Investment Strategy Advice for new investor?

Discussion in 'General Property Investment Discussion' started by Aaronsg, Mar 20, 2017.

  1. Aaronsg

    Aaronsg New Member

    Hi everyone.

    I'm new to the forum and very new to the whole idea of investing through BTL. The purpose of this topic is to try to get an understanding of the kind of strategies most investors follow and would recommend. I am currently living outside the UK for work purposes but I wish to build a property portfolio back in the UK.

    I understand that with BTL's there are the two main types which are single family homes or HMO's. I have been trying to research both types to see which would be best for me long term and have discovered pro's and con's of both. for example a single family home may be cheaper and easier to set up, however, the rental income would usually be less.

    I've been referred to a company which specialise in buying inner city houses and renovating them for you and obtaining all the necessary licences to make it HMO ready, then letting the property out to young professionals and/or students. This company charges 15% of the rental income for a fully managed service which is attractive to me as I am outside of the UK. Are there any other reputable companies that off this kind of service as I have heard that this figure is rather high.I have also heard of other people buying their own small, cheap houses and just renting to a single family for a rather high ROI too. So I'm a little undecided about which approach to take under my current situation.

    My target is to try to pay the mortgages of the properties off as soon as possible (10years ideally) and take the hit over the ten years or so to allow me access to the full rental income earlier instead of paying a mortgage over 20yrs+. I am currently 28yrs old and I would like to invest in such a way that I don't have to rely on a salary for my income once I reach the age of around 45yrs old and would be looking at a few houses (3-5) over the next 6years. (my career isn't the kind of job I want to be doing until im 67!).

    Sorry for the long post but I just want to explain my circumstances and based on what I am looking for in the next 15yrs or so to be financially free and hopefully some of you who have the experience can guide and advise me on the correct decision. Thank you.

  2. realdeals

    realdeals Active Member

    One quick question, I see you are working outside of the UK but are you paid in sterling or a local currency? The reason I ask is that all major currencies have benefited from the recent collapse in sterling so you will be getting better value for money if converting into sterling.
  3. Aaronsg

    Aaronsg New Member

    Yes I am paid in foreign currency however I send this straight back to the UK to gain on the current exchange rate. So I have no money overseas it's all back home now.

    Sent from my iPhone using Property Forum
  4. realdeals

    realdeals Active Member

    In theory you will have benefited by up to 20% on the currency exchanges since the Brexit vote last year. This gives you much greater fire power than you would have had a year ago.

    I will come back on your original questions when I have more time.
  5. Aaronsg

    Aaronsg New Member

    Yes that's what I thought too which is why I sent it all home, I've been sending it all back home every month for the last two years. In hindsight it would have been better keeping it all here and sending in one lump sum post Brexit. Thanks I look forward to reading your response!

    Sent from my iPhone using Property Forum
  6. totallyproperty

    totallyproperty Administrator Staff Member

    Hi Aaron,

    welcome to the forum! We have a number of free resources on the forum that should help you decide which investment strategy is right for you. This link takes you to a post explaining more about HMOs (including regulations and further reading). I've also asked @Nicholas Wallwork (owner of the forum) to jump on this post and give his expertise because he is a very successful HMO developer.

    I can recommend one of our members @luke who specialises in sourcing and managing HMO property in the South East of England. I'm sure he would be a very helpful person for you to speak to.

  7. Michelle Barringer

    Michelle Barringer Member Forum Partner

    Hello, I work for an investment agent and have some ready made HMOs for sale and will send you a PM.
  8. Findaksh

    Findaksh New Member

    There are many legal and physical issue associated while you are going to invest in Real Estate . Consult any trusted agents who are able to provide you all information about investment.
  9. Caroline Allison

    Caroline Allison New Member

    Here are some useful tips for new investors:-
    Check your credit report to finance investment property
    Find a good mortgage broker in your area
    Determine the best areas to look for properties
    Talk with other investors about local real estate
    Consider multiple sources for buying properties
    Find a good Realtor to help you locate properties
  10. John Scott

    John Scott New Member

    Real estate investment is a time consuming and complex process as it require a lot of research, proper property management and you have to keep a good financial record. You should do a good market research and also get suggestions and ideas from your friends, neighbours or relatives who have made investment in past.
  11. nmb

    nmb Well-Known Member

    I notice that you are looking to pay off any mortgage asap (within 10 years). There are two things to consider here - paying larger mortgage instalments will obviously reduce your interest payments going forward. However, would these extra funds be better used as a deposit for additional properties?
  12. Amanda Gray

    Amanda Gray New Member

    I believe before you invest on any private investor look for the most trusted one.
    Because some time financial issues become so complex that you can handle.
    Moreover, do check credit history and take review from different past investors regarding outcome.
  13. diyhelp

    diyhelp Active Member

    Hi @Aaronsg

    I would be interested to hear how you got on with your investment plans. Did you go ahead?

    One more point to consider in the current invironment - with interests rates so low there is probably more potential upside investing into long term property rather than paying off your debt. If you can find attractive rental yields.
  14. nmb

    nmb Well-Known Member

    The interest rate discussion if very interesting because while the Bank of England would probably like to increase rates, they are unlikely to increase them dramatically for some time to come. Brexit continues to hang over the UK and a sharp increase in interest rates would decimate the economy. Many people have borrowed to their limit at current base rate levels - any significant increase would be catastrophic.
  15. realdeals

    realdeals Active Member

    Just a quick point, in theory you should receive a substantially higher rental income from an HMO than a standard BTL property. However, there may be higher costs with an HMO in the early days and possible risk of unlet rooms from time to time.

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