Post: #1

This is something I have a lot of experience with and will very soon use to fund an epic (RVF inspired) location independent lifestyle. It's nothing new but in my eyes one of the best financial strategies available: buy to let investment - buy property, rent out, profit. Property, especially in the UK but also most major cities worldwide, is a solid low risk investment with a consistent, reliable income and capital appreciation through the asset itself - I don't think you can beat that! And more specifically with this strategy of student/multi-room letting you can achieve much higher returns and income. This is all based on my experiences with the UK market but I'm sure could be adapted for you guys in the States or elsewhere.

It's worth saying early on that you do need a decent chunk of money to start this - either through savings, loan from family or other means ... Most of the purchase is funded by a Buy to Let mortgage where the interest only is paid back BUT this type of mortgage usually requires a minimum 25% deposit, so a £120k property = £30k cash needed up front, not including the money to renovate! You also need some existing income to qualify for a mortgage - speak to a decent mortgage broker that specializes in this type of thing, they will give free advice on what options are available. A pro-tip that isn't exactly illegal is to instead take out a residential mortgage, as you only need a 5 or 10% deposit, you play it as though you are going to live there but instead rent it out - it could become complicated if the mortgage lender finds out you are doing this (and possibly invalidate your house insurance!) but I do know many that have used this method to fund their first house - myself maybe/maybe not included

Whichever way you do it, once you have this finance in place you're ready to put in serious offers on properties. To start, find a suitable house through a property search website like Rightmove: you want to find somewhere in the typical university/student area of your city, location is key but it also needs to have 3 double bedrooms ideally, with a separate front lounge/living room you can use as a 4th. This type of layout is perfect:



In general I hate estate agents but you have to get along with them - play it right and they will tell you exactly what to offer to get the best price or give you first refusal on new to market properties. To complete the purchase you also need a solicitor/lawyer to deal with the legal side and this usually costs around £600. This is the hardest and most frustrating part for me - finding a property, financing it and dealing with the bullshit 'buying process', but with the right team it makes it easier.

Another essential contact you need is a letting agent. There are plenty around these days and some are much better than others - they will find you tenants, do all the paperwork including legal contracts and credit checks, collect rent payments, general admin etc... With an agent you have little to no contact with your tenants which can be great although also has a risk attached. A scumbag agent could easily screw you over in numerous ways so it's important to find someone you can trust or close enough. You could do their job yourself but that would really change this whole thing from semi-passive to a part time job so for their small percentage a good agent is worth a lot.

A month or 2 after having an offer accepted you will have the keys and want to start work straight away: completely renovate the house - new everything, don't go crazy but don't skimp either as this will be a long term investment, a little extra money and time spent now will give you less headaches and more income over the years. A full renovation can be done for around £20-30k (Central Heating £4K, Electrics £2-3k, Joinery/Kitchen £4-5k, Bathrooms £3k, Windows £1-2k, Plastering £2-3k, Painting/Decorating £2k, Carpets/flooring £2k, , Appliances/furniture £2-3k) and should take 2-3 months max. These figures is pretty rough but I've never spent more than £30k on any property and my most recent will be way under £20k. Also the more you can do yourself the better to a certain extent, as long as it doesn't take forever and you can actually do the work to an acceptable finish.

A key point is to complete the house with a good standard, with quality fittings/furniture/appliances and that doesn't necessarily mean expensive. There's no guarantees but what I've found is the better the house = better tenants = higher rent. There is tons of poor quality rental housing already and you want to be as far away from that as possible. As an example/inspiration/humble brag, here are some pics of the house I finished this week:




This took me 3 months to complete, was signed up to be rented before it was even finished and I have (hopefully) good tenants booked up until June 2018.

Ok now the good part: INCOME Good quality student houses in most UK cities will easily rent at £95/room with bills included. So 4 rooms @ £95 x 48 weeks (mine always rent 48 not 52 as aren't there in the summer) = £18240 Gross rent Less 10% agent fees = £16416, Less utility bills of £2k max. = £14416 less Mortgage interest (£90k @ 4%) £3600 = £10816 profit So with 2 or 3 of these you are looking at £1800-2700/month before tax - enough to fund a decent life in plenty of EE, SEA or SA countries!

