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I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

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EbunEwedemi Offline Mute
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27-11-2013,12:02 AM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?


Hi all! I asked Vanessa the question on twitter...
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Some of you have asked for background information:

I'm currently in my final year of university, the 20k is pretty much made up of personal savings and student loan. I'm 20, first time buyer, low employment Income due to working a part time job, good credit. I'm yet to apply for a BTL mortgage, however after speaking to a few mortgage brokers I've been told the chances are slim to none with my profile.

A residential mortgage would be better suited however if i'm not granted 'consent to let' I'd have a huge problem on my hands. I'd like to follow the rules as it'll be my first investment, I am aware there are ways to 'cheat the banks' but I don't think its a smart move for a first timer. My current employment income is likely to be an issue obtaining a residential mortage. I could wait untill i finsh uni and get into full time job however.. will lenders want longer employment history? There are so many ifs and buts with mortgages.

Due to the unlikehood of me getting a mortgage right now I'm trying broaden my options and i must say this thread has given me a lot to think about! Many of you mentioned investing in trusts, funds, shares etc this sounds like the safe, sensible option but I'd like to get my hands dirty! I want a hands on strategy that will not only to grow my money but provide me with some experience.

I'm really interested in the following strategies:

1. JV flipping to build capital- John G, you suggested unmortgable properties, could i please have a link to the thread?

2. Vanessa also mentioned a JV with someone who needs £20K for a refurb

3. Tony A suggested a JV with a group of Investors to build on land with existing planning permission

4. Investment in US Houston, tx. 1/2 bed Apartment. However this would be a looong term investment soley relying on capital appreciation rather than cashflow.

I'm open to more suggestions, advice, comments and ideas! Anything really...

Please keep the feedback coming

Thanks Big Grin
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ian2128038772 Online Mute
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27-11-2013,09:55 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

What about...

You could rent a property with permission to take in 2 or 3 lodgers then furnish it ,this should let you live rent free and let you find out if you are happy to have lodgers.

Then wait until you finish uni and got into full time job, some lenders don’t ask for more than a few months employment history, however give it a bit longer encase you have to move for another job.
Use a residential mortgage to buy a property that you live in 1 room off, and then rent out the other rooms. Most lenders allow you to have a few lodgers without any issues. A mortgage broker can check this out with a lender before you get the mortgage. The new “help to buy” scheme will let you get a 95% LVT mortgage, if the lenders are happy that your income will cover the payments, some lenders will take into account income from a lodger.

Then when you have worked for a few years and saved up more money, turn the property into a HMO that you don’t live in, and repeat. The capital gains tax is a lower better if a property has been your main home.

Remember buying your own home to live in, is property investment provided it is no more expensive then what you would have been willing to rent – you are investing in not have to pay rent to a landlord. Personally I would not risk losing the £20K by doing anything else as you get a good return for very little work by buying a basic home to live in.

Also in the long term, the benefit of getting a 1st instead of a 2:1 and doing very well in your first post university job is likely to be more then what you can make in property in the short term. So don’t let property destruct you from more important thinks.
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Mandy Thomson @lodgersite.com Offline Mute
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09-12-2013,11:33 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

Ian is offering excellent advice - taking in a lodger can be a great way to make (almost!) passive income (and will also make you landlord!), but please, please make sure you're really ready to do this before you go out and buy a property with this in mind - many people take in a lodger without really considering what they need from someone sharing their home, and also fail to run checks on the lodger first (even more important than with remote letting).

As a student, you might have recent experience of house sharing, and as such be much more adaptable than an older person who is used to living alone or with family, but having said that, when you own a property or at least have a substantial investment in it (in terms of time or emotion as well as financial) stuff you might ignore in a flat share situation will upset you - I've come across this a lot with young landlords letting a room to their uni friends.
Check out lodgersite.com for more information on letting out a room.
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Mark Poole Offline Mute
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10-12-2013,12:46 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

Hi Ebun,

You have done amazingly well to accrue £20k whilst at university. So be careful not to run before you can walk. JV investments are risky, as is buying a property abroad.

On top of this you have to graduate and get a job!

I would focus on that and then look for a residential purchase using your funds as a straight deposit. Find a property needing lots of work. Preferably the worst house on the best street.

