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Hi All, 

I am new to property investing and looking for some general advice early on in my property journey. My sister and I have £1 million in cash to invest and would most likely look to do this through using a limited company as a SPV. We both have limited time available to dedicate to property investing - I work long hours in a full time job and my sister is looking to set up her own non-property business. 

Ultimate personal goal: 

Ensure financial freedom, so I have enough passive rental income to quit my day job and and set up my own (non-property) business. 

General strategy:

  • Diverse portfolio to minimise risk - aiming for a mixture of capital growth and rental income properties.
  • Initially invest in professional lets with no renovation required due to minimal free time. 
  • Eventually want the option of expanding to HMO & holiday rentals when (hopefully) we have more time to dedicate to our property portfolio/business.

We are first time buyers who live in Yorkshire and therefore would like to invest locally where possible, with an example portfolio shown below. 

Location

Price

No. properties

Total mortgage value 

Total cash deposit

L:V

Goal

London

£500,000

1

£375,000

£125,000

75%

Long term capital growth

Leeds

£100,000

6

£390,000

£210,000

65%

Rental income

Manchester

£100,000

6

£390,000

£210,000

65%

Rental income

York

£200,000

3

£390,000

£210,000

65%

Capital growth

Our eventual goal is to achieve a net rental income of £10,000 pcm. 

~~~

Obviously we are very early on with regards to developing our strategy. In the next 6 months the aim is to purchase our first 2 BTL properties in/around Leeds. 

We aim to refine the specifics over the next few months and i'm sure our strategy will evolve to include more 'exciting' investments (HMOs etc) as we gain experience. 

I was wondering whether: 

1) The general feel of this portfolio makes sense to more experienced investors out there?

2) Are we being too ambitious or too cautious? 

3) What are the major strategy decisions we should make now before starting our journey 

Any feedback would be greatly appreciated.

Kind regards,

Johnny W

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Hi Johnny,

Well done for getting this far and the research that you've done to-date.

Diversification across different locations is a great plan and from the headline figures above, I see no reason why you can't achieve your goal of £10,000 pcm.

There are quite a number of factors to consider when building your portfolio. In order to go into some depth, it might be worth booking in for a Goals Call with one of the team at Property Hub? We can chat through everything in detail and help with any questions or ideas that you, or your sister, may have.

You can schedule your Goals Call here: https://propertyhub.net/goals/

Kind regards,

Steve

Stephen Pyke
Property Hub Invest

https://propertyhub.net/service/invest/

05_invest.png.7472145178fc1c39cf9fbcf02c4acd1b.png

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I am just wondering how you are going to find, buy, let and manage your properties when neither of you appear to have any time to spare.

BTL investment requires a significant investment of time as well as money not only to set up but also to run.

My advice would be to start small and make sure you understand what you are getting into - the first BTL is usually the start of a steep learning curve.

Good Luck :) 

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Some issues with your numbers - for Manchester, York and Leeds, you've based your cash investment on the 35% deposit. You've not allowed for stamp duty, legals, mortgage costs or any costs in relation to getting it let the first time. You can fix that for the same amount of cash by increasing the 65% to up to 75% as required, but the mortgage rate will end up slightly higher and obviously the monthly cost goes up. You've not got that option in London, so you either need more cash or to drop the purchase price.

You're also going to struggle to get anything worthwhile in Manchester for £100k, unless you're going to want a load of hassle. You're going to need to move a bit further out to the likes of Bolton where prices drop but rents are usually lower as well, so will need some careful planning. Not sure whereabouts in Yorkshire you are, but I'd pick either Leeds or Manchester (or somewhere in between) and get to know an area. You say you're doing it for yield, so it doesn't matter which grows the most. Picking two areas means having to find at least two letting agents. Find one good one for your first property and the other properties will be easy as the agent can tell you what and what not to buy.

You're then after £10k per month, but are spending a chunk of money on properties you speculate will provide capital growth. So which do you want, cash flow or growth? 