(NOTE I've been pretty conservative with these figures - I've never paid more than £110k for a house, all mortgages are actually less than 3%/year at the moment and my agent fees are only 7% )

As per title this is semi-passive income, although you use a lettings agent who deals directly with the tenants, does all the paperwork, checks rent payments, general admin, you will still get phone calls/emails if there are any problems. The agent can sort most things out but obviously you pay for the privilege. The good thing is that if you have done a house up properly, with all new plumbing/electrics, appliances etc. there's not a lot to go wrong. With my 3 houses I get around one 'problem' call a month about something very minor that takes a few minutes to fix (or if I'm away could be sorted at the end of a phone and a £50-100 handy-man call out charge). As I've gone along and learnt more, each house has been done to a better standard and I've had less and less problems each time.

I've built this 'side business' up alongside a full time job over the past 5 years, it wasn't easy and I worked very hard for what I have now. I've worked from 6am to midnight countless times and worked weeks straight with no days off to get projects finished - last week I worked nearly 100 hours to meet the deadline of new tenants moving in. A huge bonus for me is I really like doing this type of thing - project managing mixed with hands-on manual labour: transforming a run-down shithole into a great home that also makes good money. It's not quite a passion for me, but not far off so that definitely helps! My plan now is to explore the world and it's women for 6-9 months of the year then return to the UK to do another project during the summer, rinse/repeat until I get bored.

Once you get started it gets easier and easier as you go along - to find the right properties, get finance, complete the purchase and to carry out the projects. The hardest part is starting.

Post: #2

Been doing something similar on a smaller scale and also feel like it's something I can do easily and even enjoy, although at this stage I would hate working 100 hours a week for this (did it in the past). Always entertained the idea of mortgage as a way to expand but never had courage to go for it although it's clear that the property would pay off the interest even if it's 14% in some countries. Now hopefully I will make a move.
Also it's a good insight how this could be done abroad with an example of UK.
+1 from me.
@SanMiguel - would also like to hear if you have any experience in investing in property under construction (could be cheaper - low entry costs, possibility of 0% mortgage from developer in some countries, better appreciation and cheaper to renovate in my experience).

Post: #3

Another thing to add. If the property is furnished (minimum requirement of having a bed) then you deduct a ware and tear allowance which is a straight 10% of Gross income less council tax and water, maybe TV license too but I can't remember.

I've seen a few buy to let mortgages (interest only mortgages) recently that have had an interest rate of .75% so it is possible to get a very cheap interest. Thing is with an interest only mortgage you do need to make provisions to pay off the capital but typically this can be done when the property is sold. Sales would be subject to capital gains unless you've lived in the property at some point then the calculation becomes much more complicated.

Typically a letting agent would charge 9% of gross income plus VAT which in reality means 11.5% or so charged from gross income. Multiple properties would probably give you some discount there but there does come a point where you may be better off doing it all yourself. I know someone with around 30 properties who does on the agent work themselves. Husband and wife where he's a plumber by trade and she shows prospective tenants around. They make a lot of money but it is full time work for them.

Also a 3 bedroom house with a dining room is in reality a 4/5 bedroom house - especially with student accommodation or shared housing and a living room is closed off/separate room and not an access way to other parts of the property. Depending how much you want to maximise your income potential on the property.

3 bedroom comfortable £95/wk for 48 weeks = £13,680
5 bedroom uncomfortable £80/wk for 48 weeks = £19,200

An extra £5,520 income per year but the house won't be particularly social.
Both of above might be the same property. Although the less comfortable the Tenant the more issues you will likely have with them. Tenants have far more rights than the landlord.

Post: #4

Its all sunshine and lollipops until you get a few tenants from hell, who trash the place, don't pay rent and it takes ages for the renter biased laws cogs to turn and you can get them out.

Landlord insurance may cover it, but its a nightmare bringing it back to rentable condition etc.

Also houses can go down in value as well as up.

Still a solid strategy but there are risks, just like any other investment strategy.

