11:23 AM, 13th November 2014, About 7 years ago 4
I am 30 years old and looking to lay the foundations now to better myself in years to come. I currently own a house that I am renovating and when finished will be worth roughly £210k. I owe £80k on the mortgage.
I bought my first house back in 2009 for £94k with a mortgage of £70.5k and this is now my third house that I have renovated all of which I have sold for a profit and have gradually been in better areas. Up until a year ago I lived with lodgers in my second house and rented 3 rooms out.
This was great as I have a pretty low basic wage (£20k) and the extra cash coming in was very nice. I then sold that house for a very good profit (which included a bit of an increase in house prices) and bought the next doeer upper.
Ideally once I have finished my current project I would like to buy two properties one to live in and one to rent as a HMO. They would both have to be at the lower end of the market where I live as I doubt I would be able to afford anything more. My dilemma is that as I am on a low wage nobody wants to lend me enough to do this even though I have a good amount of equity for my age.
Cheap 3 bed terraces in my area typically go for £120-£130k and average room rental is £350/month. So for the HMO I would be aiming to rent out 4 rooms bringing in roughly £1400/month. This would basically double my cash flow per month. What would you do next?
I have to stick with my current mortgage until may 2016 unless I wish to pay a hefty early repayment charge. My idea was to buy a property for say £130k, port the current mortgage meaning I put down £50k deposit and still owe the £80k mortgage. Then put about £15k into renovating it aiming for a post renovation value of roughly £155/£160. I would then ideally re-mortgage this property and take out as much as I could. My wage may be a limiting factor here. This should then hopefully leave me with enough equity to buy another one outright to rent out???
Any advise or other ideas people my have would be greatly appreciated!
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