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Some advice please:
I currently own 4 properties(worth 400k, 70k, 70k and 55k) with a total mortgage debt of 70K. I let out 3 of the cheaper properties(10 years left on repayment mortgages) with rental income of £1200 per month minus £900 per month mortgage repayments.
I also have 200k in cash. My salary is 50K. I am in early 40s and would like to quit work to go into property full time in 6 months time. Is this achievable? My wife has a salary of 20k and we have 2 children. Ideally I would like to net £2500 pcm to allow me to live comfortably.
My current strategy is leave my existing mortgage debt of 70k. Buy three BTLs putting down 20k on each on interest only mortgages with monthly repayments of £70 to £100pm. This would clear me approx. £900 in my area provided they are tenanted which I know is not guaranteed.
I would then use the remaining 140k cash to buy repossession/cash purchase property with hope of netting another £700pcm after expenses etc.
I have approached a property investment company to source me an HMO up north which claims to get me 22% ROI on 50k money in. My gut instinct is this is a bit risky and I personally don't know the geographical areas they are suggesting.
In summary, I welcome any suggestions about what I should do with my situation to enable me to leave my job in 6 mths time.
Thanks in advance
PS My wife is against borrowing any money against our existing properties to enable us to build our portfolio therefore creating a larger recurrent monthly income
(Moderator note: Content removed*).Consider building up a portfolio of HMO properties and manage your own can be lucrative. Be wary of high return traps. Rather be safe. Good luck
Hi Julian,There is a slight flaw in your plan imho. If you give up work in 6 months time, how will you qualify for mortgage finance to continue to build your portfolio?It is perfectly possible to do what you suggest, but it will take quite a bit of planning and also it will probably take longer than you first thought.See this post - Guide: Giving up day job to become a landlordI would also be extremely wary of heading into unknown areas and being lured in with promises of high yields. I suspect you will find that once you have paid your sourcing fee and completed on the property, things are not quite as rosy and lucrative as you were led to believe.Indeed, I had lunch with a major lender in the BTL sector today, and they are "blocking" certain postcodes in the north due to concerns of over-saturation of HMOs. They will not lend in these postcodes until further notice.They said that naive southerners were being sold HMOs at over-inflated values, when you could buy the property next door for a fraction of the price, convert it to a full HMO, and still be around £100K less indebted than the unfortunate person who had paid over the odds next door.If you are going to be in property full time, you will want to manage your own properties, so that means them being within, say, a 30 minute drive of where you live.Hope that brings some further clarity to your way forwards?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks for your prompt response as I really respect your opinion and experience from my recent research.
Fully aware of the mortgage finance issue which is why I am working hard to source suitable BTLs before leaving my current job.
Will steer clear of the HMO up north in light of what you have said too.
Any advice/links as to how I can best leverage my status as a cash buyer to my advantage in the current market?
I am planning (like many) to leave the rat race and rely on property income eventually. I'm 29 and currently got a couple of BTLs but my concern if i was to leave my current employer to go either go self employed or into property that how would I qualify for mortgage finance when remortgaging/purchasing more?
What are the possible solutions to this issue?
I recommend that you speak to the team at Property Tribes Financial Services on 01206 654444 and seek their advice. I am not a mortgage broker. If you have rental income only, there are some lenders would will consider that, but it is more challenging and less choice of lenders.Good luck!
I am planning (like many) to leave the rat race
Its so much harder today to reach the point where you can leave the Rat race
The truth is the Govt dont wish you to leave the Rat race
BTL has become a rich persons game The days of when you started with one property and a tiny deposit have passed
It can still be done but it will take you a long time to see the freedom you seek
Best of luck DL
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.
Who are the investment company? Have to be cautious with these people, there are so many lying sharks out there. 22% ROI sounds very unlikely after costs/expenses.If I were you I'd look up the best rated estate agents in the area and ask them about where they are suggesting, ask on here as well.Make sure you do your own due diligence, check for comparables and remember to factor in bills, council tax, maintenance which depending on the size of the HMO could be fairly hefty. Will you manage it yourself?HMOs can be a lot of hard work so many letting agents stay clear of them and the ones that do them can often be shockingly bad. Approach with caution
I would look at what you've already got, and what you've already done, and work out what has worked, or not worked.
Having the properties on repayment is stifling cash flow. These 3x BTLs requiring £20k input sounds like you're buying low-quality properties. There will be other figures to take into account as well, eg. bet they'll need refurbing!You mention an HMO up north but these 3x properties sound like they'll be up north - who'll be managing them?You're concentrating on the figures but nowhere have mentioned what tenant profile you're looking to attract with these properties?
Asking what people suggest is like asking what 10 people look for in a partner - you'll get 10 different answers!
I live in an area that's relatively cheap but just not up north!!! I manage and let my existing 3 rentals entirely myself with sometimes unreliable tenants and I am fully aware of work/costs involved. The 3 additional BTLs would be similar to what I have within an hour of my home.
I am confident I can get 8-10% rental yield on the ones I will buy. The sourcing company was suggesting 20% or more up north eg. Doncaster/Liverpool which is why I was tempted.
Happy for 10 different answers if it gives me ideas that I hadn't thought of.
I'm pleased to hear you're managing yourself!
Big box ticked right there for your future so well done.
So, what would you change differently about what you've currently achieved? I think you could re-configure what you've already got before diving in with more.What is your loan-to-value for each BTL property?
And by the way, you won't be ready to chill out this year, maybe not even next so I'd put that idea on hold for the time-being ;->