom but the house is condemned and to be knocked next year (not joking), so the conditions are not good.

Horatio, yes I hear totally you. I think this is exactly why I am struggling with the decision.

Much appreciated,

Marge

 

[saintstephen]

There are lots of places available to rent.
Just help your family member find suitable accommodation, it seems a bit extreme to reluctantly buy a home to achieve this.
If you had an ambition to own a particular property or found an investment opportunity that excited you then it would be worth considering, but if the only reason is to find somewhere decent for your relative to live then I would advise against it.
Good luck

 

[Ravima]

If you must house your relative, then ensure as far as possible, that the RA will pay the mortgage. Interest rates are rising. You will also have other taxes to pay, such as the NPPR if you are living more than 5km from the house.

get a lease signed and ensure that the RA is paid to your account not the relatives.

Buy house in an area where you can rent, should relative move on. There's no point in buying in in the area of relatives choice if in the middle of nowhere.