Good detailed datasheet, thanks for sharing OP

Post: #5

(01-30-2017 01:56 PM)Navas Wrote:  Been doing something similar on a smaller scale and also feel like it's something I can do easily and even enjoy, although at this stage I would hate working 100 hours a week for this (did it in the past). Always entertained the idea of mortgage as a way to expand but never had courage to go for it although it's clear that the property would pay off the interest even if it's 14% in some countries. Now hopefully I will make a move.
Also it's a good insight how this could be done abroad with an example of UK.
+1 from me.
@SanMiguel - would also like to hear if you have any experience in investing in property under construction (could be cheaper - low entry costs, possibility of 0% mortgage from developer in some countries, better appreciation and cheaper to renovate in my experience).

Thanks mate - good to see someone else interested in this kind of thing. The 100 hour weeks are very rare and I only put myself through the stress as had tenants wanting to move in asap and paying a decent amount of rent upfront. Financially I'm set up pretty well now so on the next project can give myself more time if I want to, or get more tradesmen in to speed up the renovation.

Mortgages are the only way I could get into this game and at the moment especially are a great way to leverage your cash. Another thing I'm doing is waiting 2 years after purchase, the re-mortgaging at a higher value (which is the 'new' real value due to the amount of work that's been done). This means I can take a large chunk of money out after paying off the old mortgage and use it to invest in something else. Mortgage repayments will go up but not my much so doesn't noticeably affect the net income but keeps the ball rolling for future investments.

I've also thought about investing abroad but for now decided the risk was too high. My houses are all within 5 minutes drive of where I live and that means a lot if there are any issues. Obviously I intend to travel and will be away for months at a time, but still have friends and family here to keep an eye on things. Airbnb is probably where I would look if I did do something though, as that is basically the international version of what I am doing - renting room by room or for shorter periods with higher returns. Would also be nice to have a cool pad in Barcelona or Budapest that you could use whenever you wanted!

As for new-build construction in the UK, a lot of it seems overpriced - where I am I could buy an old 3/4 bed house cheaper than a brand new 1 bed flat. Most new build houses wouldn't really be suitable for the student market due to the areas they put these new estates in - usually on the outskirts of cities, far away from universities or city centres.

Post: #6

(01-30-2017 03:00 PM)Ethan Hunt Wrote:  Another thing to add. If the property is furnished (minimum requirement of having a bed) then you deduct a ware and tear allowance which is a straight 10% of Gross income less council tax and water, maybe TV license too but I can't remember.

I've seen a few buy to let mortgages (interest only mortgages) recently that have had an interest rate of .75% so it is possible to get a very cheap interest. Thing is with an interest only mortgage you do need to make provisions to pay off the capital but typically this can be done when the property is sold. Sales would be subject to capital gains unless you've lived in the property at some point then the calculation becomes much more complicated.

Typically a letting agent would charge 9% of gross income plus VAT which in reality means 11.5% or so charged from gross income. Multiple properties would probably give you some discount there but there does come a point where you may be better off doing it all yourself. I know someone with around 30 properties who does on the agent work themselves. Husband and wife where he's a plumber by trade and she shows prospective tenants around. They make a lot of money but it is full time work for them.

Also a 3 bedroom house with a dining room is in reality a 4/5 bedroom house - especially with student accommodation or shared housing and a living room is closed off/separate room and not an access way to other parts of the property. Depending how much you want to maximise your income potential on the property.

3 bedroom comfortable £95/wk for 48 weeks = £13,680
5 bedroom uncomfortable £80/wk for 48 weeks = £19,200

An extra £5,520 income per year but the house won't be particularly social.
Both of above might be the same property. Although the less comfortable the Tenant the more issues you will likely have with them. Tenants have far more rights than the landlord.

The wear and tear allowance was great - I could deduct around £1500 per house even if nothing had been replaced! Unfortunately it was scrapped last year and is no longer used - you only deduct what expenses have been spent, furnished or unfurnished.

The mortgages are 25 years so when the time is up all I need to do is sell the property, which will be worth a lot more at that stage, or more likely just re-mortgage and the new mortgage will pay off the old one. In the previous post I mentioned I am remortgaging every 2 years anyway so that 25 years stays far away and isn't really an issue.

