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  • Buy-to-Let

    I'm 30, on 48K a year, have debts, should I?

    Hello everyone

    I'm totally new to property investment. The only investment I've ever done is in a company that I started that sells Exotic Teas. We're on eBay, Amazon UK and have our own website. That is ticking over, but my tea brand is still new, and so sales are slow, but enough to cover costs.

    I would like to get into property investment. I have a family (wife and one daughter) and have a mortgage on my house (bought the house in October 2016). I earn £48K a year (that's around £2700 a month after student loans and taxes). I also have a few debts.

    Debts:

    1. £170 (car on finance, will end in 2.8 years)
    2. £130 (DFS on sofas when I moved in, will end in 1.5 years)
    3. £390 (A loan my Mum took out for me when I had no money, will end in 4 years)

    Wife's family live abroad, and she hasn't seen them in two years, I've promised her a holiday this years, so that's another £1500.

    But we all have stuff like this, and perhaps my situation right now isn't ideal, but one thing I am good at, is toughing it out and being patient (especially since getting married and having a daughter).

    What is the first thing I need in order to get myself a 2nd property that I can rent out? Is it money? If yes, how much? I've looked at areas in my home town that are popular with renters, and houses are about £80K to £100K. How much money would I need saved up in order to obtain a 2nd house that costs about £90K?

    I've been listening to this Audiobook (available in printed form too). So far so good, but I won't be attending any of their "courses" and fall for guru-ism. The author talks about interest only mortgages, are these available to folk like me?

    Any help and advice would be greatly appreciated.

    Thank you.

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    Hi J,

    You will need:

    1)  A deposit - typically 30 - 35% 

    2)  A good credit rating

    3)  Access to buy to let mortgage finance

    Your absolute first port of call is to speak to a reputable mortgage broker and Property Tribes Financial Services are a great place to start.  You can speak to Howard and the team on 01206 654444.  They will assess your personal circumstances and let you know if you can access BTL finance.

    From the little you have told us, it sounds like it shouldn't be a problem.

    You can access interest only mortgages for BTL and most investors choose to do that.

    Once you have access to finance, then you know you can get started.

    See - Top 10 Property Tribes resources for novice landlords and BTL investors 

    You should also seek specialist tax advice to set up your property business in the most efficient manner.

    Hope that helps and good luck! Smile

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    Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **5 reasons to get your FREE portfolio review NOW**

    Thank you Vanessa, that make things clearer. I have a lot of learning to do, so I'll continue lurking around this site Smile

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    How much do the houses that cost 80 to 100k near you rent for? If the rent is high enough you might only need a 25% deposit.

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    Good point Peter. I haven't looked at that yet, but that is a good point to keep in mind when my savings start piling up.

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    what do you do? thats a nice salary

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    I'm a .NET Developer. I write instructions for computers. You won't believe how stupid computers are until you learn programming Smile

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    You seem to have your head well and truly screwed on!

    That is massively in your favour.

    The opinions you have been given are the best way to proceed.

    The underlying saving ethos you seem to have is commendable

    However you will face domestic financial imperatives that wishes to take precedence over your property aspirations.

    Perhaps you should formulate a business plan which would show to your domestic circumstances the viability of delayed gratification by saving to invest in future rental property.

    I dance around the edge a bit, but basically you are going to have to make a fully informed case to the wife for your property aspirations!!

    Saving is not something usually possible for domestic family circumstances.

    There will always be something they can spend your money on than save hard for a rental property and reduce discretionary domestic spending to zero.

    You are are going to have to come up with a damn convincing case for the wife!!

    The lender is the least of your problems!!

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    At least computers do what you tell them (with rare exceptions). Humans can be even more stupid

    P.S. I took my first programming course in 1976

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    Bring back 68000 assembler and 'C' for an old school software engineer like me !!

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    My advice to you is to go contracting. You could quite easily double your earnings. After one years in a contract you should find it possible to secure a buy to let mortgage, if you can show you have another contract going forward at least 6 months. Are you currently permanent?

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