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Hello :-) -- Beginner investor from SW London


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Hello everyone!


 


My name is Ewa and I live in SW London. 


 


I always wanted to work for myself and achieve financial independence. 


I was considering various business opportunities when I finally set my mind on property. Just saved up for the deposit and planning to buy my first BTL beginning of next year. I’m a freelance web designer, but planning a full time career in property in 5 years time (that’s my goal :-))


 


I’ve read a few books about property, joined thepropertyhub and started listening to the podcasts, which are great source of information!


 


I have not decided where to invest yet. I’m considering South West London. I realise that the yields are not very high here and everyone is saying that you cannot just count on capital growth. Therefore I’m hesitating with my choice of location for property investment.


 


I’m looking forward to talking to other people who share the passion for property investment.


 


Thank you!


Ewa


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HI Ewa

 

Welcome from another forum newbie. I'm edging on SW London (Richmond) so thought I'd say hello. I have been reading about BTL for the past few months. I have consumed both of Rob's books as well as the podcasts that The Property Hub publish - well worth subscribing.

I have also read a handful of books including:

 

The 3 + 1 Plan: The Insider's Way to Achieve Financial Freedom with Just 4 Properties

The Richest Man in Babylon: The Original Version, Restored and Revised (not strictly property related, but interesting nonetheless)

HMO Property Success: The proven strategy for financial freedom through multi-let property 

Property Magic: How to Buy Property Using Other People's Time, Money and Experience

How To Dominate Property Investing In The UK And Achieve Financial Freedom

Hustle Your Way to Property Success: Love it or Hate it...There's No Inbetween

How to Buy-to-Let Property Properly: A guide to property Investment

 

Some have been more interesting than others but all have taught me something.

 

As for areas, I am still unable to get my head around investing in London, especially for a beginner with limited capital. In my opinion, spending all of my deposit on one BTL flat in London could be better spent on two (or more!!!) flats a few miles outside the M25. I realise that London may be seen as a more secure investment, but I am betting/hoping on a price dip either by or after the next general election. I am going to wait it out patiently and hope that prices do not continue to rise. Of course, I could be completely wrong and I may end up paying £20k more if I buy next year rather than now, but I don't think prices will rise significantly or at the same pace as they have over the past 12 months... here's hoping.

There are some great areas in Surrey that are along the commuter belt. I have a friend that invests almost solely in the Guildford area, although he buys houses and converts them into HMOs for London rail commuters. It's proven extremely successful for him.

 

I am finding my feet and, like most people, am trying to juggle all of this with a busy job and other things going on right now. It's nice to meet other newbies and discuss some of the more 'novice' aspects of BTL to better understand them.

 

Regards

Stuart

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Hi Donald, thanks so much for your message! 


 


I just read the discussion you recommended. 


 


I also think that the property prices in London are unlikely to go down. I remember that people were speculating about property crash 2 years ago and the market behaved the opposite way. If it slows down a bit then as you said this is a long term investment.


 


The worry I have is that the yields are not great. Everyone is talking about gross yields around 6-7%. I have made calculations on several locations and at best I’ve seen 5% gross yields. Even if you go further out to Surrey it was 6% tops. 


 


I suppose the question is, if you buy a property with 4% yield with prospects of capital growth would that be a bad start for building a property portfolio?


 


How is it going with your BTL investment in London so far?


 


All the best,


Ewa


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Hello Stuart, 


 


Great to hear from you :-)


 


I have also read Rob’s books and started to listen to the podcasts.


Thank you for the advice on the books, I will take a look as I have not read all of them yet :-)


 


I recently bought Rich Dad Poor Dad by Robert T Kiyosaki as lots of people talked about it on property hub forum. Just started reading.


 


Another good one I thought was The Complete Guide to Property Investing Success by Angela Bryant


 


I’ve heard about Guildford and that lots of people started investing there, therefore it might be too late to get a good deal if you’re competing with so many investors?


 


Similarly I’m also hesitating regarding the area, though I’m biased towards London. I’m planning to buy at the beginning of next year, so hopefully it will be more clear to me after I’ve done another few months of research. Perhaps the property prices will be more stable too.


