Part two of the story of my first intentional property investmentMake Text Bigger
Having agreed to buy my first intentional property investment I soon realised that it’s a bit like a visit to the loo, paperwork is important!
I’d purchased my first home a few years before but to be honest I’d forgotten about all the paperwork I’d done at that time. All of a sudden it all came flooding back to me. I wonder if women go through something similar when they give birth to their second child? Never say never again!!!
The first load of paperwork was the mortgage application, for me that was second nature, I worked as a financial consultant at the time. If you’re not a mortgage broker yourself though you may need a bit of help to source the right mortgage and to find somebody to help you complete the paperwork – if that’s the case, start by clicking here. The estate agent took all of my details and advised my solicitor of the agreed purchase and that started another chain of events. Soon I was being bombarded with mortgage offers, a copy of the valuation, a wedge of papers from the solicitor with details of what was going to be left in the property, who the utility suppliers were, a copy of the lease, copies of covenants, a contract, land registry forms and so the list goes on. My chosen letting agent also wanted a whole load of forms to be completed too. If you’d have told me then that I’d put myself through this more than another 100 times over the next few decades I’d have said it was impossible. When I look back though it was so easy then, there’s even more paperwork now with Gas Safety Checks, Tenancy Deposit Protection, Inventories, I didn’t know what an inventory was until 10 years later! That’s another story for another day though.
I really pity the people who think they can just buy a property, let it out themselves and enjoy a passive investment. These so called property gurus have a lot to answer for!
Financial due diligence
When I purchased this little flat I got lucky, well sort of anyway. I had a £14,500 mortgage at an interest rate of 9% on a 15 year repayment basis. That was the best deal I could get at the time, if I wanted interest only I had to buy an endowment policy!!! I rented it out for £325 a month which, as it turned out made me a nice little profit, even though I’d not properly budgeted for management fees, maintenance, rental voids, ground rent etc. We live and learn I suppose. Thank goodness I used a letting agency who knew what they were doing. That was a bit of luck too, it never occurred to me that some of them could be rogues so I never even thought to check them out.
Joining a Landlords Association
That was probably the best move I made. If I’m honest, I didn’t join with any intention of learning anything tough. What was there to learn? I knew it all, or so I thought. I was selling mortgages and life insurance at the time so my reason for joining a landlords association was that a group of landlords would be rich pickings – right? WRONG! I’d never met such a cynical bunch in my whole life. They were all old, they wore tweed jackets and met monthly to drink G&T and talk about how crap the local councils were and about all the rob dog agents in their area. They spoke a new language to me, full of abbreviations I’d never heard of such as HMO, AST, section 8’s and section 21’s? I can even remember watching a Betamax video of why it was so important to pay your £1 Stamp Duty on an AST. I never did understand that but the law subsequently changed and that was no longer necessary.
The landlords association members were tight as a duck’s @R5E and there was no chance I was ever going to sell them life insurance or a pension. Were they immortal or something? Apparently not, they knew that but they also knew that their properties would be around earning money well after the’d fallen off their perches. They taught me so much and I’ll whisper this, I didn’t like them very much at first, I thought they were a whining group of old farts. However, I soon realised that between them they had hundreds of years of experience of being a landlord. I also realised that for the price of a few G&T’s I had a resource where I could go once a month with a whole list of naive questions.
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OTHERS ARTICLES IN THIS SERIES
YOU ARE HERE >>> Part two – Tips on becoming a buy to let property investor
Part four – My first property management checklist
Part five – Buy to Let Maintenance Budgets
Part six – Do landlords have to provide lawnmowers?
Part seven – Landlord, Tenants, Dogs, Pets
Part eight – Vintage 2003
BONUS ARTICLE >>> My relationship with Leathes Prior Solicitors and Property118
Part ten – Online Letting Agents Review
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