Advice on my first BTL from Sunderland

by Readers Question

3 months ago

Advice on my first BTL from Sunderland

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Advice on my first BTL from Sunderland

Hi there, I’m planning on buying my first BTL property and would be grateful if you could share your advice on a few areas, my goal is to be a full time landlord in five years’ time with an adequate sized portfolio enough to provide me with a decent income and build from there, I want to make this my mains source of income and aren’t necessarily bothered about building up substantial equity ATM.

I live in Sunderland where the property is cheap and have £20k to invest, my questions are:
– Which type of property would you recommend to suit my goal? (HMO/Flat/ House/ Free-Hold/ Lease-Hold etc.)
– What is the best way to fund a subsequent BTL’s and build a portfolio and main challenges involved? (Particularly keen on learning about additional borrowing vs re mortgaging and the costs associated with each)
– Auction vs Estate Agent?
– Will my current BTL and residential mortgage have any implications? (please read below)

Please feel free to provide any additional advice, criticism you feel necessary I am willing to listen and learn.

Please allow me to share some information which I feel is relevant and provides the basis for some of my questions:

Experience so far:
– I am quite familiar with BTL as I guided my father down that route with a property he jointly inherited worth £60k in its inherited state – The property was owned outright with no mortgage with equal share between my father and his sister. Via a broker my father and I acquired a joint BTL mortgage for £36k, £30k of which was paid to his sister as a buy out and the remainder was used to renovate. We had a tenant in within a week of renovation who has remained for the last two years. IMO we rent the house around 20% less than what we could however the tenant is good and causes no problems (touch wood). Around two months after we re-mortgaged the house to 75% of its new value (£85k) and in doing so released a decent amount of equity. My dad effectively bought me out by paying me £6k of that which I used towards a deposit on a first home and used the rest himself. As he bought me out I have nothing to do with the property apart from the fact on paper I own half of the house and the BTL mortgage is in both of our names. In reality we agreed that the house is 100% my Dad’s but I got £6k for having the initial idea, arranging all the finances and helping out here and there with the refurb which I am more than happy for and it enabled me to by my own home.

Other details:
– My girlfriend and I used the £6k along with other savings to buy an under-priced, dilapidated house for £50k which we refurbished and is now worth £75k. (£7k investment)

– I am 23 years old living in Sunderland and work full time as an accountant earning an above UK average income, my dad has worked in the building industry in high level jobs and has a plethora of contacts and a wealth of knowledge

– My credit rating is below average

– We both had no prior knowledge or experience of BTL but this was all done by research and seemed to work pretty well. However I do feel we were pretty lucky in a few ways as the house was already in the family, the tenant came knocking (literally)

– I am classing my new project as my first, as it will be the first time I have to source a property

Many thanks

Adam

Comments

Neil Patterson

3 months ago

Hi Adam,

I am going to give you some serious research to do:

Please read as many 'Newbie' articles you can from doing a Search Articles (there are a lot). Please see >> https://www.property118.com/?s=newbie&submit=

Landlords Calculator >> https://www.property118.com/calculating-rental-yields-and-returns/

Tax Planning >> https://www.property118.com/tax/

Lettings and Management >> https://www.property118.com/letting/

An oldie but goodie >> https://www.property118.com/how-to-become-a-respected-profitable-landlord/60765/

Property research tool >> https://www.property118.com/property-reseach-tool/

I hope that helps build your knowledge base as it becomes easier to answer more specific questions.

PS beware of anything that sounds like get rich quick as property NEVER is.

Alison King

3 months ago

Good luck Adam. Re your first question my advice is to be very cautious about flats and leasehold properties in general. They sometimes come with hidden fees that can go up over time. If unsure stick with houses and either freehold or very long (like 999 years ) leases that cannot go up.

Adam Surtees

3 months ago

Hi Neil and Alison,

Thanks for your replies its much appreciated.

Neil, it looks like theres some very useful threads/ tools there which I will spend some time reading over and understanding.

Alison, thanks for that advice its good to get the answer I was expecting, I think I will focus on houses initially.

One or two burning questions I cant seem to find a definitive answer too is that will my situation I.E already being named on a BTL mortgage (details in original post) have an effect on attaining further BTL mortgages.

In addition, if the plan is to raise additional finance against a property, would you advise buying houses that are completely run down, requiring basic work or just looking for BMV purchases?

Thanks in advance your time is appreciated.
Adam

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