 


Please keep in touch, would be great to talk more!


 


Good luck!


Ewa


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Hi Ewa

I’ve yet to see 5% gross yield in any of the particular areas in London I’ve looked at (although I don’t normally look at gross yield, I tend to focus on ROI) so I don’t think 4% would be a gamebreaker. Just make sure the fundamentals are there for capital growth and keep your focus on the long term. I’d also look for a place that has the potential to force capital appreciation e.g. loft space that could be converted, or large garden for an extension.

 

Given the yields are so low I’ve decided to take a slightly different approach to my London investing:

 

- my first purchase was a let-to-buy. That is I’ve bought a place and moved in with the intention of letting it out and buying another in due course. My aim here is to buy places that need work and/or have potential to expand, add value to the house (not just a lick of paint) while I live there, get my money out and move on to the next. I guess it’s a similar line to flipping except it’s over a longer period and I rent out the property at the end of the deal instead of selling. If you’re prepared to put up with the discomforts there are some benefits: 1) assuming you’ve lived in the house at least 6 months then the 3 year CGT rule will apply, in case you want to sell in the near future 2) your mortgage lender might allow you to keep your current residential mortgage deal once you’ve moved, no guarantees tho 3) you have some flexibility in that it’s still your primary residence and no-one can hold a gun to your head if market conditions take a bad turn for the worse – the last thing you want to be is a distressed seller! I’m not aiming to generate income from this strategy, my aim is to get my original deposit back and have the rental income at least cover the mortgage and expenses (taking into account potential voids and significant interest rate increases) and then let this ‘free asset’ do its thing for the next 20 years. I’m also considering flipping at some point as a means of accelerating capital growth, I’m quite enjoying the refurb side of things

 

 - I am investing for yield outside London (I’m currently going through the purchase process on my first 2 BTL’s up north) so that I at least have a little of both worlds in my portfolio

 

However you decide to start out, it’s not fixed in stone – keep an eye on the market and adjust your strategy accordingly as you go along. My plans for 2014 changed about a month after I wrote them down, once I saw what the London market was doing! But do start asap, there’s a learning in doing that no amount of reading books will give you.

 

Hope this helps!

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Hi and welcome.

 

In this modern age of computer wizardry ( which I'm still getting used to), its much easier to invest anywhere in the country. 

 

I certainly agree that its easier to invest near to where you live, as you should know the market better.

 

However, I know of many full on investors from London who invest in the North East ( for example) as the yields are excellent. The capital growth has only just started to creep in. 

 

See http://thepropertyhub.net/forum/topic/1021-best-places-to-buy  for further comments.

 

Robert

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Hi Donald,


 


Thank you for your advice. All this information helps a lot to clarify and evolve the way I think about investing.


 


I’m sure I will need to embrace the strategy of adding value to force capital appreciation, so I can remortgage and get my deposit back to invest again. 


I don’t want to be in the position many beginner investors end up in, investing all the money in one BTL and not having any money for the next project. 


 


I think I will try to invest in London near where I live first as I know this area best and then try to go further north for the next project. I know I will have to get a relatively inexpensive property here so I can afford another property outside of London.


 


I will start making offers soon, and see if it will be possible to get a good deal at all :-)


 


You said that you're considering flipping. In terms of selling the property is it a good time now despite the slowdown in the market? Or perhaps with a good buying price and refurb you can get a reasonable return and sell quickly anyway? 


 


Thank you again!


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Hi Robert,

 

Thank you for your advice and the link. All valuable insight!

 

I do agree that lots of people invest away from home. 

I am considering this as well, though for my first property I feel more uncertain about investing in an unknown area. It’s not only getting to know the area but also finding a network of trustworthy people to work with for example a construction company if I wanted to refurbish the house I buy away from home, finding a trustworthy estate agent to manage the property, as I won’t be coming there often enough etc. It is all possible but seems so much more difficult, surely because I’m still inexperienced in this subject. 

