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Hi Folks, I’m after a bit of advice here regarding getting started in property investment.

 

So I’m still currently learning as much as I possibly can about real estate so sorry if I come across like a novice as I pretty much am, I have my future set on being a long term investor it’s what I’ve always had an ambition for, and now’s the time to start!

 

Now I’m pretty young in the scale of things at 22, me and my partner are close to getting a mortgage on our first home. Once we are settled we want to start work on investing.

 

We will have a total of roughly 20k saved dedicated for investing. Now I know that’s enough to get a buy to let mortgage and start renting out however what I want to do in the ideal world is make that 20k into say 100k in say 3-5 years if possible, so I can then invest in more properties instead of being stuck with one.

 

So my thoughts were, in an ideal world I’d like to flip a few properties to make up the capital needed to start building up a portfolio, however I can’t seem to see a way of doing it, I’m hoping I’m just missing something and you guys can point me in the right direction!

 

As far as I’m aware to flip houses you need the need the entire asking price up front? Which I obviously don’t have. The other ways I’ve read of getting the money is to borrow it of family/friends or use a hard money lender, what do you think to the hard money lenders option?

 

So my main question then is, how can I make my 20k into 100k as quick as reasonably possible?

Sorry if it’s a vague question but it’s a difficult thing to try and find an answer to, so I hope you can help!

Thanks in advance!

 

Brian.

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Hi Brian,

 

There are a few ways you can turn the money over. £20k to £100k isn't impossible, but will be extremely difficult! It works out as around 55% return a year. If you manage it, please let us all know how you did it!!

 

Not knowing your full situation, there are mortgage companies that will lend on refurb projects.

 

I'm no mortgage advisor so I don't want to point you anywhere that may be wrong for your situation, but if you find a specialised mortgage broker (usually not ones you find in estate agents) they will be able to point you in the right direction.

 

You will need to factor in that the £20k you currently have will have to cover deposit, refurb costs, council tax, bills and any fees, so I would imagine you'd need to start 'smaller' then build up your pot to do bigger projects.

 

I too started with a modest pot, but instead of using it to invest, I spent it on helping me source refurb properties/anything I though we could add value to and taking the project to people I knew would be interested, and offering them the chance to buy it, I'll manage the project and split the profits. 

 

This way, you can build your pot and build some good relationships, so in the future, when you come across a really good (but potentially pricey) project, you will have people you can work with.

 

 

Of course, there are other methods, but this is one I'm implementing.

 

Hope this helps.

 

Krish

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Hi Brian,

 

There are a few ways you can turn the money over. £20k to £100k isn't impossible, but will be extremely difficult! It works out as around 55% return a year. If you manage it, please let us all know how you did it!!

 

Not knowing your full situation, there are mortgage companies that will lend on refurb projects.

 

I'm no mortgage advisor so I don't want to point you anywhere that may be wrong for your situation, but if you find a specialised mortgage broker (usually not ones you find in estate agents) they will be able to point you in the right direction.

 

You will need to factor in that the £20k you currently have will have to cover deposit, refurb costs, council tax, bills and any fees, so I would imagine you'd need to start 'smaller' then build up your pot to do bigger projects.

 

I too started with a modest pot, but instead of using it to invest, I spent it on helping me source refurb properties/anything I though we could add value to and taking the project to people I knew would be interested, and offering them the chance to buy it, I'll manage the project and split the profits. 

 

This way, you can build your pot and build some good relationships, so in the future, when you come across a really good (but potentially pricey) project, you will have people you can work with.

 

 

Of course, there are other methods, but this is one I'm implementing.

 

Hope this helps.

 

Krish

Hi Krish, thanks for the advice, Those were just rough numbers to be honest, the idea is that I just want to make my capital grow as quickly as possible and couldn't find a way of being able to flip with not a lot of money. I'm more than happy to start small and build up so thank you for pointing out that there are mortgages for refurbishing :) I'll get reading!

 

So what was it that you did exactly? I'm all ears for ideas at the moment!

 

Thanks, Brian.

Link to post

Hi Brian,

 

There are a few ways you can turn the money over. £20k to £100k isn't impossible, but will be extremely difficult! It works out as around 55% return a year. If you manage it, please let us all know how you did it!!

 

Not knowing your full situation, there are mortgage companies that will lend on refurb projects.

 

I'm no mortgage advisor so I don't want to point you anywhere that may be wrong for your situation, but if you find a specialised mortgage broker (usually not ones you find in estate agents) they will be able to point you in the right direction.

 

You will need to factor in that the £20k you currently have will have to cover deposit, refurb costs, council tax, bills and any fees, so I would imagine you'd need to start 'smaller' then build up your pot to do bigger projects.

 

I too started with a modest pot, but instead of using it to invest, I spent it on helping me source refurb properties/anything I though we could add value to and taking the project to people I knew would be interested, and offering them the chance to buy it, I'll manage the project and split the profits. 

 

This way, you can build your pot and build some good relationships, so in the future, when you come across a really good (but potentially pricey) project, you will have people you can work with.

 

 

Of course, there are other methods, but this is one I'm implementing.

 

Hope this helps.

 

Krish

Those figures were just rough to be honest, the main thing I wanted to know was the best way of making that 20k into 100k in the quickest way, using property. So are you saying you basically, borrowed money of someone else, did the refurbishing for them, then split the profits?

Thanks for the advance by the way! I'll look into the mortgages, I didn't know they existed! 

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  • 3 weeks later...

Bridging lenders will lend on refurb projects, check out people like Shawbrook as an example. 

 

One thing to bear in mind though is the cost of these. They will generally charge a lot more than a standard BTL mortgage, so this will reduce further how far your money is going to go initially. 

 

Honestly, I think £20k is too small to be looking at flipping houses. You'd be better off saving for a bit longer and waiting until you've got say £50k. 

 

It's doable on £20k, and I'm sure there are examples of people doing it for that much, but as a complete newbie you're likely to make mistakes and overrun and underestimate costs etc. It is a relatively high risk strategy. 

 

 

Another strategy to consider would be to buy a property for yourself that needs work doing to it. It's not a long term strategy, but if you and your partner buy a place you can add value to. Then not only can you use the money you have for the purchase, but also your £20k investment fund to increase the value. Sell it, and repeat. 

 

Technically I think HMRC will look at this as 'trading property' at some point, but that's a conversation to be had with an accountant. It's a very good (and tax efficient) way of increasing your capital though. 

Damien Fogg
MRICS CeMAP CeFA

Email: damien@theepinvestor.com

Web: www.theEPinvestor.com

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