Newbie in becoming a serious property investor

[stuart_w84]

Hi, 

My name is Stuart and new to the forum.

My first dealings with property began in 2007 when I bought my first property at the age of 23. With advice of a financial advisor to stay clear of this purchase, I went ahead anyway because I just wanted to get in and live a party lifestyle. Looking back, I was so naive, but now I can relate the concepts of where and why I failed to help make better decisions for the future in regards to property.

I purchased a steel framed 3 bedroom end terrace for £93k which was ex council but had been decorated to a nice standard. The failures I now realise in that purchase was it happened at the winners curse, on a 95% mortgage with a stupidly high interest rate. Oh and did I mention steel frame? An absolute shambles. My only saving grace was the crash in 2008/09, that after my fix term, my payments went from £500 pm to £314 pm. This sounds great but because I was so quick to get into the property at the start, I just signed the paperwork and didn't worry about the term which was set at 40 years to begin with.  Totally mis-sold as I walked into Halifax and back out with a ball and chain of a deal by Birmingham Midshires. Anyway for the last 6 years it has been renting for £500-£595 pm covering the mortgage payment on a consent to let since I work a way being in the forces.

At present,  I also own my 2 bed home, which has had value added through rendering, new roof, interior decoration etc. After listening to the podcasts and reading books I now want to rent this as a means of producing more income when I finish a 22 year career as an aircraft engineer. Not interested in buying the big house or luxury car, but want something to give me the financial freedom of doing what I enjoy more. My desire has faded from engineering even though I am halfway through an engineering degree as a means of back up. My real passion is now in property and understanding how the world economy and debt really works including debt cycles. I have also managed delayed gratification for the last year and started to save much more money. 

My goal is to invest in my home village in the area of Fife due to the expansion of new homes and commercial units going in, plus it gives me the chance to manage it all myself as in dealing with people directly. The plan is to work for the next 3 years and receive my full service pension and find the right strategy to go limited or retain the right amount of properties in my personal name to give the passive income needed. 

My background is aircraft engineering,  private pilot flying and reading or listening to everything from the likes of Robert Kiyosaki, Grant Cardone, Napoleon Hill and off course Property Hub. Just can't get enough of continuing personal development and spreading the word to the people around me.

Hopefully this is the start of something new, acting on the desire of getting into property full time and sharing information with like minded members.

Cheers

[Mark Rocks]

Hi @stuart_w84

Big welcome to the forum! And thanks so much for letting us know so much about your journey with property so far.

It's interesting to hear from someone who's had actual experience with the winner's curse - wondering what your opinions are on the return of the 95% mortgages?

 

[stuart_w84]

Hi Mark,

Thank you for the reply and welcome. 
I think it is a terrible product at 95% speaking from experience. The amount I had to pay back on the heightened interest rates was daylight robbery.
 

I have £30k equity in todays market with £70k left on the mortgage after 13 years of purchasing at 95%. Pretty rubbish numbers and there needs to be more clarity and comparison against lower LTV rates before anyone jumps into these products. 
 

Definitely a sign of the winners curse with poor products being packaged up by the banks and sold on. 
 

Just waiting on the No Income No Job loans being dished out next. 

Stu

[David McGuigan]

Hi Stuart

The front end of your story sounds very similar to my own. I bought a home in late 2007 (I was 25). A two bed terrace that cost me £90k. Still have it now and it's just about back to worth the £90k I paid for it (ignoring inflation!) ... Have had it on a 75% LTV buy to let mortgage for over a decade now and on a positive note it's probably only been empty for 2 weeks the entire time.

The good news about making these 'mistakes' in your early 20s is two fold in my opinion. 1. You're supposed to make mistakes in your 20s!! and 2. You still have a good 60 odd years left to be able to recover from them!

Like you I also then looked to invest locally. Bog standard buy-to-lets, targeting cashflow and a touch of growth as a possible bonus. Went for places I could add a little bit of value to that I felt should rent well for long periods to good, local people. Built up a small portfolio of four properties, and decided to call it quits there in terms of growing the portfolio.

Last year we took in around £13k clear profit and I probably spent about 10hrs doing the admin work to support them. That was a pretty nice feeling, all from that boring boring bog standard buy to let strategy! Based on the info you've provided above, I reckon keeping it simple (which I think you allude to) as an overall philosophy will naturally lead you to a sound strategy to achieve your income goal.

Good luck to you 🙂

[stuart_w84]

Many thanks for your reply and similar story! It is good to hear how you started and then quit after 4 properties. That is my target for the next couple of years. I totally agree about the mistakes in the 20’s. Live and learn. 
 

I see how people are working hard in property but for me, I’ll let time do the work and hopefully buy right on my next few purchases. 
 

Well done on the profit for some admin time though! I still see the bog standard BTL strategy as a way of replacing my income in the future. Just a shame that section 24 has put a halt on the nice profits. 
 

Regards

Stu

[David McGuigan]

Yeah, letting time do the work is a great way of putting it! Ultimately I prefer having time and energy to money, so I'd rather make my money work hard, than kill myself in the process!