 

I’m sure that after I got my first property and it would be successfully let I will overcome my fears and venture further out!

 

Thank you,

Ewa

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I'm not sure now is a good time to sell in London, when I was looking for my first purchase back in March there was an area I really liked but the viewing queues were out the door and I was gazumped even when putting in offers above asking (I put my experiences down in a blog on the TPH Plus forum, if you're really interested I'll PM it to you). I've continued to keep my eye on the area and there's a house that went on sale 2 months ago that hasn't had a single offer (I happen to know the person next door very well) despite the price being dropped 15k since. That said I reckon if you do your sums properly beforehand (don't overspend on creating a house to suit your personal tastes) and don't try and shoot the lights out with your selling price and drive buyers away, you can still get a decent return from flipping in this market. I've run an imaginary scenario on a potential deal I saw in Colliers Wood where the house was in an unliveable state; decided the max offer I would have put in, made a very rough estimate of costs from a costing book by Sarah Beeny and some of the work done on my current place (cheesy yes, but I know next to nothing yet! I intend to learn tho) and then looked at comparables that have recently sold in the area as a selling price guide. The numbers would have worked and it gives a little more confidence.

 

In terms of getting a good deal the only advice I could give with my limited experience is get mortgage pre-approval and stress to the seller that you are not in a chain and can move fast, be prepared to get a place that needs work (and a little discomfort if you intend to live there while doing it), and always ask why the house is being sold (if the seller is in a chain or in any way distressed they will be under pressure to move quicker).

 

Investing up north is a good idea and Robert is right that it's become so much easier to do, but I'm with you on the concerns and it will require a little more time and effort initially. My thoughts:

 

- never buy a property unseen, so ask someone you trust in the area to view it or take a day trip up there yourself to see it

- lettings: the founders of this website, Rob & Rob, have started a lettings company called Yellow lettings, I will definitely be using them

- contractors: when I cross that bridge I'm going to be asking the more experienced people on this forum for recommendations, I guarantee you will get a handful of great companies out of it

 

Sorry this seems to have dragged on a bit, I could go on for ages when talking property!

 

cheers

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Hello Donald,


 


Thank you again for all the advice. If you're enjoying talking about property that is great news, I’m all ears :-)


 


If you could PM me about your experience of buying your first property in London, I would be really interested in learning all about it. 


 


Regarding buying up north, I’m getting more and more convinced. 


My worry is how to go about viewing properties which are far away from where I live. Not sure how other investors are doing that. As you said, never buy a property unseen.


 


If I find a property on Right Move or Zoopla and think that it is an ok deal, I suppose I should book a viewing. But then I will have to travel there and perhaps find out that it is not the right property or even if it is ok and I make and offer then my offer might not be accepted. I will have to start the process all over again. It seems very time/money consuming. Also I might not be able to view the property quickly enough and not able to get the good deals. 


 


Perhaps there is another way of doing that, which I'm not aware of?


Unfortunately, I don’t know anyone in the areas that seem to have reasonable yields. 


 


Thank you!


E


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I'm not originally from the UK so I don't know anyone outside the M25! My initial investments outside London have been through a property investment company so I haven't needed to visit them (altho I did visit one anyway as it's so unique). However next year I'm going to do my first property out of London off my own back and I'm going to take the shotgun approach: identify at least half a dozen properties in an area that I'd like to view, visit all of them in one day, and hopefully if I've done my research correctly and they are decent properties I can make offers on several of them simultaneously. The more offers you make the higher the chance of getting at least one accepted. If you get multiple offers accepted then choose the best. I don't particularly like the thought of putting an offer in on a place that I may not end up going through with, but that's the system here and it's not illegal.

 

It looks as tho regular members don't have access to the mail system so drop me a line at donkendall@outlook.com and I'll send you some excerpts, it'll be a good alternative to counting sheep ;)

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  • 4 months later...

Hi Ewa, 

 

Interesting to read your intro, how are things coming along for you? I have been looking at acquiring properties for HMO conversion in SE and SW London - so I would be interested to hear about your progress! 

 

Best wishes, 

Harley

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