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First Time Buyer Help!


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Hello, 

I am a recent university graduate currently working full time as a process engineer. I've started with a decent wage, however I have goals of having multiple streams of income in order to gain financial freedom in the future. Plus I don't want to be an engineer forever, I just naively picked the degree when I was younger because I read on google that it paid well *face-palm*. 

I'm looking to get involved in property investment as one of my extra income streams and have been building up knowledge for a month or so with hopes to have enough knowledge and to have saved enough cash (with my partner) to invest in a property next year. 

I am currently renting a flat in London with my partner, it is expensive but is close to family. Up until now, I had no intention of buying a first property for us to live in any time soon.  It's expensive for us renting in London let alone buying, so have considered moving to a city up north eventually, but not for a few years. Plus, I'm wary of committing to moving into a home permanently due to potential good job opportunities for both myself and my partner which could come about in other areas of the country.

I have heard that it is best to have bought your own property first before getting a BTL property and building your portfolio. If that's the case then we'd have to likely buy something here in London to live in (which would likely be very small/not in an ideal location) so that we can then start investing in BTLs etc...This doesn't seem ideal.

Is this true that you should be a home owner before investing in further property to rent out? And for what reasons ?

Does anyone have any recommendations for my situation? I am still relatively new to the world of property so any knowledge is greatly appreciated!!! :)

Danielle 

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Morning @danihubbard97

Welcome to the forum, and thanks for sharing your story so far :)

It sounds like you've done lots of research, which is a great first step to take. However as you say, the question of whether to own your own property before you start investing is one that's raised quite a lot for new potential investors. It's also one that Rob & Rob covered in an early episode of The Property Podcast; https://propertyhub.net/podcast/ask47-buy-home-invest-property/

In the above episode, they break down the benefits of investing while renting in another property, as well as shaking off the belief that owning your own home is the most important thing to tick off. It'll give you a clear view of the other options available to you that you might've otherwise not known were there!

Obviously if this raises more questions just drop them in here, other Hubbers will have been in your shoes before and will be more than willing to share their experiences :)

Mark

Mark Rocks
Community Builder and Content Writer

www.propertyhub.net

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2 hours ago, Mark Rocks said:

Morning @danihubbard97

Welcome to the forum, and thanks for sharing your story so far :)

It sounds like you've done lots of research, which is a great first step to take. However as you say, the question of whether to own your own property before you start investing is one that's raised quite a lot for new potential investors. It's also one that Rob & Rob covered in an early episode of The Property Podcast; https://propertyhub.net/podcast/ask47-buy-home-invest-property/

In the above episode, they break down the benefits of investing while renting in another property, as well as shaking off the belief that owning your own home is the most important thing to tick off. It'll give you a clear view of the other options available to you that you might've otherwise not known were there!

Obviously if this raises more questions just drop them in here, other Hubbers will have been in your shoes before and will be more than willing to share their experiences :)

Mark

Hi Mark, 

Thank you very much for the quick response! I will take a look at the podcast episode, I’m sure it will be very helpful ! Will let you know if any further questions ☺️ 
 

Dani

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Hi Dani!

Your story sounds so similar to that of me and my partner that I couldn’t not reply!

We initially were looking at buying in London (around Peckham) about a year and a half ago now but it fell through at the last minute which at first was a bit disappointing but as soon as we began to think about it more critically we realised that it was a blessing in disguise as we don’t plan to live in the UK forever and the rental yields we could have achieved on the property were minimal.

We then began doing our research (listening to LOTS of property hub podcasts! Among other resources) and visiting properties at some interesting locations around the country and realised that with the deposit we had saved for our house in London we could buy two properties elsewhere at far higher yields once rented so it seemed like a no brainier to us.

We have since bought our first BTL in Liverpool and are (fingers crossed) going to close on a second shortly and are pretty pleased with the portfolio we have begun to build up.

That being said, this has not come without its challenges. As first time buyers we found it very difficult to get mortgages secured, which we were told was mainly down to COVID and our profiles (we think because we were trying to buy through a ltd company) but after a 6+ month struggle we ended up buying one property in cash rather than buying two. 

Mortgage providers have fairly strict requirements and based on discussions with our broker we the more boxes you tick of the below, the easier you will find it to secure a mortgage and the more options you will have: 

- Landlord experience (6 months + proof of being a landlord) 

- Min. £25k annual household salary (usually not from property) 

- Owning your own home

- Not buying through a limited company 


I would also mention that at least in the beginning these properties can be pretty hands on and may need DIY/ building works etc so just be aware that it’s is not necessarily the passive income stream from day 1. 

Long story short, you probably can get a BTL as a first time buyer but it is challenging and especially challenging in the current economic climate. 
 

Hope this helps!

Olena

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1 hour ago, olenakk said:

Hi Dani!

Your story sounds so similar to that of me and my partner that I couldn’t not reply!

We initially were looking at buying in London (around Peckham) about a year and a half ago now but it fell through at the last minute which at first was a bit disappointing but as soon as we began to think about it more critically we realised that it was a blessing in disguise as we don’t plan to live in the UK forever and the rental yields we could have achieved on the property were minimal.