At 7% I am getting my agent very cheap then! I did think about managing the properties myself but for me the 7% isn't just money - it's also freedom. I don't want phone calls off the tenants late at night or weekends or have to deal with all the paperwork just to save some cash.

(01-30-2017 06:35 PM)RatInTheWoods Wrote:  Its all sunshine and lollipops until you get a few tenants from hell, who trash the place, don't pay rent and it takes ages for the renter biased laws cogs to turn and you can get them out.

Landlord insurance may cover it, but its a nightmare bringing it back to rentable condition etc.

Also houses can go down in value as well as up.

Still a solid strategy but there are risks, just like any other investment strategy.

Good detailed datasheet, thanks for sharing OP

Thanks - so far so good tenant-wise. Am aware that it's not all roses but touch wood I've only had good tenants so far. They all pay a deposit and parents need to sign as guarantors - to pay up if their children don't. It's not bomb proof but haven't been caught out yet!

Post: #7

Here's my experience from living in such a property (325,- per month).

- The place was almost a run down shit hole when I moved in
- My flatmates were fucking retards, especially the Indian guy
- The Indian Guy didn't pay rent and just fucked off to another country at the end of the contract
- Didn't clean, didn't pay utility bills, the toilet was smeared with shit daily (Im glad he used it at least). Talking to him like didn't do anything.
- He spent the most time smoking weed and inviting Ghetto guys
- He got beat up by drug dealers and those ghetto type of guys in our house
- From time to time the police was there, asking questions
- Food was rotting away. Have you tried to get rid of the smell of rotten meat? It is hard.
- In the night I heard noises from the kitchen, but knew my flat mates weren't in. So I grabbed a big stick and looked for it... and there was a homeless guy from Gambia living in the kitchen who said he knew the Indian guy. He was nice so I let him sleep in the kitchen for the night. On the next day he cleaned up the house as a thank you - something the Indian guy never did. However the Indian guy was trying to ignore him and not open the door (I allowed him to stay for the week to look for a flat). He even called the police and I had to explain that he is my guest. After what I have heard the Indian guy smoked his weed and ate his food at the black guys place when he still had one, but when the black guy needed help, the indian guy bailed like a bitch. The black guy started beef constantly with the Indian guy, which was like heaven for me. I couldn't beat him up without having the coppers on me.
- In the end, the house was even more resembling a run down, moldy shithole and I was happy to leave it for good.
- The Tenant Agency did jack shit. They were extremely incompetent. Never rely on them, even if they are extremely polite.

In my opinion, renting flats or houses to students is a really risky enterprise. I spent my free time at so many parties in student owned houses, and EVERYTIME you could see how the property was being neglected.

Post: #8

(01-31-2017 09:51 AM)reciproke Wrote:  Here's my experience from living in such a property (325,- per month).
...

Housing in the UK is so broken, to the point where i'm opting out, i'm slowly converting a van to live in. #vanlife I might invest in a shared-ownership crowdfunded operation because they've done the due diligence for me already and the market is liquid so I can sell without too much hassle.

eg thehousecrowd.com which advertises 10% ROI with minimum investments of £1,000 and 2-3 year lock in period. They also do P2P lending.

Post: #9

Great thread. I definitely recommend semi-passive income from Real Estate.

I seriously need to do a data sheet on RE in the United States.

Out of curiosity, what are mortgage terms in the UK? Meaning required down payment, interest rates, etc.

Post: #10

(01-31-2017 09:51 AM)reciproke Wrote:  Here's my experience from living in such a property (325,- per month).

- The place was almost a run down shit hole when I moved in

You need to re-read the original post - the main point was these houses are done up to a very good standard (for student houses anyway!). That attracts a higher rent and the type of tenants willing to pay that, who are usually the ones more inclined to study than party every night. They are still messy bastards but all it takes is someone properly to clean the house once each year before the new tenants move in. I've been to houses you described when I had friends at uni and the reason they picked those places was solely based on the cheap rent, as they wanted to spend more money on going out drinking and trying to pull girls. Actually the vast majority of the tenants I have are unattractive girls, if that says anything at all ...

