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  • Property-a-holics

    Introduction: Entrepreneurs and keen to learn

    Hi All,

    We just wanted to introduce ourselves and a bit of background as we are keen to begin our property investment, networking, and achieve financial freedom through a passive income stream.

    To cut a long story short our names are Rob and Alex and we have known each other since we were 10 years old (now 23 and 22). We also went to the same University in Birmingham together (Alex studying Business Management and Rob studying History). We then undertook a Master’s degree in Real Estate Management as we have always been interested in property both doing work experience at numerous well known firms.

    Having both achieved a distinction we then managed to get on a graduate scheme to become chartered surveyors – which we are both currently working towards, approximately 18 months away from taking the APC.

    However, being surveyors is not our ambition. We both see it as a stepping stone to learning more about property and enhancing our knowledge to give us a better chance of succeeding in our own business ventures of property investment – which we eventually aim to make our main source of income.

    We both live in North London (Totteridge and Barnet), and living at home as we are trying to save as much as possible in order to invest. Together we have probably saved around £20k (£10k each), we also reckon that we could get our parents to also invest, maybe another £20-50k per family so £60-£100k to invest – allowing us to get property in the range of £240-480k with a 75% LTV, or several properties that are less expensive).

    What strategies would you recommend for the sums above – we thought perhaps the best route would be to purchase and refurbish cheaper properties and sell on in order to raise our capital. Then once we had enough capital we continue along that strategy whilst adding BTL properties to the portfolio in the aim of substituting our wage with the BTL properties eventually, allowing us to do this full time.

    Any views, advice and general comments are greatly appreciated. We are keen to meet with a talk with like-minded people and people that have been there and done that, as our main aim is to learn and we are always open to new ideas.

    Apologies for the long introduction!

    Rob and Alex.

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    Hi Rob and Alex,

    Welcome to the Tribe and thank you for the introduction.  It is always very gratifying to see young people interested in business and wanting to flex their entrepreneurial muscles! Smile

    I think what you propose to buy, refurb, and sell lower value properties is a good way to go, but you will need cash or access to bridging finance to undertake this and most lenders like to see a bit of experience.

    Another option would be to buy a property in need of refurbishment, do the work, and then let it out, eventually refinancing up to the new value to release some more cash.

    The more cash funds you can gather together, the more options you will have, but you may need to be prepared to be patient, as it may take a while to recycle your cash.

    London is very pricey, but there are some opportunities within the M25 and the M3/M4 corridor, which would be do-able for you, as it's better to start out investing closer to home imho.

    I would like to direct you to some threads that you may find helpful:

    Top 10 Property Tribes resources for novice landlords and BTL investors 

    Top 10 Property Tribes resources to learn how to find property deals 

    Young property entrepreneurs set a shining example. 

    Property course for scaling up 

    Hope you find those resources useful/inspiring and good luck.  Please keep us posted how you get on ... Smile

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    Hi Venessa,

    Thank you for this.

    I would definitely agree that for the first couple of investments at least, that nearer home would be better - although as you rightly pointed out London can be very expensive so finding a property in our budget may prove difficult. However, I am sure there is a deal to be had somewhere.

    What sort of capital would you say is required to be able to provide an income through BTL?

    Yes, that may also be a good strategy - having a BTL property, creating added value, re-finance to release your capital and repeat. Although I understand you normally have to wait 6 months to re-finance. A few options to explore, its just about finding the right one for us! We could even JV with someone who has the money but doesn't want the hassle, and work out an appropriate split accordingly.

    Thank you for those links I will definitely have a read through and I'm sure there will be useful information.

    Kind regards,

    Rob and Alex.

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    Hi Rob & Alex,

    There are obviously lots of places outside of London where it would be cheaper to start but if you would prefer to invest in the capital then I think it makes most sense to go east, still a lot of scope and reforms there tend to outperform elsewhere, also anywhere near next stage of Crossrail. Otherwise, parts of Sydenham, Norwood still fair prices.

    Regards, Babooshka

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    Hi Rob and Alex,

    I agree with Vanessa. Understanding your investment strategy is key and being adaptable to changes that may occur along the way is vital for success.

    It's great "taking the plunge" and starting your journey. Many investors love and relish the challenge of a refurb project and short-term exit strategy. Whilst others prefer the "hands-off" approach, whereby they purchase as the right price, collect a rental income and wait for the capital appreciation to be achieved over time. That up-lift in value can help release equity for the next purchase. Being prepared to be patient, just like Vanessa said, is important.

    Another short term strategy could be investing in hot-spots, where capital growth projections are strong, then looking to exit before price rises start easing.

    Major cities sometimes favour this strategy. I'm sure many investors will have purchased off-plan units at today's prices in prime locations, knowing that upon completion the values will have risen, thus allowing them to "flip" and benefit from the mark up in values. This gain is then used for the next investment.

    I hope your uni days in Brum were memorable. Being a brummy myself, I am seeing some real positive changes to the city and with HS2 being given the green light, a lot of investment in being attracted to the city as well.

