Thoughts on my situation

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    Thoughts on my situation

    I've been trying to sell my residential property for 3 months now as I have a new build property lined up to purchase. I'm not legally tied into buying the new property but have very little time left before the builders release the property again.

    I had thought about renting the property out but I don't have the deposit required for a buy-to-let mortgage and don't really want to take the risk of void periods. A friend of mine suggested that a group of us could club together and purchase the property to rent out. This way we'd be able to finance the deposit and would easily be able to cover any empty periods. Buying a property and developing a portfolio is something my friend and I have thought about before so maybe the situation has provided an ideal opportunity to get started.

    My current property is a 2-bed flat in Edinburgh and was completed in 2003. The flat is really nice but it's unfortunately a bit too near to a deprived area with lots of council housing. The viewers that we have had report back to the agents and say that they like the flat but comment on the area. We haven't had any major problems with the area but feel that other people are put off buying because of it's bad reputation. This doesn't mean that the property doesn't serve a purpose - I am sure that it could be profitable long term.

    Many of the flats have been bought on a buy-to-let basis. They all appear to be occupied and aren't often advertised to let. This suggests to me that the tenants stay for long periods OR there is a quick turnaround of tenants. Most of the flats are rented to people who I assume (based on various observations) are on housing benefits.

    Now I've painted a scenario, can you experts give me some advice?

    Should we go for it?

    If we do then how do we go about it?

    Do we need to 'buy' the property (and pay stamp duty) or can a solicitor simply get the deeds changed and the mortgage swapped over to a buy-to-let?

    Do we need to set up a company as it's a joint venture?

    If we decide to target tenants on Housing Benefit how can we approach them? My father-in-law reckons that I simply need to approach the council and they'll house someone in it really quickly. I appreciate the risks involved in this and would therefore rather select tenants.

    I appreciate that any investment by any party is long term and we need to consider this carefully. However, the goal would be to grow a portfolio of properties and I feel that when the risks are spread like this we can't go far wrong.

    Thanks

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