It is a definitely a risk but with a good quality house, which will be in demand, you can be pickier about who you have live there. If you have a run down shit hole house and charging bottom of the market rent rates, you will probably have anyone live there and that gives you shit tenants like your Indian friend. I don't know why you decided to live there - did you not look round the house first before signing the tenancy? If you were based in London or a more major uni city in the UK (which I am not) then I'm guessing £325 was cheap and the houses similar to mine would have been more like £425-500/month.

(02-01-2017 10:09 PM)BostonBMW Wrote:  Great thread. I definitely recommend semi-passive income from Real Estate.

I seriously need to do a data sheet on RE in the United States.

Out of curiosity, what are mortgage terms in the UK? Meaning required down payment, interest rates, etc.

Right now a 25% deposit you will be looking at 2.5% interest only mortgage with pretty low fees - around £1k added to the loan. Usually the low initial rate lasts 2 years and then it's time to switch to a different mortgage. You can get buy to let mortgages with lower deposits but obviously higher rates/fees. For me 25% is good because it keeps a certain amount of equity in the property should I ever need to sell.

Post: #11

Even the run down houses started out as fancy posh houses. The maintenance needs are not obvious on the first glance. A week in the shower breaks. Mold pops up where you haven't checked before. The oven breaks. Plumbing breaks. The flooring breaks, because it was old and just cosmetically fixed. You get the idea. This is not about cleaning up.

325 ist the cheapest you can get for a non-studio appartment in Student Cities.

This is the reason why most property owners diversify their real estate and aim to have multiple assets.

If you outsource everything to tenant agencies, you have no pick in who's renting. Check out this article
http://www.telegraph.co.uk/finance/prope...enant.html
And yes, most agencies are very lenient. Check their rating in the Internet - most of them will have a rally bad reputation. My first hand experience with them is bad and I had trouble getting my money back. My advise is to do it on your own or hire a personal landlord agent. It's not as passive as it could be, but you stay in control.

I'm not trying to convince you to not do it. I think it's a pretty good income choice. But I offered some first hand experience that can help you succeed while keeping the risks in mind.

Post: #12

Agencies should only be hired to find tenants. Not manage the property. If you rent to students try international from northern Europe.

Post: #13

(02-01-2017 10:09 PM)BostonBMW Wrote:  Great thread. I definitely recommend semi-passive income from Real Estate.

I seriously need to do a data sheet on RE in the United States.

Out of curiosity, what are mortgage terms in the UK? Meaning required down payment, interest rates, etc.

Many of us would appreciate this. I have seen in your prior posts that you have sound knowledge on this subject.

---

This is what I want to get into, but it looks crowded, and much of the value looks to be in flyover markets versus the established cities.

I also would like to know if anybody has any war stories from going about this with poor credit. If I knew now the things I knew, then I would not be set up like this, but shit happens. Plus with a massive school debt load around my neck, I am trying to think strategically of how I can access capital/credit as a typical debt-ridden student.

Post: #14

Kosko,

The mortgage markets are back to some of the weaker lending processes pre-2008. So it is lot easier to borrow now than just a couple of years ago. Kosko, if you can partner with someone with good credit and do a couple deals that way, that might help you work around your credit issue. The problem is properly documenting your deal. Even if you set up an LLC or C-Corp, you will probably have to personally guarantee the debt with your partner. But with an LLC you have some means for ending the relationship, which without may be harder because you need to think of all the ways to justify a dissolving. With an LLC, many boiler plate templates have the justifications laid out. Or simply you want out. But these documents have been reasonably tested. No need to re-invent the wheel.

A C-corp probably isn't the ideal way to structure a real estate deal. But for longer term planning and tax purposes it could be useful as a management company etc.

On a separate note. I just want everyone to be careful. Nothing is ever as easy as it seems. And proficiency in rehabbing, etc takes time and dedication like anything else.

So your first deal may not go well, and you may want to quit, but with your experience you might make the next deal work.

I have seen both sides of real estate, the wins and the losses. I have had some glory and I have had some fucked up experiences that have hurt. So whatever unjustified swagger some guys may have, be careful.

It isn't easy. If it was everyone would be doing it, and they are all doing it - time to get out.

Protect your capital at all costs.

