How should I split my savings between a new main residence and starting a BTL portfolio?Make Text Bigger
I have been reading this amazing forum for quite a long time already and I am learning something every time I am here. I need fresh opinion and advice from property investors and landlords, because I am really not sure what should I do in my current situation.
I would like to explain first few things about my situation at the moment. I am married I have two children under 5 years. I am working full time and I am 28 years old. I am making good amount of money at the moment and I am the only working person at home(my wife is looking after the children). I have £15000 savings at the moment and till the end of the year I will probably save between £2000 to £4000 more. I live and work in Great Yarmouth, Norfolk.
I would like to invest in properties because for me this is the most reasonable investment, but the main problem is that at the moment I am very confused and I do not have experience at all in the property business. I would like to have few properties one residential and few rentals which will repay one to each other. Ideally I would like to have 4 or 5 properties , one residential and 3-4 rentals the profits from the rentals will pay the residential, my own money will be free I can save more money and buy more properties… that’s if everything goes smoothly of course. Now I would like to tell you few strategies for which I am thinking and please guys tell me your opinion.
Strategy 1- I can buy a house with residential mortgage here in Great Yarmouth with 10% deposit, a cheap decent house for about £80 000-£90 000, I can put down 10%deposit and the rest of my savings I will use to save more on top of them and I can buy a BTL after that. I am planing to buy cheap and small BTLs 2 bedroom family houses suitable for large variety of tenants. The BTLs will be in big cities only in the north or central part of England. The possible problems with this strategy are: Great Yarmouth is a flood area I am really concern about buying a property here. For the people of Great Yarmouth floods are normal thing but I do not want to buy a residential house in flood area with all the risks coming from that- high house insurance, possible damage of my property from floods, damp, and more…That is why people here are saying buy anywhere else but not in Yarmouth. So what do you think guys about these floods here in Yarmouth?
Strategy 2- I can put down all my money every single penny in a nice decent but expensive house in Norwich. A big 3 bedroom family house with good size of accommodation. I will buy the house as residential property for me and my family I will put down 10% deposit. My family and I can live on the ground floor of the house and I can rent out two separate rooms to two lodgers. The money from the lodgers rent will boost my income and I can start saving quickly for a second property a BTL. I will rent out rooms only to two lodgers because this is the maximum amount of lodgers which I can take in my residence according the law. Main problem with that strategy is that I would be left without any other cash, because I have to put all my money in the house if I want to buy a house in Norwich because the houses there are much more expensive. I like Norwich, I lived there and it is a nice city -safe from floods from the sea, good schools, and good value of the properties. If I have the chance to buy a property in Norwich with 5%deposit and to leave some money on side from my savings for a BTL that would be nice, but I think that most lenders will give me restrictions. If I want to buy a house with 5% deposit and to put some lodgers after that and to save more money for more houses.
So what do you think guys about these strategies and my plan?
Thank you very much
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.