Get cracking with HMOs or buy my own property first?

[LizzyB]

Hi guys,

My desired strategy - buy at BMV, refurb into HMO, refinance and then rinse and repeat building up a Manchester based HMO portfolio.

I am saving up for a deposit to kick start this off HOWEVER - does it make sense to save up a bigger deposit and buy my own home in london first?  

Some benefits - 

Get some experience closer to home first

Benefit from the buy to help scheme that Ive been saving up for

Benefit from the stamp duty waiver as a first time buyer

I would buy a 2 bed and convert to a 3 bed to cover the mortgage & costs & create some kind of a positive cash flow

More lending options

 

Some negatives - 

A lower ROI

A lower positive initial cash flow 

Requires investing more money

 

I really appreciate your input,

Thanks,

Liz

[tchughes]

 

If you dont own your own home or any other property then Im afraid you going to struggle to get HMO mortgage. First time buyer and first time landlord, non owner occupier HMO mortgages are not available.

[Chloe Williams]

HI Liz,

Congratulations on starting your property journey.

You’ve clearly already thought about the different options and how they help you. You should think about what is best for yourself, which option would be most useful.

As Tom has said you may struggle to get a HMO mortgage so you may want to take this into consideration as well.

I wish you all the best in your next steps!

[DrKidd]

Hi Liz, 

Welcome to the forum!

As per the previous posts you may struggle to get a HMO mortgage as a first-time landlord. There are workarounds but it would require moving your residency to Manchester and a bit of a wait to get consent to let from your lender! (....Maybe not the most practical workaround) 

Personally, I would take advantage of your first-time buyer status and leverage the help available. Because once this is gone, you'll never get it back. I actually started my property journey with Help-to-Buy and do not regret it for one moment. After living in my purchase for a number of years, I applied for "consent to let" and now rent out my former home.

I guess it became a Help-to-Buy-to-Let?

[KemAnjorin]

On 2/23/2019 at 1:06 PM, lizzyb said:

Hi guys,

My desired strategy - buy at BMV, refurb into HMO, refinance and then rinse and repeat building up a Manchester based HMO portfolio.

I am saving up for a deposit to kick start this off HOWEVER - does it make sense to save up a bigger deposit and buy my own home in london first?  

Some benefits - 

Get some experience closer to home first

Benefit from the buy to help scheme that Ive been saving up for

Benefit from the stamp duty waiver as a first time buyer

I would buy a 2 bed and convert to a 3 bed to cover the mortgage & costs & create some kind of a positive cash flow

More lending options

 

Some negatives - 

A lower ROI

A lower positive initial cash flow 

Requires investing more money

 

I really appreciate your input,

Thanks,

Liz

Hi Liz,

I think it does depend on your situation and your long term goals (which is the most important thing to consider) once you are clear on this it should be easier for you to make a decision

[dennis hughes]

On 3/14/2019 at 1:21 PM, Mortgage_tom said:

 

If you dont own your own home or any other property then Im afraid you going to struggle to get HMO mortgage. First time buyer and first time landlord, non owner occupier HMO mortgages are not available.

I can only re-iterate this succinct comment from @Mortgage_tom.

It contains all the information you need to formulate your best strategy, but I appreciate that it might be frustrating not to be able to go from A to Z directly.

Good luck.

 

[LizzyB]

Thank you for your input guys, I have decided to get my own property first.  

[loum]

On 10/23/2019 at 10:35 AM, lizzyb said:

Thank you for your input guys, I have decided to get my own property first.  

Did you decide to go for a help to buy in London? I was in the same situation and decided to go for a residential HMO in Nottingham. What's your plan? How much deposit do you need for a 2 bed H2B in London? When you decide to buy property no.2 you'll have to sell your Help to buy because you can't own more than one property when using the H2B scheme. And I believe you can't sell for 5 years? I might be wrong. Just wondering what your plan is?