    Good luck to the both of you in your endeavours. 

    Sunil

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    Hi Sunny P,

    Thanks for your response - some more very interesting strategies that I would need to investigate further. I think essentially what we need to decide is whether we take more risk with the likelihood of capital appreciation e.g refurbish/flip on hotspots and obtain capital more quickly. Or, slow and steady going for Yield as opposed to capital appreciation, but may take a lot longer to get where we want to be.

    I presume you are an investor? Knowing what you now know from your experiences and where you see the market going - if you were in our position what would you do and why?

    We are both happy to say that we absolutely loved Birmingham - even when Broad Street used to get a bit rough on the weekends! It gets a bad rep but until you've lived there you never truly get the feel for the place. Great place for university students and great universities, lots to do and see.

    I would also agree with that conclusion - lots of investment opportunity in Birmingham especially with HS2, cheaper properties than London too so would be able to buy more. The student property scene too is definitely one to explore in Birmingham, particularly Selly Oak (although be weary as there are only a certain number of streets that students like to live on). I think a lot of the student property landlords are not professional landlords and have just amassed a lot of property and are now wanting to get out due to the recent changes in law - which means there are some good deals to be had there. Yields are high in Selly Oak too as they are HMOs and students pay a premium. Additionally, the stock is relatively poor so there are also opportunities to created added value. Win/Win?

    Thank you for your response!

    Rob and Alex.

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    Hi Rob / Alex.

    I guess I'm a little bias towards Birmingham, as I know certain areas of the city better than other locations.

    As a previous property sourcer and now working for a medium / larger property developer, I am even more inclined to cast my radar on Birmingham. For me, investing in Birmingham City Centre right now is the right move. A lot of investment in moving into the area and Birmingham is undergoing a multi-billion pound regeneration program. It's a shame I cannot provide some great article links about it. Demand out-stripping supply and major shortage of adequate city centre living for the plans that are underway.

    I know some of our clients have a short term focus on buying off-plan at 2017 prices, waiting for completion and selling with the capital growth uplift. Other clients are taking the long term view of obtaining good tenants and benefit from rental income (income producing asset for life).

    Birmingham has 5 universities and over 65,000 students.However, some lenders dont touch student lets properties. Or if they do, then they may charge higher interest rates.

    Professional tenants from experience form the best tenant base.

    Let me know if you decide to consider off-plan or indeed any Birmingham investment. 

    Sunil

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    Sunil,

    Of course and Birmingham does look great for investment for the aformentioned reasons (Universities, development, HS2) the issue with Birmingham is whether or not prices have already accounted for these and thus the majority of capital growth has been taken by early investors, or whether this is just the start? I don't think anyone has the answer to that, but for sure there will be growth  - to what extent? Who knows.

    In light of that, maybe areas such as Manchester/Leeds may be a good early investment as the HS3 is a long way from completion and prices are even cheaper than Birmingham. These towns also have a strong university base and with companies downsizing from London and moving further north (Birmingham, Manchester, and Leeds) there will be increased business there. Additionally, I was reading an article stating a lot of foreign investment is being attracted to Manchester (and I read Sheffield too?).

    I think we would consider buying off plan depending on the completion date - this sort of flipping is relatively risky for our amount of capital if we can not sell. Holding the properties to have long term income is the long-term goal. But I would suspect growing out initial capital is the smart short-term choice to be able to have more BTL properties to supplement our income?

    As I said I am keeping my options open and just exploring the different

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    every one has a stratergy

    its not the problem of strategy its all t do with Govt Policy

    If the Govt doesn't want Landlords they will Tax us out of business

    I stated in 1982 when there was no BTL

    The laws changed and we had the birth of BTL with the short hold tenancy

    Nothing to stop the Govt doing the same read history of landlords and you will see what I mean

    it goes in circles this is not our time the wheel has turned

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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.


    DL,

    I respect your opinion and obviously you have been in the business a lot longer than us. But, what you state above is purely speculation - nobody really knows what will happen, when it will happen, and at what cost.

    If more people are less willing to invest and instead sell, then those remaining will have more stock to pick from at lower prices so it could be beneficial. And history does not dictate future, it may give an indication or it may not - all we can do is speculate. Some will decide its a bad time to invest, some will decide its great, some will succeed and others wont (in both groups).

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    Keep researching and reading articles posted in PT.

    I was in Manchester last weekend (Crystal Maze experience.. great fun) and the city look great. I feel that Manchester has a lot to offer  but also feel its reaching its plateau in terms of development. I reckon a good deal can be found in Manchester but is there rental demand?

    Birmingham on the other hand is now going through this regeneration and investment. Its still early days so even now prices look set to increase over time. HSBC and Deutsche Bank are relocating to Brum, along with PWC. Will other big firms relocate out of London?

    The pressure now on providing adequate housing in Birmingham City Centre in paramount. Demographically also, Brum has a higher population than most other major cities (except London) and people need to live somewhere! Net migration and better birth rates have also contributed to this nationwide housing shortage.

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