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i am an 18 year old student (will be attending uni in September) and am aiming to save a 10% deposit for a 3 bed terraced house in the West Midlands for my first property by the end of next year. I have begun reading books on the topic to gain knowledge on property investing but I would like to know whether I would be able to get a mortgage next year being so young. Also, I’m unsure how to go about the process and the ins and outs of beginning in general.
Originally I wanted to rent the 3bed as a family home but am now thinking of renting the 3 rooms out seperately to generate more rental income. How could I maximise rental income from a first property of this sort?
I would love some advice and am looking for someone who has been through the journey I plan on partaking to potentially mentor me and help me along the way.
Hi Malika,Firstly, I take my hat off to you for making the decision to get into property investing at such a young age. I wish I had made that decision at your age and stuck with it.There are a number of different strategies you can use to invest in properties that will give you a healthy return on your investment (ROI). However, each one will need you to follow a set of rules to ensure you stay on the right side of the law. If you don't follow the rules, there will most likely be a penalty to pay somewhere along the line so it’s important that you strategy as thoroughly as you canYou are definitely on the right path by doing your research before you've bought a property. One of the challenges with doing research on your own is that it could take you in a number of different directions all at once. In an ideal world you'd want to Focus One Course Until Successful (or FOCUS). There are LOADS of investors who have become very successful through property investing many of them have written books and set up YouTube channels on how they did it. Decide on the strategy you'll be using, Identify the people who have been successful using that strategy and focus your research on those people. You'll start to see common traits or clues developing. Success leaves clues.No matter what decision you make there will always be someone who will tell you that you've made the wrong session or you're doing it wrong so your mindset will account for 60% of your success. Spend time on developing a positive mindset because the world is bursting with people who have given up on their dreams and will look to destroy yours. Developing a strong, positive mindsest will get your through those challengesWish you all the very best with your journey
Hi Malika and welcome to the tribe.Well done for your desire to create a financial future for yourself at such a young age!Finance always come first in property, so the first thing to do is to speak to a reputable mortgage broker to see if you can access BTL finance. You would typically need a 25% deposit and also a minimum salary of £25K. As a student, I am afraid you may struggle to get finance, and without it, you will unable to move forwards. The team at Property Tribes Financial Services on 01206 654444 will be able to support and advise you on this.Get the finance in place and then you can really start your investment property journey. Until then, it is all a bit of a moot point, but you can continue to save and also to learn and grow your information.This is a good resource to start looking at:Top 10 Property Tribes resources for novice landlords and BTL investors Unlike the previous poster, I would recommend that you stay away from facebook groups and youtube mentors as many of them are not reputable and have just created a marketing funnel to sell expensive courses and mentoring. Facebook is one of the biggest originators of scams and it is a dangerous place for newbies imho!My advice is that you keep it simple. Start out with a terraced house in a good street and put a family in it who want to put their kids through a local school. This is straight-forward and low risk for you as you are learning and honing your landlord , tenant, and property management skills.Many many people have lost money paying for expensive education and mentoring so be very wary of getting involved with the "wealth creation" industry and people claiming to be multi-millionaires and selling you a dream of easy riches.Read Property Tribes views on this topic to find your way to a source of reputable education:Property education, training, and mentoring I hope that helps for starters and I wish you the very best of luck!
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**
Thank you very much for your replies. They have been very helpful. The main point I have gathered is that it will be hard if not impossible for me to get financing next year via a bank. Is there any other way I could finance a home next year and get started before I have a salary of £25k?
I aim to get the 25% deposit through other assets I have acquired such as stocks and bonds which will give me a healthy return in 2 years so I may continue doing my research and begin property when I get a salary job If there is no way to begin now.
As mentioned, the mortgage broker I directed you to will be able to advise you how to get started as quickly as possible, as they can indicate the mortgage products you can access and at which point you will be able to access them.Buying with cash or using mortgages are the only two ways to purchase a property, unless you start looking at "control" strategies like Rent 2 Rent which is not something I would advise.
Thank you, I will get in touch with the contact you have provided and hopefully find a way to start out despite the challenges.
The above is spot on advice
you have a number of hurdles
you need 25% plus to buy your first property
the plus side is you have bags of time
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.
Just a thought that may not be viable. As you will be attending Uni in September I presume you will need somewhere to live. If you are able to raise finance on a property and are happy to share it with other students this could provide a useful property investment.
As it would be your home, you should be able to get a mortgage with a 5% deposit, dependent on affordability. Speak to the brokers for advice on this and also get advice on any First Time Buyer assistance, there may be a solution available that includes lodger rental income. You would qualify for the Rent a Room scheme, giving £7500 pa tax free income on top of your personal allowance. If you decide to sell, which you hopefully won't need to, there will be no Capital Gains Tax liability.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
This seems like a very good idea. Would I have to live in the property myself or could I rent out all the rooms and live in a rental flat myself?
I will speak to a couple of professionals regarding this and hopefully find a solution. Thank you!
In theory you could live in a rental flat, but you will be making things very difficult for yourself. Yourself plus 2 other students is a simple solution that may be acceptable to lenders. The students would have a licence to occupy, not a tenancy, so the lender retains security over the asset.
If you do not live there with the students it will be very difficult to not create a tenancy and then you will need a different mortgage product. You will also create an HMO which may need licencing amongst other legislation. You may also lose the RAR relief, and be liable for tax on the rental income. You will likely lose the PRR and be liable for CGT if you decide to sell.
But first, speak to a broker regarding mortgage options. Until you secure finance, the rest is irrelevant.
Here are some guides:
And this website is very useful:
Congratulations on looking to invest in property! Its great to see people your age are thinking about property!
It’s great to see that you’ve thought about different options with what to do with a 3-bedroom property, and both renting as a house and individual rooms are a good idea! With being in uni, you may want to think about what is best for you from those options in both terms of time and money as each require different amounts.
Everyone else has made some great comments and points, which can be useful to yourself.
I hope this helps and I’m looking forward to seeing how your next steps progress!
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