**Story about unjustified swagger - In college me and some friends decided we were going to bet on NBA basketball games. Won on the first bet, then...after I lost all my college savings, realized it was time to stop. All savings might have been 1K. But still, we thought we were the shizzle. There is more control in RE than NBA games, I know.

Post: #15

(02-02-2017 03:50 AM)SanMiguel Wrote:  

(02-01-2017 10:09 PM)BostonBMW Wrote:  Great thread. I definitely recommend semi-passive income from Real Estate.

I seriously need to do a data sheet on RE in the United States.

Out of curiosity, what are mortgage terms in the UK? Meaning required down payment, interest rates, etc.

Right now a 25% deposit you will be looking at 2.5% interest only mortgage with pretty low fees - around £1k added to the loan. Usually the low initial rate lasts 2 years and then it's time to switch to a different mortgage. You can get buy to let mortgages with lower deposits but obviously higher rates/fees. For me 25% is good because it keeps a certain amount of equity in the property should I ever need to sell.

Thanks for the insights. They appear to be in line with investment property mortgages in the United States.

Very helpful.

Post: #16

(02-02-2017 02:03 PM)kosko Wrote:  

(02-01-2017 10:09 PM)BostonBMW Wrote:  Great thread. I definitely recommend semi-passive income from Real Estate.

I seriously need to do a data sheet on RE in the United States.

Out of curiosity, what are mortgage terms in the UK? Meaning required down payment, interest rates, etc.

Many of us would appreciate this. I have seen in your prior posts that you have sound knowledge on this subject.

---

This is what I want to get into, but it looks crowded, and much of the value looks to be in flyover markets versus the established cities.

I also would like to know if anybody has any war stories from going about this with poor credit. If I knew now the things I knew, then I would not be set up like this, but shit happens. Plus with a massive school debt load around my neck, I am trying to think strategically of how I can access capital/credit as a typical debt-ridden student.

Thanks Kosko. The main challenge is figuring out what aspect of RE investing to focus on. I have done:
fix and flips
buy and holds
investments in REITs
Invested using SDIRAS

There are plenty of sub strategies within the above the strategies as well. I definitely want to do something for the RVF forum as you guys have been nothing short of spectacular in helping me make decisions.

While this should not be considered a data and I don't want to hijack the thread:

- Midwest is terrific for buy and hold (rentals) deals, while the coasts have greater potential for fix and flips. However..

- I do believe that there are localized bubbles in cities like Boston, New York, San Francisco, Los Angeles among other cities. For the record, I don't necessarily believe that the economy will head into a recession led by Real Estate (don't expect a repeat of 2008) but rather an exogenous shock/issue may lead to declines in RE markets that have hit or exceeded the pre 2008 high. So proceed with caution.

- Credit: You definitely need to work on credit. Set up an account at https://www.creditkarma.com/ and start working on the credit. Since you may not want to discuss the credit situation/it may be complicated, I recommend that you start resolving each issue and getting accounts current and in good standing.
- Check https://www.naca.com/ and see if they lend in your area. If they do, start working with them. It will be grueling process to work on and get an approval from them, however you will be trained like a navy seal with respect to the finances. One of my boys went through the program and it took him 6 months to get approved for triple decker (3 Family) in Dorchester a few years ago. He is on to property number 4 right now.

- Student loans are not necessarily a detriment to the mortgage application. If you buy a multi family, most banks are willing to use 75% of the anticipated rental income in the units. You can live in one of the units and rent out the others. Your tenants can assist with the rents. The same friend even rented out the 2 other bedrooms in his unit (he lived like a pauper; but lived free).

I'll be happy to discuss further if you have any questions.

Post: #17

(02-02-2017 03:10 PM)samsamsam Wrote:  Kosko,

The mortgage markets are back to some of the weaker lending processes pre-2008. So it is lot easier to borrow now than just a couple of years ago. Kosko, if you can partner with someone with good credit and do a couple deals that way, that might help you work around your credit issue. The problem is properly documenting your deal. Even if you set up an LLC or C-Corp, you will probably have to personally guarantee the debt with your partner. But with an LLC you have some means for ending the relationship, which without may be harder because you need to think of all the ways to justify a dissolving. With an LLC, many boiler plate templates have the justifications laid out. Or simply you want out. But these documents have been reasonably tested. No need to re-invent the wheel.

