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Lots of research but how to implement?


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Hi All,


 


I have been looking at BTL and the idea of being financially independent for a few years now. 


 


About us : Our home is in my name as OH was contracting at the time and she couldn’t be part of the mortgage. We are in our mid 30s, have a home via HTB scheme and saving enough to overpay about 10% every year. We save £2500 pm across ISAs, company stock options and cash (mortgage overpayment, home expenses fund etc). The numbers say we can start our property portfolio with no major risks than the usual suspects


 


Target : Portfolio of 3 BTL properties in 5 years which I feel is risky enough to start and learn and sets us on course for our long term plans which is £3000 pm income in 15 years time


 


Now for the BTL dilemma. I have a £30k deposit to play with but bothered by 3 possible entry routes with increasing risk and costs


  1. Buy a single property upto £120k in both our names : Gets us a decent property plus steady start to learn what we need to be successful
  2. Buy a flat in OH’s name and another in my name : That limits our deposit to £15k and property value to £60k so not a lot to play with property choices (or am I wrong?) 
  3. Buy a flat in OH’s name and another in my name with my good friend. As he is interested, we have been talking of starting together. So one property for £60k and another for £120k shared ownership

 


I have worked the numbers and all 3 options are financially viable to us with the clear risk of empty months/maintenance etc increasing with more properties. We are looking at flats and I have been closely monitoring properties in Leeds, Birmingham and Southampton.


 


I’d like to understand which of these 3 choices make sense as we are just starting out. Are 2 properties nonsensical without any experience in the field or taking way too much risk as newbies in the field? Is there a major advantage of a single £120k property over 2 £60k properties? Investing in £60k properties means studios in the cities I am looking at or moving further afield to Salford, Manchester etc. How can I network and speak to those who have been down this road before?


 


Thank you


Ken


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 .

 

Ok my personal stream of thoughts.  (And so you know where I’m coming from I  believe in getting rich slow, and steady growth while learning along the way - property was never my ‘why’ but my ‘how’ and although I love it  is simply a vehicle to personal freedom of choice and to help others up.)  You are in an extremely good position, and your targets are very achievable and realistic.

It also sounds like you aren’t desperate to leave hated day jobs – so I‘m assuming you are still working and not looking for property to be a full time occupation – trying to get out of a current bad situation is what motivates many would-be property investors – sounds like you are ‘running towards’ and this will affect what your journey looks like –and make it enjoyable - also you are used to saving – another great position to be in.

So my personal choice would be option one – a single purchase, a house. Flats in my experience get fiddly with all of the different charges involved, potential problems with neighbours, freeholds etc.

I look for four things in an investment as a long term game player –

  1. A property that is a good price compared to others (I don’t personally like distressed purchases so massive Below Market Value sis not my way and I don’t have the time or inclination to source them -but I do like to make sure that there is something I can do to it to increase the value a bit – mainly light refub, buff and fluff as they say).
  2. A property that will increase in value over time – this is my pension plan
  3. A property that will always be easy to let – for me  this means a very good standard of finish, a place that is  near to major transport links, in an areas of high employment, with lots of businesses nearby.

 

These three requirements meant I could re finance which was part of my personal strategy.

I don’t know how near you live to the area you are planning to invest in - if it’s not too far you may in your early days want to be a bit hands on – maybe do a bit of and decorating work yourself to save costs and learn from the experience, and you might want to find and reference tenants yourselves etc and I’ve done all that  - I don’t any more – I hand over to recommend trusted agents everything I possibly can.  Google and go along to some local Property meetings locally or in the area you are interested in, and talk to others about what they are doing, subscribe to some good property magazines (Landlord and BTL magazine,  Residential Property investor magazine, Your Property Network magazine) and forums like this one where everyone wants to help.  Don’t get side-tracked by the millions of strategies you will hear about or do very expensive training courses if you don’t need to (I’ve been there and learnt from it). You sound like you know your personal levels of risk and that is great. Stick with them!

The posts from Rob and Rob are always sensible and there are some great books out there for you that will suit your strategy too not least the ones that people on this forum have written – and there are some real staples such as Rich Dad poor Dad which are really all about mindset and help with my motivation when I need it.  Richard Brown who is on this forum has a great blog and a list of books he likes and I’ve read all of them too and agree with him and I’d add a few with a female perspective such as the millionaire woman next door and Kim Kiyosaki’s books . Sounds like you understand the need to get out there and act even if you are not 100% ready – this is what I did - and I’d have made different decisions about my investments with hindsight, but I still reached my target.  Just be warned about one thing – you will probably find when you get to three that you want to keep going………

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Hi Suzan,

 

Thank you for the very detailed and insightful reply, puts right thoughts in my mind and makes me feel better than before. I shall keep my response short (unlike my initial post!)

 

  1. Yes, we are going to buy a single property and if possible a house rather than a flat. Discussed at length with OH, she told me to rein it in and go easy so it's just a single property for now
  2. We both aim to work full time for the foreseeable future and this road is more towards eventual financial freedom, starting the learning process when I have time to make those mistakes and building up cash to one day get a property in the perfect location for good growth
  3. I do want to enjoy the journey so not in a hurry to buy something tomorrow. Happy to wait 1 month or 1 year to get a property in the right place. Doing a lot of reading books as well as forums and websites to get info. From past experience, I have learnt how to tune out of listening to a lot of brilliant advice and sticking to what we are comfortable with (and no expensive courses for me!!)
  4. Given where we live and how much we have to invest, it is very unlikely we will find something close to commuting distance. So hands on management, tidying up etc are all tasks that will require considerable time and travel which we may not be able to invest right now. This was the sole reason for looking at rental ready flats which requires just a couple if visits to buy and let out. 
  5. Finally you are right, if we manage to have 3 properties there is no way we will stop. Saying that we are saving enough to have a steady income when we retire but as we both always had an interest in property investment, we'd like to give it a go. There are no starry eyed dreams of turning rich overnight or becoming millionaires so that way, we are ready to stop if we have to. Right now the plan is to start, make mistakes and learn from property number 1

Will keep you posted :)

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