Your goals call will be useful, but remember, there's a business behind it and that business sells off plan properties. They may fit perfectly with your strategy, but they may not. In fairness, when I spoke to them, there was no hard sell, but my goals didn't align with new build property. You're waving a lot of cash about and certainly if you mentioned that on a few groups on Facebook, you'd be inundated with people who'd help you spend, sorry, invest it, especially if you mention HMOs and serviced accomodation. Be careful.

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  • 2 weeks later...
On 6/19/2020 at 1:40 PM, Lee G said:

Hi Johnny, thanks for your post. Have you though about adding Liverpool to your investing areas? I’ve been investing and the yields and rental demand are high. Best, Lee

Hi Lee, thank you for the reply.

I think further down the line Liverpool will definitely be an area we consider. For now though, because we are just starting out, we are looking to focus on areas that are more local to us. 

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On 6/21/2020 at 6:10 AM, julia urquhart said:

I am just wondering how you are going to find, buy, let and manage your properties when neither of you appear to have any time to spare.

BTL investment requires a significant investment of time as well as money not only to set up but also to run.

My advice would be to start small and make sure you understand what you are getting into - the first BTL is usually the start of a steep learning curve.

Good Luck :) 

Hi Julia,

Thanks for the heads up. We have considered this a lot. We will look to outsource as much as possible and look to invest in new properties at a sensible pace so we don't overstretch ourselves. One thing I did not mention is that we have a lot of time over the next few months to get the ball rolling, before my next job starts. 

We will start small though, like you say, and then make sure we have enough 'time' to invest before expanding our portfolio further. 

Thank you for the advice. 

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On 6/21/2020 at 12:49 PM, dino v said:

Some issues with your numbers - for Manchester, York and Leeds, you've based your cash investment on the 35% deposit. You've not allowed for stamp duty, legals, mortgage costs or any costs in relation to getting it let the first time. You can fix that for the same amount of cash by increasing the 65% to up to 75% as required, but the mortgage rate will end up slightly higher and obviously the monthly cost goes up. You've not got that option in London, so you either need more cash or to drop the purchase price.

You're also going to struggle to get anything worthwhile in Manchester for £100k, unless you're going to want a load of hassle. You're going to need to move a bit further out to the likes of Bolton where prices drop but rents are usually lower as well, so will need some careful planning. Not sure whereabouts in Yorkshire you are, but I'd pick either Leeds or Manchester (or somewhere in between) and get to know an area. You say you're doing it for yield, so it doesn't matter which grows the most. Picking two areas means having to find at least two letting agents. Find one good one for your first property and the other properties will be easy as the agent can tell you what and what not to buy.

You're then after £10k per month, but are spending a chunk of money on properties you speculate will provide capital growth. So which do you want, cash flow or growth? 

Your goals call will be useful, but remember, there's a business behind it and that business sells off plan properties. They may fit perfectly with your strategy, but they may not. In fairness, when I spoke to them, there was no hard sell, but my goals didn't align with new build property. You're waving a lot of cash about and certainly if you mentioned that on a few groups on Facebook, you'd be inundated with people who'd help you spend, sorry, invest it, especially if you mention HMOs and serviced accomodation. Be careful.

Thanks for the help. We will focus on Leeds initially and then potentially look at Manchester further down the line. 

In terms of investing in properties that we think will provide good capital growth vs high yielding properties - this is something I have found interesting. Most advice I have read says you must choose one of these strategies. Would you not advise to have a portfolio with some properties aimed at long term capital growth and some properties aimed towards high yields/cash flow? 

Thank you for the heads up regarding the goals call etc. 

All the best

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Just to reply to the question about strategy, I think having some key structures and fundamentals in place from the start will really help.

Cashflow trackers, Cost trackers for each house refurb, A&L spreadsheet to assess overall position. Plus, having your team in place before, who understand your ambitions and who will match your pace/style. Especially Builders.

Consider using a VA to outsource the admin tasks whilst you focus on the higher value matters.

I've grown my portfolio to £4 - 4,500* a month using BTLs in a similar area, in 9 months of purchasing. So You can be as ambitious as you like! :) 

 

*I have one Buy2SA so it varies.

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