Looking at becoming a Landlord after successful business helped purchase main residence

by Readers Question

16:25 PM, 28th October 2014
About 4 years ago

Looking at becoming a Landlord after successful business helped purchase main residence

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Looking at becoming a Landlord after successful business helped purchase main residence

First of all I’m called Max and I have just become a member after reading a lot of the great advice that is available on this page. I am 27 years old and I bought my first property 3 years ago off the back end of a 3 year experience in setting up my first successful business in buying gold after having finished my business degree.

To cut a long story short I bought a ‘Home’ for me and my partner at the time and bought all the material stuff to make it comfy and full of all the gadgets a young man would aspire to have in his home. However the business came to an end as a response to the market, I am no longer with my partner, and I am working a job in insurance to pay my mortgage and everything has got a little mundane.

However my property is now worth around £210k and i owe £125k and I have 5k in the bank. So if I sold up, got rid of some of the luxuries I acquired whilst the going was slightly better I could be sitting on roughly 90k give or take. However, I realise I may have an early payment fee to pay if I cancel my current mortgage, and I’m not sure if I would benefit for waiting for the fixed term to lapse!?

Also I live in Bristol now but I am originally from the North, rental returns seam better in the north marginally, however property prices and rental demand seems much stronger down here, so do I favour a very strong rental market where I can pick and choose my tenants thus making life (hopefully) easier, or do I favour being in a cheaper market where I can build my portfolio faster but potentially not gain as much in property inflation in the long term.

I would like to work part time and ease my way into a full term career as a landlord and build a portfolio over the years, and I am prepared to live well below my means for a few years if it helps me get to where I need to be in the future.

I like to be my own boss and you don’t ever really earn money working for anybody else unless it involves selling your soul, so I would just like to get some advice and direction to give me the faith of developing the start of a strategy that is as close to fail safe as possible.

I am considering joining some Landlord clubs and speak to some of those old G&T drinkers and see how well my landlord osmosis skills are working, but I think at this point I am possibly the most Niave person in this situation and I figured boring you all with this post would be a great way to get the ball rolling!

Thanks for your time in reading this, any response would be greatly appreciated!

MaxGold



Comments

Neil Patterson

16:35 PM, 28th October 2014
About 4 years ago

Hi Max,

I am going to give you a lot of reading to get you started, but have you considered getting permission from your mortgage provider to rent your property.

Would they be willing to convert the mortgage to a BTL and release some of the equity say up to 75% LTV at the same time (on interest only of course).

Property is a long term investment and is costly to trade so consider keeping the one investment you have already made.

However please also see the Advice tab in blue at the top of the page.

And on the top right of the page in the Search Articles box type "Newbie" and return. This will find hundreds of articles for you giving advice to new starters 🙂

Maxwell Day

17:24 PM, 28th October 2014
About 4 years ago

Reply to the comment left by "Neil Patterson" at "28/10/2014 - 16:35":

Hi Neil thanks for your quick response! I have considered this and I have already had the property valued between £900-£1000 PCM to rent, and it is in an area of high and growing demand. However I hadn't considered transferring my current Santander mortgage to release equity, being my first mortgage I am still very naive with these things.

I think a conversation with my lender and a whole lot of reading is definitely in hand, but if this is possible it could definitely be a much more sensible and easier way to start building a portfolio.

Really appreciate the feedback! 🙂

Mark Alexander

19:55 PM, 28th October 2014
About 4 years ago

Reply to the comment left by "Maxwell Day" at "28/10/2014 - 17:24":

Hi Maxwell

Another option to consider is taking in lodgers. It's much easier to get them out if you don't like them and the first £4,250 of your rental income will be tax free.

Your options for refinancing at low rates may also be better as you would be able to retain residential mortgage rate terms. You haven't said whether your existing mortgage is a good deal or not but if it is, and you want to keep it, you could also consider top up finance from an equity financier. In simple terms they will lend you a further 20% of the value of your home in return for 40% of any capital appreciation from now on. You will not have to make any additional monthly payments on this type of finance either and you could use the money raised to fund the deposit on an additional buy to let property investment. Just for the record, equity finance is available on your own home, not just buy to let properties - see >>> http://www.property118.com/equity-finance-for-buy-to-let-landlords/44713/

Happy reading by the way and welcome to Property118 🙂
.

Maxwell Day

20:14 PM, 28th October 2014
About 4 years ago

Reply to the comment left by "Mark Alexander" at "28/10/2014 - 19:55":

I currently have a lodger paying £450pcm (inc bills), I only have two rooms but they have the smallest one. I took a fixed 5 year Santander mortgage back in Nov 2011, it sits at 5.5% but it holds quite a high early payment fee...

I was a very cautious first time buyer, my mind set given the volatility of the economy at the time was that "if i can afford it now I should be able to in five years time" I have never heard of an equity financer so that is definitely something for me to look into, i have a lot of reading ahead of me!

Thank you for the warm welcome guys 🙂

Maxwell Day

21:53 PM, 28th October 2014
About 4 years ago

My interest rate is actually 4.99%, early repayment fee was £6404.25 as of Dec 13!

Mark Alexander

22:14 PM, 28th October 2014
About 4 years ago

Reply to the comment left by "Maxwell Day" at "28/10/2014 - 21:53":

That's a big fee but with two years to go it might be worth comparing the cost of paying it to what you might save as a result of refinancing.

I suggest you have a chat with this guy >>> http://www.property118.com/member/?id=314
.

Mick Roberts

7:47 AM, 29th October 2014
About 4 years ago

Yes, some of us lived hard for some years at beginning, right way to go. No holidays for 5 years me, got some rollickings off missus for that one.

Old G & T drinkers? Hmm, I’m skiing Feb with 10 mates.
And Magaluf June cycling in the hills, then short skirts on the strip at night-Can we be a young have fun Non G&T Landlord too?

Yes u did bore me ha ha.

Mark Alexander

8:19 AM, 29th October 2014
About 4 years ago

Funny you should say that Mick. I only took one holiday between my first and second property too, in my case a six year gap!
.

Neil Patterson

9:06 AM, 29th October 2014
About 4 years ago

Reply to the comment left by "Mark Alexander" at "29/10/2014 - 08:19":

Mark is making up for it now though !!!

Mick Roberts

9:25 AM, 29th October 2014
About 4 years ago

I keep saying it Mark, as u realise too, we have done so many similar property things & also the times/years that we did them.

When u passing Nottm next, you'll have to say hello. I han't got time for coffee though ha ha,

Yes he is making up for it, I'm not, going on less, got to get that sorted next few years.

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