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  • New Members

    Introducing me and my journey to date!

    Hi everyone

    PT newbie, accidental landlord and determined investor here!

    I have spent the whole of my weekend to date absorbing some fantastic information on posts on here and thought I would introduce myself properly and share my property experiences to date.

    I’d love to hear what other people starting out are up to and also any advice in hindsight from those more seasoned!

    Background

    My wife and I are 34 and are both in full-time employment with good salaries. Both jobs are time intensive and the spare time we have is mainly spent enjoying our baby daughter.

    I have been considering investing in property in earnest for a while, with the aim to build a BTL portfolio to supplement our employment income so that we can reduce our working hours, spend more time as a family and explore other pursuits.

    To achieve my goals within an accelerated time frame (by the time I am 50, hopefully!) I am conscious that I need to make the most of my capital and I have realised that I am yet to nail down the right strategy for me.

    That being said, I already have investments in property with many lessons being learnt already. I have outlined my experiences to date in separate posts (to try and stop this becoming too unwieldy) below:

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    Property 1 – Accidental landlord - residential switched to BTL


    • Large 2 bed duplex apartment in central Reading
    • Bought for 236k in 2013
    • Used as main residence until March 2018
    • Undertook DIY throughout, replacing the bathrooms, flooring, etc
    • Remortgaged in 2016 to at 330k to increase LTV and access capital that had appreciated
    • New mortgage was a 5yr fixed offset mortgage, kept the extracted capital in the offset account to limit interest charges whilst deciding how to invest
    • Ended up changing jobs and moving to Bristol, using the capital to purchase a new residential apartment in central Bristol
    • We did a light refurb and rented the apartment (furnished) out straightaway to a family for 1,250 pcm, we also earn 250 pcm from renting out the parking spaces separately, ground rent and service charge is 216 pcm and I’ve estimated my ROI at 10% (once management fees, contingencies, etc are taken into account)
    • Challenge 1 – mortgage had huge redemption fees so we had to port, meaning we were stuck with the product (LTV, rate, etc) which we would ideally liked to have changed.
    • Challenge 2 – the replacement BTL mortgage valued the property at 320k, meaning we had less money to play with in purchasing our Bristol apartment (particularly relevant to Challenge 4!
    • Challenge 3 – conveyancers for the BTL mortgage were Enact, who were less then helpful
    • Challenge 4 -  BTL mortgage and the purchase of the Bristol apartment nearly fell through because although I was porting my residential mortgage, we were only exempt from the early redemption fee (12k) if everything completed on the same day; because this couldn’t be guaranteed Enact were unwilling to release the full funds of the BTL mortgage and wanted to retain the 12k, which meant we would not have sufficient liquidity to complete on the Bristol apartment. None of the parties involved (mortgage providers, Enact, my broker, my solicitor) were able to provide a solution. I managed to get my solicitor to provide a guarantee that they would pay Enact the 12k redemption fee from the deposit they were holding for the Bristol apartment if it was not completed on the same day. After a last minute scramble and lots of chasing and stressing from me, we got there!
    • Challenge 5 – Has not yet happened! However, we are weighing up moving the property into the LTD company we have set up for Property 3 (detailed below). We thinking we would move it within three years to recoup the stamp duty surcharge from the Bristol apartment (to use, in part, for the stamp duty cost to move it to the Ltd). Within this time, between primary residence relief, lettings relief and two lots of annual exemptions we would expect any capital gains tax to be minimal (if at all).
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    Property 2 – JV with parents


    • Small 1 bed apartment in central Reading
    • Bought for off plan 218k in 2015 (was ready in 2016)
    • Bought as a BTL 50:50 with my parents
    • It is in a converted office block less than a minute walk from the train station
    • Bought with next to no due diligence done, but based on the recent appreciation in value of Property 1 and the (unrealistic) expectation that would continue and would improve with Crossrail on the horizon
    • Bought using a 5 yr fixed BTL mortgage (by which time Crossrail should be in operation)
    • Intention to reassess property at the end of the fixed  period of the mortgage and consider selling if appreciation is significant
    • Has rented well with few voids to a mixture of a company (that had secondees coming over) and postgrads
    • Rent has been static at 1,000 pcm, ROI 3.7%
    • Challenge 1 – The snagging process was extremely painful, with many issues that the developers took a long time to resolve, restricting how quickly we could get the apartment on the market.
    • Challenge 2 – The bedroom ended up being slightly different from plan and wouldn’t initially fit a double bed because it would hit the door. After a lot of wrangling, we managed to get the developer to switch the door so it opened outwards.
    • Challenge 3 – Initially getting it rented was difficult as the market was flooded with similar properties (as they had all been bought as investments and there were c.50 in the block), this pushed the rent we had expected down which we have not been able to increase since due to market conditions.
    • Challenge 4 – We had considered putting the apartment on Airbnb (as there is strong demand in the area) but hadn’t checked the lease before which prohibited it.
    • Challenge 5 – Due to the very central location, a mixture of tailgating and unauthorised Airbnb apartments having keysafes outside the property there has been a huge problem with vagrants sleeping, taking drugs, defecating, etc in the building. This is what has made our last tenant leave despite loving the apartment. The management company at the time, LSH, was completely useless and did not tackle any of the issues and caused more with other contractors who would not work with them (like the lift maintenance company). We have a new management company, RMG, who are being much more proactive but I am anticipating a substantial cost in the service charge, which will eat away at our returns as a result
    • Challenge 6 – Out of our control, but from monitoring sales in the building and area the property is struggling to maintain it’s value, rather than appreciating as hoped.
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    Property 3 – BMV off-plan through sourcer


