Life changing property career decision

Reply to the comment left by "Hazel de Kloe" at "19/09/2014 - 14:33":

Thank you hazel, very good advice. Cashing in the house and contributions from other funds should generate £250k. That would give me roughly £80k to spend on 3 houses either all at one time or staggered over time. Where I am in Yorkshire there are plenty of auction properties with guide prices of £50k-£70k and like any auction some are better than others. An average spend of £80k should allow me to renovate to a reasonable specification in what i would consider are good buying area.

however your point about a more fluid market is very valid and it is something i will consider. I say £80k on 3 houses but it could just as easily be up to £125 on 2 houses which would then lift me into higher quality housing.

I'm in a slightly similar position, but...rather then buying to sell....I'm thinking about the buy, renovate and remortgage strategy to recycle your cash, to hopefully leave non of my money in the deal.

if after a renovation the btl mortgage valuation is low, then just sell rather then remortgaging.

i don't know how you feel about this strategy, but i think it makes sense as you can add to your portfolio without much outlay.

Reply to the comment left by "Jag Chumber" at "19/09/2014 - 16:23":

Hi Jag,I think the strategy can be very effective. It was how i managed to build up a portfolio and it is certainly something i would consider but the downside is you collect tenants along the way. I prefer the thought of releasing the money in my investment quickly and without the ongoing problems that renting can bring.

Good luck with your venture.

Hi Onslow
Why don't you sell your house and use the cash to buy a house to live in and do up yourself and also pay off the mortgages on a couple of your properties , then you would have the rental income from them each month.

Reply to the comment left by "Elaine Cuzner" at "19/09/2014 - 20:17":

Thanks Elaine, good suggestion, However the majority of my cash would go into buying and renovating the house. I accept i would be mortgage free and possibly even have reduced payments on other investments, but i would have no income. When the Bank of England raise their rates back to normal my rental properties will pretty much take care of themselves but there won't be enough left over to give me a decent income.

Have you considered remortgaging your buy to lets on interest only fixed deals. This would fix your income for the next couple of years, that way if your plan doesn't go to plan you know you can still eat.
As you can't really sell until you've owned for 6 months you're probably better off buying one property every 2-3 months. That way you will have them on a cycle buying - working on - selling. Rather that buy 3, renovate 3, sell 3. This could also help with budget if one crops up in a better area. You will also need an exit strategy, how long do you have a property on the market before you remortgage and rent it out.

Reply to the comment left by "Sally T" at "19/09/2014 - 21:24":

Thanks Sally. The problem with interest only fixed deals is that they are considerably higher than my current BoE interest only tracker rates which are set at 0.5% over base rate. So to swap might be beneficial in the long run would involve a large increase in the short term.

With regard to not being able to sell within 6 months, i am not sure of the rules on this.Does it apply to all house purchases or just mortgaged property?

However the suggestion of buying over a 2-3 month period makes a lot of sense. This may well happen anyway, There is no guarantee that there will be an appropriate property at any given auction so the buying cycle may well be spread out.

Reply to the comment left by "Onslow Clough" at "19/09/2014 - 21:55":

Hi Onslow

If you were to refinance your cost of funds would be circa 3% higher in terms of lending margin. A rate of 0.5% over base is unlikely to ever be available again in our lives.
.

Very few mortgage companies lend on properties that have been owned for 6 months or less for fraud reason (mortgaged or not).
When flipping so many properties exit strategy would be key. How long would you let one sit on the market? How far would you drop the price to sell? Bearing in mind that if you have a property on the market for 100k then drop the price to 85k, you would only be able to remortgage in for 85k. You would have to have a clear plan at the start so you would have a maximum time for releasing equity from one property to keep on buying others.
I agree with others that yours is a bold plan with a lot of risks, but I think it is lessened by the fact that your spreading it.
Good luck, I hope it works out !

Reply to the comment left by "Mark Alexander" at "19/09/2014 - 22:31":

Hi Mark, i agree regarding the rates, I was fortunate enough (I'd like to say astute, but wouldn't be true) to put all my mortgages on lifetime BoE trackers which with the odd exception of a certain lender in the West Midlands has worked well. Nobody could have predicted the nosedive of the Base Rates but some have benefitted hugely from this.

But alas as you say these kind of deals will probably never be seen again. However with my current portfolio linked to Base Rate it is likely that they will continue to be very competitive for years to come. A couple of them are on Flex accounts linked to Base Rate so in fact provides me with a cheap source of borrowing ie I can draw down from them on much lower rates than i'd get from the banks.