Looking for guidance from experienced landlords

by Readers Question

13:32 PM, 19th June 2014
About 5 years ago

Looking for guidance from experienced landlords

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Looking for guidance from experienced landlords

I am a relatively inexperienced property investor and am in the process of buying 2 HMO student rental properties to add to one other B-2-L property we have. Looking for guidance from experienced landlords

We have been letting out a second property for about 8 years and as we are now buying a couple more I’m interested in understanding more about how people build up their portfolios and if there are any learnings I could use.

I know I won’t make as much money as some as it’s important to me that my tenants have a home and are not living in squalor!

I would love to build a portfolio from a few to many one day, I just am not sure on the best way to do it!

The first property we have has a bit of equity built up with a very low tracker rate mortgage and a high mortgage as it’s in London. I think it would be best for us to sell this later in the year and use the money to purchase more.

The 3 options I keep pondering are below:

A) go to an auction house, buy a flat outright, do it up, rent it out and mortgage it to pull the equity out and go again.

B) use the equity to put 25/30% deposit down on 2 or 3 properties – possibly student HMO’s  if they go well (not sure if I would prefer to spread my risk outside if just students though)

C) use all the equity as a deposit to purchase a higher value multiple flat type property.

Also, what are your thoughts on student studio investments?

Thanks so much for your help!

Natalie



Comments

Mark Alexander

13:45 PM, 19th June 2014
About 5 years ago

Hi Natalie

I think the student pod type investments can be good for people who don't want/need and finance and are simply looking for a better return that they get on their savings and a property deal which involves minimal experience and/or day to day involvement. I don't think they can be compared to geared property investment though.

The other three ideas you have had can all work and I have done all three. To go into all of the pro's and cons, due diligence requirements etc. on one forum thread would not be practical though.

If you are asking which one of these strategies I would personally choose right now then my answer would be none of the above. I share my latest portfolio building strategies with my Consultancy clients, these strategies are not rocket science but knowing what to buy, where to find it and the best ways to finance deals is valuable information.

The key details of how I have built and managed my own property portfolio over the last 25 years, the challenges I have faced and the experiences which have shaped my investment strategies are summarised in this series of articles >> http://www.property118.com/how-to-become-a-respected-profitable-landlord/60765/

It seems to me that you need some professional Consultancy and I am able to offer that. Details and testimonials can be found here >>> http://www.property118.com/consultancy-mark-alexander/61522/
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Allan Wadsworth

18:40 PM, 23rd June 2014
About 5 years ago

Hi Natalie,
At first I thought Mark's reply was rather short on substance, however when I read you email over again it does look as if you will benefit from some "group therapy". I don't mean the deep thought stuff, more the networking meetings. Talk to people who have already done it. I can recommend my group HPN (of course) down in Hampshire and I have found the PPN meetings very good for your type of questions.

Don't sell the house just yet. There are lots of better ways to get your cash out and still earn from it - The one i'd recommend is a bit like an Option to purchase but with clearer and tighter legal documentation.

When you talk with people, who have experience , those that are still growing their portfolio's they, will tell you the goal is to get your money back out and continue to get money from the property .

An area I cannot help you with, and you should be thinking about, is the Capital Gains tax. Its one area I hear a lot of grumbles about but as yet the groups I go to (HPN PDPLA, PPN PIN) no-one has an answere - other than PAY UP!
Good luck and enjoy.
Allan

Mark Alexander

19:05 PM, 23rd June 2014
About 5 years ago

Reply to the comment left by "allan wadsworth" at "23/06/2014 - 18:40":

Hi Alan

Sorry to put a downer on your latest post but my experience of most networking events has been that they are full of "self-proclaimed-property-guru's" and "masterminds" peddling their next bright idea to newbies and wannabes. You know the type, those who are attracted by golden opportunities to "get rich quick" in return for attending a few free courses which are followed by an alluring upsell presented as the bargain of the century at just a few hundred or a few thousand pounds a pop to learn the best kept secrets to becoming wealthy. Most of the schemes are ill-conceived, immoral and often borderline on being criminal.

For these reasons I advise newbies to give them a miss.

I have yet to find a person who has invested into courses purchased through property networking events who has genuinely attained financial freedom using the strategies offered. I have, however, seen many of the guru's driving flashy cars (purchased on finance) off the proceeds of selling and delivering training courses as well as having met several financially embarrassed participants of training courses.

In my humble opinion, there is no substitute for building wealth from an activity other than property, investing smart into property and being patient.

Property can be the route to riches but rarely, if ever, quickly.

Having never attended one of your events, clearly I can't say what they are like, but I can share my experiences of other networking events and urge caution to all newbies.
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Allan Wadsworth

19:46 PM, 23rd June 2014
About 5 years ago

Hi Mark,
Hmm, interesting initial phrase - "put a downer" - Rather negative don't you think?

I do however agree that many of the Network meetings are actually attempts to sell training courses. It may be that I am lucky to have shared in building a group of experts who actually come to the HPN meetings to share knowledge, as well as deals.

I'd like to think I am not the only person with such a network, but maybe I am being over optimistic. - Perhaps I should be selling them as a pre built team with free entry to those in my inner team - Ahhh I don't charge though - except for the cost of the hall. Other than that everyone is free to come along, newbies and experience alike.

Of course I also have no experience of what your Professional Consultancy offers. I feel sure it wont just be another form of training for beginners with a few months telephone support.

What I am trying to politely say Mark is that there are many ways to build skills and some actually are free.
Regards
Allan Wadsworth
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Mark Alexander

20:04 PM, 23rd June 2014
About 5 years ago

Reply to the comment left by "allan wadsworth" at "23/06/2014 - 19:46":

Indeed Allan, that's exactly why I built property118. It is free and runs on donations and without conventional advertising.

Clients usually come to me for specific advice on their portfolio, building it , optimising systems and costs or indeed exit strategies.

I am happy to answer pretty much any specific question posted on Property118 but some people like to take their time and discuss matters more privately.

I can't offer one to one time free of charge to everybody who wants some as time itself is scarce. Therefore, I charge enough to put off time wasters and wannabes but not too much so as not to deter those who really need some help. I seems to be working as I have a very manageable trickle of new clients but not too many so as to impact on my lifestyle choices and various non-exec Directorships.

Your networking club sounds very different to what I've experienced previously, save perhaps a few events run by landlords associations.
.


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