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Morning all

Just wanted to ask for some advice off anyone who is a few steps in front of me or is where I want to be. I am a 20 year old electrician and have been studying about property investment/ development for about a year or two simply just reading books, articles, forums you tube videos etc... My best pal and I (who is also and electrician) have decided to partner up on our property investment journey as we both have very similar if not the same goals relating to where we want to be and also feel that we would work very well with each other. We both live in Caterham surrey and between us both have managed to save up around £25,000 and also can get loans if needed. We have been viewing properties in areas such as Crawley/ East Grinstead about a 20 minute drive from our homes. Our strategy is for the first three properties we buy we will sell two and hold one for rent in the hope that we would have made enough capital to afford a BTL investment. Our goals aren't for short term cashflow it is for long term wealth as we both know you cant get rich quick. We have agreed that we will live off our current wages and any money made from the property business will be reinvested back into it in the hope that over a 10/15 year period we would have large property portfolio and leave our jobs as sparkies and become full time property developers as it has always been our dream. 

I know I have only touched on our goals/ game plan briefly in this paragraph but have one written up going into the depth about where we will be in the future if anyone is interested. Hope you all have a good day and look forward to reading any replies as I think we would both benefit massively from it.

Kind regards Will. 

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Hi Will,

 I don't think you give enough information here for advice. Are you planning to buy a house together & live in it while you do it up then sell? That would give you some capital although it may be tricky to do a lot to a property and work full time.

Or are you planning to do one up and rent it out whilst keeping you current living arrangements?

If you are both living on your wages where is the extra money to pay the mortgage coming from? Given the areas you are looking at I'm assuming you will have quite a large one.

It's good that you realise this is not a get rich quick scheme but it may take longer than you anticipate to build up enough capital to keep a BTL.

Good luck :) 

 

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2 hours ago, julia urquhart said:

Hi Will,

 I don't think you give enough information here for advice. Are you planning to buy a house together & live in it while you do it up then sell? That would give you some capital although it may be tricky to do a lot to a property and work full time.

Or are you planning to do one up and rent it out whilst keeping you current living arrangements?

If you are both living on your wages where is the extra money to pay the mortgage coming from? Given the areas you are looking at I'm assuming you will have quite a large one.

It's good that you realise this is not a get rich quick scheme but it may take longer than you anticipate to build up enough capital to keep a BTL.

Good luck :) 

 

Hi Julia 

Thank you for taking the time out of your day to read my post, no we will be living in our separate family homes. The first property we will purchase will be left empty as it makes it a lot easier to refurb. We will most probably stay on weekends if we work late but apart from that no. We are aware that it will be hard working full time and have this on the side but are both up for the challenge. We both have family members in the building trade who will be willing to help us along the way. 

Our plan is to buy a property and then sell it after a refurb and then repeat this process again as we can take advantage of paying no stamp duty as we are both first time buyers. Once we have both bought and sold a property in either of our names we want to invest into a BTL that we refurb, refinance and hold in the hope that we can pull out enough money to finance our next investment. 

We have factored in the mortgage payments and can afford on our current wages as we both have minimal over heads at this given time. 

Any advice on our plans as it would be much appreciated or anything that we should avoid doing?

Kind regards

Will

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Hi Will,

Thanks for clarifying. 

First of all you need to check if you can get a mortgage for what you want to do. As you are not planning to live in the property you need a BTL mortgage not residential and unfortunately your age and lack of home ownership will make that harder. I'm not saying you won't be able to get one but that you may pay more for it than you expect. I would talk to a mortgage adviser to find out your options. 

It sounds as if you are planning to put the mortgage in one name only. If so the property cannot be in joint names so how do you plan to protect the unnamed party? Be sure you have thought this through - people fall out and one of you could lose out here.

Although you won't pay SDLT you will be due to pay tax on disposal of the property because it is basically a business so make sure you have factored that in.

You will also need empty property / refurbishment insurance - more expensive than usual LL insurance.

In order to make a decent profit you need to buy below market value if possible and then add value in your refurb. It is not always easy to find the right property so you need to do your research about area and type of property or you risk working very hard for little return. Your scenario works best in a rising market and we are about to enter a recession - where we do not know what will happen.

I think you might be better to aim to hold your first property as a rental which will allow you to recoup some of your costs, give you break (which you may well need) and hopefully allow the value to increase. Then plan your second one.

You need to have a strict budget and stick to it; be clear about what each of you will do and how you will manage any differences of opinion. After property one you will  have a better idea of how it all works so you can adjust your plan if necessary.

Above all remember this is a long term project not a get rich quick scheme. 

Good luck :) 

 

 

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