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  • Mortgages & Finance

    Building up portfolio more efficiently..

    Hey folks, can somebody share some tips how to speed up building portfolio quicker? My main stopper is finance I would say- I am successfully using my savings for first properties, but I would like to grow faster as within current situation I can get 2-3 properties per year..

    In nowadays most lenders requires 20% deposit.. stamp duty and legal fees takes another 5-6% of property price.. I am buying and financing properties via my limited company (company funded via directors loans).

    As it stands I feel like I am missing time Smile My goal is not to start earning cash and spending on my needs, but grow and grow quicker as business.. I am not rushing to buy any property- I am cautious investor- always measuring twice..

    I am still full time employed and I am higher tax payer.. so all my investments funded from single source currently and I feel like it will take forever to achieve what I am forcing myself to achieve.. I got interest only mortgages on more expensive properties and repayment mortgages on less expensive properties with higher yield..

    Would appreciate for any feedback- especially from landlords who have in their portfolio - 10 and more properties- what was your stories and how long it took to achieve where you are now, how did u started, sourced your first investments?
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    Hey Zem!

    I just wanted to come back to you with a few concise points that you might find helpful!

    1. I would prefer to have repayment loans against my low yielding properties as it reduces the LTV overtime which is preferable as lower yields are higher risk as there is less coverage of the mortgage by the rent. I'm more comfortable with high LTV interest only loans against properties which have very high yields as a change in interest rates costs is likely to be insulated by the high rent.
    2. I have heard it mentioned that it could be preferable to keep all mortgages interest only, and put aside cash each month in a savings account, then use it to repay mortgages each year at your time and choice. This could be more flexible than just having a repayment mortgage.
    3. Regarding building a portfolio, I think you have to be conservative when looking to refinance all your properties to maximum LTV and use that as a strategy. In my mind, developing properties / ADDING VALUE is the best way to sustain portfolio growth, as you can refinance at the increase value which allows you to move on but also not have to leverage every property up to the hilt.

    Hope this helps!

    Harley

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    You are outlining a problem I forecast years ago

    BTL is a great strategy if you have the cash to start with

    Long gone are the days when you purchased on a Monday did a little work with Magic Magnolia and take out your deposit with and 85%

    mortgage on the Following Monday

    Lending is much stricter now and LTV much lower so it will stunt the growth of a BTL business who is depending on leverage

    The only real answer is you need to be well off before you start a BTL business to start with

    BTL now is for the rich in general

    What took me 5 years to achieve will take you 25 years because when I started as long as you had a pulse you could raise thousands of pounds.

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Hi Zem

     The simple truth is that you need to buy the property right in the first place so you should have three options once you’ve purchased it you should be able to sell it on without doing anything to it at a profit or should be able to refurbish it and sell it on at a profit or refurbish it and let it and refinance it and move on to your next acquisition .  

    If you’re not able to do all three options you need to question whether you’re getting the property for the right amount of money property developing and investing is all about paying at the right price if it isn’t the right price don’t buy it .  Hope that helps
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    I am long time investor and property is not my primary target- property for me is a tool to achieve stable independence finance.

    Regards “is too late” - I would disagree.. I am young, full of energy and with generous income + full of ideas..

    When people advising to buy whole property from available cash- I would disagree that this is a wise idea.. say you have 100k and can buy terraced + remortgage it after- I think is better to buy 4 terraced with 25% of deposit and repayments mortgage type.. within years property price will grow (if u chosen right location) and you can always sell/remortgage your first house to buy more.. so if you buying 10 properties during crisis- you will be wealthy within next decade- it will make u stronger.. you don’t need 25 years to achieve this!

    There is also over tools - like stocks, investments into limited companies and etc. Flip sales can boost your finance as well.. but my goal - to grow as business not as personal wealth here- my personal wealth is fine - I am happy with it
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    i disagree zem, we have used cash for our first purchase which was 40k below market value, we then decided to sell, bought our second house at 80k below market value refurbed and again sold, our third house is 45k below market value, we will add an extension for kitchen diner small refurb then either sell or rent, all this been done with cash and we can either mortgage and rent getting all our money out and not pay a deposit or sell, buy one at a time makes more sense, we will have 10 done this year easily

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