We then began doing our research (listening to LOTS of property hub podcasts! Among other resources) and visiting properties at some interesting locations around the country and realised that with the deposit we had saved for our house in London we could buy two properties elsewhere at far higher yields once rented so it seemed like a no brainier to us.

We have since bought our first BTL in Liverpool and are (fingers crossed) going to close on a second shortly and are pretty pleased with the portfolio we have begun to build up.

That being said, this has not come without its challenges. As first time buyers we found it very difficult to get mortgages secured, which we were told was mainly down to COVID and our profiles (we think because we were trying to buy through a ltd company) but after a 6+ month struggle we ended up buying one property in cash rather than buying two. 

Mortgage providers have fairly strict requirements and based on discussions with our broker we the more boxes you tick of the below, the easier you will find it to secure a mortgage and the more options you will have: 

- Landlord experience (6 months + proof of being a landlord) 

- Min. £25k annual household salary (usually not from property) 

- Owning your own home

- Not buying through a limited company 


I would also mention that at least in the beginning these properties can be pretty hands on and may need DIY/ building works etc so just be aware that it’s is not necessarily the passive income stream from day 1. 

Long story short, you probably can get a BTL as a first time buyer but it is challenging and especially challenging in the current economic climate. 
 

Hope this helps!

Olena

Hi Olena, 

Thankyou for the advise ! It’s great to know there are others in similar situations and the fact that you have managed to successfully start building your portfolio is great ! And also very encouraging for me! 
 

Thanks for the tips from your broker, that’s very interesting. And yes I can imagine at this current time it is indeed more challenging starting up. 
 

So you said you have a BTL in Liverpool, are you currently living around that area or are you still  down in London ? If so, have you found it challenging at all having your BTL far from where you are living ? 
 

Thanks for the help ☺️ 
 

Dani 

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  • 2 months later...

Hey Dani, 

Sorry for not getting back to you for a while, we completed on our second property so things have been quite busy over the past few months! 

Usually we would just be living in London and we have an estate agent up in Liverpool who manages everything for us (definitely shop around if you're going to do this as their charges vary quite a bit), however, because of COVID and because we bought our second property empty and needed to do some final decoration/ adding furniture and because we don't need to be in the office at the moment we are living up here whilst we get it ready to rent. 

The only real challenge that we have found having a property far away from where you normally live is during the initial setup phase when you're getting the house up to the standard required to rent it out. Obviously if you're planning on getting someone else to do the DIY side of things for you then this may be easier (as long as you trust who you're hiring), however, for us we wanted to do things as cheaply as possible and so when getting our first property up to  standard we spent quite a few very busy weekends going up to Liverpool and getting everything ready and then getting the late train back on a Sunday to be back in London for Monday. This was tough, particularly as we were nearing the end of the annual student cycle so had time pressure to get things ready in a very short period of time so, we had quite a few long nights painting till 5am, but it is totally doable and worth it if you ask me! 

Other than that everything is fairly simple and we've not had any issues just leaving them to be 'passively' managed by our agent. Overall, unless you plan to do all the agent work yourselves (finding tenants, legal work, vetting tenants etc.) I don't think you really need to be near your property. 

Hope this helps!

Best,

Olena

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On 4/18/2021 at 10:46 AM, olenakk said:

Hey Dani, 

Sorry for not getting back to you for a while, we completed on our second property so things have been quite busy over the past few months! 

Usually we would just be living in London and we have an estate agent up in Liverpool who manages everything for us (definitely shop around if you're going to do this as their charges vary quite a bit), however, because of COVID and because we bought our second property empty and needed to do some final decoration/ adding furniture and because we don't need to be in the office at the moment we are living up here whilst we get it ready to rent. 

The only real challenge that we have found having a property far away from where you normally live is during the initial setup phase when you're getting the house up to the standard required to rent it out. Obviously if you're planning on getting someone else to do the DIY side of things for you then this may be easier (as long as you trust who you're hiring), however, for us we wanted to do things as cheaply as possible and so when getting our first property up to  standard we spent quite a few very busy weekends going up to Liverpool and getting everything ready and then getting the late train back on a Sunday to be back in London for Monday. This was tough, particularly as we were nearing the end of the annual student cycle so had time pressure to get things ready in a very short period of time so, we had quite a few long nights painting till 5am, but it is totally doable and worth it if you ask me! 

Other than that everything is fairly simple and we've not had any issues just leaving them to be 'passively' managed by our agent. Overall, unless you plan to do all the agent work yourselves (finding tenants, legal work, vetting tenants etc.) I don't think you really need to be near your property. 

Hope this helps!

Best,

Olena

Hi @olenakk,

Thanks a lot for sharing your experience. Very useful since I am in a similar situation being a first-time buyer in London and looking to buy a BTL in Liverpool. I was wondering whether you could shed some light on the area where you invested in Liverpool and what type of properties you focus on?

Thanks a lot,

Paul 

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