    • 3 bed semi in Crewe
    • Bought for off plan 144k in 2017 (due to complete in September)
    • The property was supposed to be 10% BMV, i.e. MV of 160k based on local comparables – discount achieved by sourcer by gathering 14 investors to buy in bulk
    • Set up our LTD for this purchase as our intention is to build a portfolio and keep reinvesting profits whilst we are working
    • Using a new broker (different to Property 1) for the mortgage
    • Rent is estimated at 625 pcm and the ROI will be just north of 5%
    • Challenge 1 – Have just seen the valuation that the lender requested which has down-valued the property at 137.5k (14% BMV, apparently!). This seems to be because it is close to social housing (which I did not pick up through my own due diligence), it is a new developer with no history and it is one of the first properties on the development to be ready so it will be on a building site!
    • Challenge 2 – Achieving the rent estimated when it is still on a building site!
    • Challenge 3 – I had purchased the property with the expectation that it would appreciate and I could extract and recycle capital. However, given the anticipated ROI, how much I could potentially extract whilst retaining a profitable investment might be limited; this is something I did not appreciate at the time.
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    Property 4 – TBC

    Having had mixed success to date and having learnt a lot more about investing, I am going back to the drawing board to reassess my strategy and what I can achieve given I do not have the time I feel is necessary to implement a more aggressive strategy to meet my goals.

    If you’ve made it this far, hopefully my experience is of interest. It has at least been cathartic for me to summarise my progress to date!

    Thanks for reading!

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    Hi Mark,

    Welcome to PropertyTribes. Thanks for sharing, it was interesting to read your story thus far and I'm sure the members of this forum will be glad to comment on your story and give you some advice.

    I want to ask how can one find a BMV property sourcer like the one you mentioned on your 3rd property deal?

    Ara

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    Hi Ara

    Thank you for your response. I will PM you in respect to your query.

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    Thanks so much for your message.

    Just so you know as you are a new member to the forums your private messages can't be replied to for a certain period of time, the 'probation period' (I believe that's the reason why).

    Ara

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    Hi,

    Your property journey till date made an interesting reading

    Well done for having come this far

    Kept me glued to the screen

    Being a newbie myself, I am also on this platform to learn, absorb and learn some more

    Not sure about property 1, but I noted that property 2 &3 were bought off plan

    From reading on this form, many experienced landlords  eschew new builds

    Mainly because they can be too small and boxy

    As you said, initially it was a struggle getting a double bed in

    Many older builds tend to be more spacious,

    I have just turned a 2 bedroom house into a 3 bed...simply by dividing one huge room into 2

    Still managed to get  a double bed and a wardrobe into each room

    That said, we are all here to learn from each other



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    Hi! Thanks for your message, I'm glad you found the read interesting.

    The first property is in an older 1980's development and wasn't off plan.

    I think the points raised about new builds are fair comments and I can see how more active investors can probably get more returns from older properties through both forcing capital appreciation through refurbs and higher yields.

    At the vary novice stage that I was, Property 2 was definitely bought with the idea of location is king and Crossrail is coming, hoping both would provide capital appreciation; I still think they will given enough time.

    Property 3 was again bought for long term growth but I had thought I had forced capital appreciation through buying at BMV. I think this remains to be seen and I will get better clarity once the development has been fully finished.

    I'm sure I could have been wiser with my investments but being time poor, I had looked for opportunities where the properties were ready to go and ongoing management would be limited. I would like to implement strategies where capital appreciation/higher yields can be forced through improvements but I haven't quite worked out how I would do this with the limited time I have to invest at the moment.

    If you don't mind me asking, what gains have you managed to force through splitting the bedroom?

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