Invest in properties or renovate existing freehold property to increase value.

  • Thread starter Raymond Fernandes
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Raymond Fernandes

New Member
Dear Property investor Experts,

I currently am a home owner of a 2 Bed end-terraced property in Mitcham Eastfields, CR4 area built in 1983. Current value as per Zoopla is £343,000, Mortgage outstanding balance £57k, Outstanding remaining term 19 years 9 months. Have a residential mortgage with Barclays since 2015, renewed in 2017 for another 2 years fixed remortgage, which expires on 30th April. My current status - Single 38 years, Self-employed - IT Freelancer, can be on and off contracts, 3 months work, 3 months off etc.
I have dilemmas and need advice on renting my existing property before my mortgage ends in 2019, not intending to remortgage, but rent out my house, so have these options in mind with dilemmas.

Option 1: Rent the existing property with reliable tenants with or without estage agents, word of mouth or AirBnB
Dilemma: Where would I move to if I rent it now? I'll probably have to relocate with a new job and rent out outside London.

Option 2: Move home with equity from existing property, take outstanding balance mortgage to put toward the new product to remortgage.
Dilemmas: This property is an ideal location for young professionals to rent out, since train amenities is 2 minutes away and property value is gone down 5% since last year. Reluctant to move.

Option 3: Stay at the existing property, renovate house to increase value for another 1 year, i.e. loft conversion. Remortgage with new Fixed/Tracker product from 1st May 2019.
Dilemma: Is it worth putting extra money in loft conversion and waiting for 6 months to a year for house value to increase?

Option 4: Pay off the full mortgage once the current 2 year fixed mortgage expires on 30th April 2019. Depends if I get a well paid contract for long term.
Dilemma/concerns: I may have to pay an exit fee or Early repayment charge £2K / 3% of the amount repaid.
On the other hand, with any extra cash - £5k - £10,000, planning to invest in properties, preferred strategies:

1. Invest £5k for 10-12% annual returns with Joint Venture partners with HMO's
2. Leverage returns on investment to further 4 more HMO's with the Joint Venture partners.

My long term plan is to use any returns of cash investment into deposit and mortgage for a family 3-4 bedroom detached home outside London, easily commutable to London. Been in my existing property for over 14 years, since Dec 2004.

I would appreciate your advice on the above, not sure which option to go for on my existing property and how to use extra cash through my self-employed dividends to invest in properties.

Many thanks,



If you were to rent out your existing property, find a cheaper property for yourself outside of London (with good rail links) then in theory the rent would more than cover your current mortgage and you could afford an additional mortgage on your current income?

As houses prices have dipped, it may be worth injecting the existing property into a company if you are looking to create a large property portfolio in the longer term. You would need to speak with an accountant but there are benefits to holding property in a company.

Raymond Fernandes

New Member
Thanks for those tips.

Renting outside of London is on my mind, however the 2nd option you mentioned seems interesting for long term goals.

I'd like to know more about how to inject my currently property into a company to create a large portfolio in the longer term.
Do you have any recommendation on accountants dealing with these legal matters?


Hi @Raymond Fernandes

Any accountant should be able to advise you on setting up a property company. The way I understand it is that the property would be "sold" to the company at market value. This would go down as a loan to the company (directors loan if you were a director of the company) and you would have first call over the property until the loan was repaid.

Some benefits to this include:-

- You sell to the company after a dip in prices so there should be some long term potential for capital growth
- The company can use the asset to raise funds for investment
- The loan is repaid out of company income which will be tax free as it is a loan repayment as opposed to a dividend or salary

I would check the mechanics and small print with an accountant but this may be a viable option for you.

Raymond Fernandes

New Member
@Longterminvestor, thanks for that. I'll find an Accountant from (moderated) website, seems there are some reliable certified accountants dealing with property investments.

There are some doubts running in my mind:

1. I currently have a Limited company for my IT contracts with an accountant dealing with my taxes. Can I have another company seperatly, dealing with property investment and and accountant dealing with the taxation matter?

2. The benefits to selling the company sounds like a good long term plan. Since I currently a home owner of the property and mortgaged. Can the process to sell to the company to raise funds for investment be started soon or do I need to pay off the mortgage in full?
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Josh Caldwell

Josh Caldwell - American Real Estate Investor
@Raymond Fernandes -

I have a question. Since you work in IT, are you able to work remotely to fill your contracts? If so, then my second question is important.

If you can work remotely, then it doesn't matter where you live for your profession. Can you rent your place for more than the mortgage and upkeep expenses? If so, then why wouldn't you let the renter pay off the rest of your mortgage, keep the extra cash for your future investments, and lower you cost of living by moving to a flat that would cost less per month. This strategy would allow you to increase the amount of money that you have working for you.

In essence you would be increasing your wealth exponentially by investing that money into some other real estate investment with a positive return. One of the great things about real estate investment is that we can have other people pay for our property in the form of rent, while we experience a gain in net asset value. I am a little concerned that your property value has decreased, that doesn't happen where I invest, but as long as it produces positive cash flow, I don't care so much.

to your success