Advice needed - new to property

[Nicholas Wallwork]

Hi Nicholas,

Many thanks for this - we would be looking to purchased our properties as an SPV/Ltd as this seems to be the general consensus now. Evidently we would also get tax advise to confirm this is the best method for our situation and future portfolio growth.

HMOs are definitely one strategy we have looked at, specifically student property. However, our initial consultation with a mortgage broker we found online was that we would not be able to get a mortgage on this if we had not already had experience as a landlord. Is this correct? As such, we would need to get a single let property to begin with and show lenders that we are capable landlords? It appears that have a guarantor may be essential in the beginning and we believe both our parents (who each own properties) would be willing to do this for us which could increase our options/

We were under the impression that for BTL properties lenders look at the rental income as a proportion of the interest rates to decided whether to lend?

Many thanks for your response.

Rob and Alex

I'd strongly advice before purchasing your first deal get your mortgage in place in principal and ensure you take good tax advice. Some lenders might not like Ltd Co lending as you are starting out so be extra careful and speak to all the relevant advisors first...

I wouldn't like to answer too many of your mortgage related questions as I deal mainly in commercial mortgages now, however Darren @The Mortgage Broker should be able to help and walk you through the minefield of mortgages and what is and isn't allowed at the current time. It's changing so quickly as well, you need a good advisor to keep up!

Guarantors will definitely help so that's great the "bank of mum and dad" can help... we all need a leg up sometimes and it's the best place to go for your first use of OPM (other people's money) which is key to growing your portfolio past a handful of deals when you get to that stage...

 

[Nicholas Wallwork]

Hi Rob and Alex

Nice to meet you (virtually). It sounds like you are in a great position to get started in property investing. As Tracey has mentioned, I invest in BTLs around Liverpool and St. Helens. I live in Stevenage, Herts, so I've built up a team in my investment area to make the process as hands-free as possible. I started property investment training when I was 27 (now 31) so I could learn as much as possible. My strategy is to buy 2-3 bed properties in need of refurbishment (often with bridging finance as they tend to be unmortgagable),add value through refurbishment, then I rent out and mortgage them after 6 months to recycle as much of my cash as possible to buy the next property. I've bought two properties this year from my local sourcing agent, who I'm now using to find the deals quicker than I can.

Last year I grew my investment pot by lending funds out to other investors for a high return, whilst I took a break from property to get married. I now pay for my refurbishments in this way, by borrowing funds for 9-12 months and giving 8-12% interest p/a. This might be something you can do to increase your pot if you can think of anyone that would be interested to invest with you, as it's very difficult to get good interest in the bank, so you can help them too. I repay the investors once the new mortgage is completed and the funds are 'recycled', generally 7-8 months after purchase.

To give you some rough figures, I tend to buy properties around the £43-50K mark, spend between £9-15K on refurbishments, rent for between £475-550pcm and add value to approx £70-95K. I chose this income strategy to replace my monthly income from working as I don't need large capital pots at the moment. Some friends are doing HMOs nearby in Warrington and Wigan, so there's lots of opportunities in the North West.

Good luck with your onward journey and if I can help with anything, let me know!

You've don't a great job there Kim well done! We lend from private investors on a similar basis to cover 100% of GDC and it works really well. We've paid returns for a number of years now and some very happy investors, it's a win/win partnership we find!

Keep on growing!

 

[RobandAlex]

I'd strongly advice before purchasing your first deal get your mortgage in place in principal and ensure you take good tax advice. Some lenders might not like Ltd Co lending as you are starting out so be extra careful and speak to all the relevant advisors first...

I wouldn't like to answer too many of your mortgage related questions as I deal mainly in commercial mortgages now, however Darren @The Mortgage Broker should be able to help and walk you through the minefield of mortgages and what is and isn't allowed at the current time. It's changing so quickly as well, you need a good advisor to keep up!

Guarantors will definitely help so that's great the "bank of mum and dad" can help... we all need a leg up sometimes and it's the best place to go for your first use of OPM (other people's money) which is key to growing your portfolio past a handful of deals when you get to that stage...

Nicholas,

Thank you for this.

We completely agree, we are trying to speak to mortgage brokers to get advise on what we can/can't do, get a mortgage in principal and adapt our business plan accordingly. Thank you for mentioning Darren - we will try to get in contact with him!

Exactly, we are very lucky to be in that situation where our parents can help - so it would seem silly not to take advantage of that.

Many thanks for your contribution.

Rob and Alex.

 

[Kim Firmin]

You've don't a great job there Kim well done! We lend from private investors on a similar basis to cover 100% of GDC and it works really well. We've paid returns for a number of years now and some very happy investors, it's a win/win partnership we find!

Keep on growing!

Thanks Nicholas. There's always a way to get started and grow!

 

[Mark Lodge]

I would say one of the most important things to take into consideration are the costs: Homes under the hammer has created a monster by making refurbs look super easy with easy money up for grabs! One thing they do not talk about though is all of the extra costs you will incur. You need to understand the potential exits and not kid yourself in to a deal! If you account for all costs effectively and work on a modest / worst case scenario, then if the deal still works and gives a decent ROI you should do well! If the property does sell for more then that is the cherry on top - but at least you will be safe! As you grow on your property journey you will have more insights and be able to work more effectively but at the start you need to be safe so do your due diligence!