How should I split my savings between a new main residence and starting a BTL portfolio?

How should I split my savings between a new main residence and starting a BTL portfolio?

11:38 AM, 9th September 2014, About 9 years ago 6

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YarmouthI 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


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Neil Patterson

11:59 AM, 9th September 2014, About 9 years ago

Dear Peter,

Our property research tool can help you out with your due diligence in so many ways but in particular if you put in a post code it will give you a flood risk map of the area to put your mind more at rest about purchasing in Great Yarmouth.
please see >>

The purchase of your main residence is normally a very personal and emotive decision and I think ultimately it will be a choice for you and your family about the lifestyle you want. As it happens Mark and I have both lived in and around Norwich for the last 30 years so know the areas you are talking about. Any advice on a main residence mortgage is regulated by the FCA and can only be given by a fully qualified and regulated IFA or mortgage broker. If you need to chat with one just email me separately on 🙂

Your available strategies will then start to fall in place once you have decided on your main residence and funds left, but please do remember to keep a good sized cash reserve if you do start to invest as you can see from readers experiences rainy days can very easily happen.

Please do check out Mark's 13 stage advice on how to become a landlord.
See >>

Also if you use the article search box at the top of our website and type in "Newbie" you will see tens or hundreds of article where people starting out have been given advice by readers. "Newbie" is not meant in any other way than we all have to start somewhere and as Mark says "non of us are born knowing how to boil an egg".

However, you are quite sensibly looking at this as a long term investment, but one of your biggest criteria's is to earn an income so your research should start with looking at where and what type of properties offer you the best yields. I know that HMOs in Yarmouth can offer high yields as prices are still low, but this is a much more time consuming and specialist area of property investment and not one for the arm chair investor.

I hope some of that helps and I am sure readers can dive in where I have left off and offer alternative views. 🙂

Dr Rosalind Beck

13:25 PM, 9th September 2014, About 9 years ago

This isn't going to be a helpful comment in terms of what you're asking. But as a woman I have to say that you are not the only 'working person' at home; your wife is not 'not working;' she is doing 'unpaid work' (if a childminder were doing it, it would clearly be defined as work). A lot of people say this and I have to challenge it whenever I can - a woman looking after two children under the age of 5 is not lazing on the chaise longue all day. It's really hard work and research has shown it to be one of the most stressful jobs. (I expect she's doing a damn sight more than a childminder too - cleaning, laundry, shopping, cooking etc. etc.)
I say this to all the men and women on the site who may make this mistake - words do matter, as women at home can feel so unvalued and it's not right.
End of lecture.

Neil Patterson

14:03 PM, 9th September 2014, About 9 years ago

Reply to the comment left by "Rosalind Beck" at "09/09/2014 - 13:25":

Noted, employed would be a more accurate description

Dr Rosalind Beck

14:38 PM, 9th September 2014, About 9 years ago

Thanks Neil.

george anderson

18:34 PM, 9th September 2014, About 9 years ago

a bought 3 flats 80k you can cheaper flats here in scotland but guaranteed youl end up stuck with them if you buy in a good area you will pay more buy sells quicker a sold one flat in 6 days

Neil Robb

18:52 PM, 14th September 2014, About 9 years ago

Before you buy find a decent Independent financial Adviser Plan a strategy .

Sharing your family home with two strangers would not be easy with two young children.

A lot of people think buy a house rent it make a killing. Does not always work that way. Think of cost, repairs non payment of rent cost of eviction etc. What would happen if you lost your job.

Best advice look out for local property investors group they meet regular each month and help each other like this forum. The group is not there to sell you anything but to share there experience's and help you.

I go to a group in Belfast which has a fee of £10.00 a meeting this can be claimed under tax as training as each months we have a guest speaker. Who all ways have good advice of information to learn from.

Read this forum each week I do the wife goes nuts because it takes me hours but I have learnt a lot. I think I met Mark once many years ago when he was the money centre I could be wrong.

But through this forum I have a lot of respect for him and Neil in what they are trying to do.

I joined The National landlords Association as the cover all parts of the country. It also has an advice line if you need it. NLA cost's about £80.00 a year.

I am learning you have to invest in your learning and understanding just how much work is involved as a landlord.

Best of luck in the future

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