A C-corp probably isn't the ideal way to structure a real estate deal. But for longer term planning and tax purposes it could be useful as a management company etc.

On a separate note. I just want everyone to be careful. Nothing is ever as easy as it seems. And proficiency in rehabbing, etc takes time and dedication like anything else.

So your first deal may not go well, and you may want to quit, but with your experience you might make the next deal work.

I have seen both sides of real estate, the wins and the losses. I have had some glory and I have had some fucked up experiences that have hurt. So whatever unjustified swagger some guys may have, be careful.

It isn't easy. If it was everyone would be doing it, and they are all doing it - time to get out.

Protect your capital at all costs.

**Story about unjustified swagger - In college me and some friends decided we were going to bet on NBA basketball games. Won on the first bet, then...after I lost all my college savings, realized it was time to stop. All savings might have been 1K. But still, we thought we were the shizzle. There is more control in RE than NBA games, I know.

I cosign everything Sam3X has stated. For me, partners are not worth the effort, however it is definitely a viable strategy. You're absolutely right about things costing more, taking longer, and profiting less. People need to be careful and have adequate cash reserves to ensure that they are not going to run into trouble, financially.

Kosko: If you want to get started immediately, you may want to get a RE license or become a wholesaler (locating deals; getting them under on contract; assigning them to an investor for a finders fee). This should help with the cash flow situation as well as building up that credit.

Like I mentioned earlier, there is a wide array of RE strategies that can be used.

Post: #18

What Boston said about assigning deals or getting a license is a good way to start if you don't have a ton of cash, credit or experience. It will be effort and hustle driven. But if you have good people skills and dedication you can do well.

I think in almost every big city there are real estate investment clubs. Some of them just try and sell shit. But you can meet like minded people. Maybe you can connect with a more experienced person and get in that way.

Post: #19

@ SanMiguel

Thanks for the informative post, I have a few questions.

1. How long have you been doing this now?

2. How do you manage to find a property with 3 double bedrooms in a good area in major UK cities for circa £120k?

3. You mentioned that the wear and tear allowance was scrapped last year. A 3% stamp duty on second properties was also introduced by the government last year - have there been any other recent changes to the detriment of landlords to the best of your knowledge?

Post: #20

(02-04-2017 05:13 AM)Lagavulin Wrote:  @ SanMiguel

Thanks for the informative post, I have a few questions.

1. How long have you been doing this now?

2. How do you manage to find a property with 3 double bedrooms in a good area in major UK cities for circa £120k?

3. You mentioned that the wear and tear allowance was scrapped last year. A 3% stamp duty on second properties was also introduced by the government last year - have there been any other recent changes to the detriment of landlords to the best of your knowledge?

As a landlord about 5 years in total, although the first house I bought was more like 7 years ago. I sold that after a complete refurbishment (flipped it) and made about £15-20k profit. But after all the blood sweat and tears that went into doing the house up, decided next time I’d do better keeping any house as a long term rental and go for steady income rather than a big payout in one go.

Without giving too much away I’m not exactly in a major city, just one that has a university - you need to be looking in the Midlands/North for anything around these prices. They don’t come up that often and when they do you need to be quick. I use Rightmove to search and do it every 3 days if I’m really eager to buy. Auctions are also a great source for this type of property but nearly always need a lot of work - my first rental house, although 5 years ago now, was £70k at auction and converted it into a 5 bed student let

I missed this out the first post but if you can be creative with the layout you can make a 2 bed to a 3 bed fairly easily. That’s what I did with this recent house in the pics - see the old tiled bathroom, that’s now a bedroom because I moved a wall upstairs, stealing some space of the larger room next door. Also had to remove a chimney breast in that room but was worth it - cost of the work was about £1.5-2k (did a lot myself) and I’ll get that back in 6 months from the added rent of an extra room. I then made 2 small shower rooms - one in a sort of cupboard at the top of the stairs that wasn’t being used and another in a space to the front of the house upstairs. One of the first things I look at when searching for properties is the floor plans/layouts as changing that can make a huge difference and is overlooked or too much work for a lot of people.

