Investing my money by getting onto the property ladder... Im a student... good idea?

Question

I'm saving some money for a deposit on a house, so by the end of uni I can have something to show for the money I've worked for besides getting a degree hopefully! My parents cannot afford to help me, and to be honest they've done far than enough already.

However, is this a good idea and if so where do you recommend I look into buying, or how to start the process?

Thank you.

Answer 1

First of all, let me congratulate you on your approach and decision to be financially responsible.

As to your question, I have to disagree a little with Paul that property is a bad investment but I do agree with him that it probably isn't a good investment for you right now.  Since you are just graduating there's a good possibility that your situation may change over the next couple of years.  You may have to relocate due to exploring different job opportunities, see new areas, etc.  Unless you are absolutely sure of where you will be working and plan to stay for several years then it's probbaly best to not purchase a home.

Investing in a home can have good returns but you need to stay there long enough in order to build some equity and have your property appreciate in value enough to cover all of your closing costs, etc.  This can take several years but it is heavily dependent on housing prices in your area.  Regardless, you don't want to try jumping in and out of a house.

So what do you do?  Continue to save and invest and give it some time.  Once you are sure that you're ready to settle into an area, then it's time to pull the trigger.  In the meanwhile, you can always continue to look.  The easiest way is to look on-line at realty websites.  Most good ones will have search engines and virtual tours so it's easy to just "window shop".  There are alot of decsions to be made so this will allow you to take your time.  You'll want to consider what type of home, location, traffic, schools, resale value, etc.  After that it's just a latter of getting a realtor and allowing them to take you through the process.  Good luck.

Answer 2

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Answer 3

Absolutely not. In terms of investment, property is a bad investment: it's putting all your eggs into one basket. Although returns on property can be good it can go down in value. You will certainly have to borrow money in order to invest and there will be interest and legal costs. There is also the possibility of negative equity.

I'd suggest ISAs with not more than 50% of your money in a share ISA.

Edit

In my opinion it does not change things. There's no guarantee that rent will pay for the mortgage, and there's even a possibility that the tenant does not not pay the rent (and does a runner). I have bought and sold two leases in my lifetime. Both times I made a profit but I now rent out of choice. I was lucky: I happened to be in the right place at the right time. I think that there are much better ways in which you could invest your money.

If you do decide to go ahead check things out very carefully. For instance, there are parts of London where buildings cannot be insured for subsidence (owing to risk factors).