Being young you can put up with the inconvenience of living in it whilst you refurbish over time. Perhaps look for a property with future development potential (extension, loft conversion) so that you can really add value in future years.

In the meantime get on with your life and new career.

In a few years time, look to move out and rent it. Consent to let would be ideal, but hopefully the value added will have created enough equity for you to remortgage onto a BTL product if needed. Perhaps with enough to extract some cash out for your next purchase.

Hey presto - you are now a landlord!

Rinse and repeat.

This is how I started out and I still have the consent to let from 10 years ago, although granted I believe it is harder to achieve these days.

Thanks,

Mark
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EbunEwedemi Offline Mute
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10-12-2013,11:25 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

Thank you for the feedback! Smile

I plan to invest after April next year when i have finished uni. There's no way I could juggle writing a dissertation and buying my first property! Although I'd like to leave having an idea of what i'm going do...

I currently live in East London, I plan to work and live in London after graduating (I'm on a surveying related course but I'd like to go into property sourcing, sales or inventories lol). I can see the benefits of living with a lodger or two on a resi mortgage. I have lived in a house share with other students, I could take in uni friends so that wouldn't be a problem for me. However my deposit is small for a multi bedroom property in London. Maybe it'd work if i find an exceptionally good deal or a good LTV (85%-90%) mortgage but again I'm not sure what LTV ill be able to get. That's something ill have to look into.

I could use the help to buy for a London purchase as only 5% deposit is required... I did some research and there are a few drawbacks:
-This scheme does not allow for a remortgage
- Repayment mortgage only
- Government owns 20% of property and will take a share of capital appreciation once sold
- Cannot let out so there may be issues with converting to HMO later

Maybe I should post a thread on ''How to take advantage of the help to buy scheme as a first time buyer/rookie investor''

It'd be an ideal situation if i could get a mortgage.
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TrevOfHucknall Offline Mute
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23-03-2014,06:31 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

After April, once you have had a job for at least 6 months then maybe you could get a mortgage but it would have to be on a property outside of London as a newly qualified graduate I would imagine your wages would be to low.

If you went a lot further away from London it could be possible to start up in Norwich for example, where it may be possible to buy a run down long term empty property and then lease it back to the local council who would repair for you and give you a rent. Then when the lease ends you would be able to sell it at the renovated price and in the mean time you would recieve a rent although it would be about 20% below market rent for the area. As you are young it would start you off nicley even if you had to get a small mortgage.
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lodesk Offline Mute
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23-03-2014,07:39 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?



Hi
It isn't a problem at all.
*moderator content removed*

It pays to be creative!
It also pays to educate yourself in this business.
It is NOT a game but a serious business.
Make mistakes and it will cost you dear. We all make mistakes, just make sure you don't make the big ones.

I look forward to hearing from you

Regards
Barry
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DaddyLandlord Offline Mute
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23-03-2014,09:09 PM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

My 2 pence worth? Tackle the reason why you can't get a mortgage.

What's the reason???
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Cormac Offline Mute
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17-06-2014,12:38 AM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

Hi there

We like cheap properties - the return on investment is high and you can usually sell them at auction which means you get your money back within 60 days.

We've bought around 15k and sold for 25k in places like Burnley http://www.rightmove.co.uk/property-for-...50758.html

15k is the cheapest I've bought but if you can turn an £8k profit in 60 days and do this 5 times in a year that's 40k return on 15k outlay or almost 200% ROI.you can be searching and learning whilst waiting for your first deal to complete.

It's possible but you need to research and find comparisons. If you can make a relationship with a local auctioneer and ask for help valuing the place offers in the region where you need to buy. And this is the best education for making money as a property trader and you are in control. I'm not against JVS but with this budget you won't have an marketing spend to go direct to a vendor and agree creative low money down structures and learning to sell and value is key to making money as a trader/developer.

Good luck!
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Vanessa Warwick Offline Mute
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17-06-2014,08:40 AM
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RE: I've got £20K to invest, but can't get a mortgage.How can I get involved in property?

Hi Cormac,

Thanks for commenting.

We have a thread about the strategy of buying at auction and re-selling on the open market >>> here.
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