And yeah the government seem to be trying to make it quite difficult to get into buy to let now although I’m not concerned. One major change that comes in this year is how they calculate tax - I’m still not 100% sure on this but I think it only affects those in the higher tax bracket - instead of your mortgage interest being deducted as an allowance at 40%, it will instead be restricted to the lower tax bracket of 20%, which will increase their profit figure and tax bill. Google search ‘but to let tax relief changes’ for more. This will only really affect those with poor returns though - where rent is barely covering the mortgage payments which isn’t the case with these student rentals. I actually think it could push people with buy to let properties that aren’t making much to sell up, so could bring a lot more suitable houses back to market - I’ll be waiting!

Post: #21

I know its a bit off topic but in Australia its much harder to make positive cash flow from investment properties because here interest only investor mortgages typically have an interest rate between 4 and 5%, also the majority of properties in desirable locations have low rental yields. Its still possible to generate positive cash flow do but its much harder to do than in the U.K., U.S.A. or certain countries in Europe.

Post: #22

(07-07-2017 06:52 AM)Australia Sucks Wrote:  I know its a bit off topic but in Australia its much harder to make positive cash flow from investment properties because here interest only investor mortgages typically have an interest rate between 4 and 5%, also the majority of properties in desirable locations have low rental yields. Its still possible to generate positive cash flow do but its much harder to do than in the U.K., U.S.A. or certain countries in Europe.

Yeah that's not too good, 5% is more like commercial mortgage rates here. I just got approved for a new mortgage at 2.59%, crazy really - borrowing £90k for less than £200/month.

It's strange here in the UK, London is the same as you said - very hard to buy somewhere with a good return or cashflow because prices are so high. Then go 2/3 hours North, prices drop massively but rent stays reasonably high.

I'm taking advantage of it while it lasts.

Post: #23

Hi San Miguel,

I liked your post. Couple of questions, you mentioned that your house or one of your houses had 3 double bedrooms (as per the layout pic) yet you calculated rent as 4 x 95£! Are people living downstairs?!

I'm from England and this sort of thing interests me, though my knowledge regarding mortgages etc is lacking at the moment. With the current Brexit situation and low interest rates, for a first time buyer, do you think this is still viable? I'm yet to get onto the property ladder though have enough money saved to put down a large deposit/renovate etc. I'm not sure whether to to a BTL first then buy my own house in 2-3years , or the other way around .

Cheers

Post: #24

Hey man, yeah a typical 3 bedroom terraced house here has 4 lettable bedrooms, using the downstairs front living room. Though this only works if the front door opens into a hallway as in the floorplan I posted. If you PM me your city I don't mind having a look online to see what's available in your area. As for mortgages etc it's definitely still viable, even with Brexit which I don't think will make a big difference. Best way to start is talking to an independant mortgage advisor (not a bank), you can go to them for free advice - they'll look at your finances and let you know what's available.

I would 100% recommend buying an investment property before buying somewhere to live yourself. If you do something like I do one student house will bring in around £800/month income, whereas a house for yourself you'd likely be paying out £400-500 a month on a residential repayment mortgage. If you haven't read it, buy the classic finance book Rich Dad Poor Dad. The author explains very well why your own home is actually a liability not an asset, better to buy something that gives you income than drains it. I have no intention of buying my own place here anytime soon, for the reason above - it would reduce my income and 2, I don't plan on staying here long term anyway.

Post: #25

SanMiguel, my friend is currently investing in Liverpool aggressively buying auctions with various loans and claims to be getting exceptional yields 12%+. I worry he might get stung if he gets many defaults as he deals with bottom of the barrel clients mostly. I haven't got the latest details of his venture from him but I will catch up with him soon. I have around 120k cash and am thinking of getting involved and maybe taking loans on after I've got the first houses set up and making yield.

It seems you can buy a small terrace for around 40k that would bring in over 5k of income per year (often slightly more). I would buy as part of a LTD company.

Year 1: Buy 3x 40k terraces and get them set up.
Year 2: Release equity on each when rental yield is proven to free up funds to buy 2 or 3 more.
Year 3: When I have spare cash to add more the portfolio, occasionally add an exceptional bargain when they come up.

What do you reckon to this plan? Cheers