UK Landlord Forum / Life

Hello all, I'm 23 years old and I have just started teaching - as much as I love my Job I am very keen to increase my income significantly as everyone knows teaching does not pay enough to meet the dreams of the average dreamer!

House prices in my area are quite low - there are 2 bed houses which can be converted into 3 bed houses for sale at £80,000.  my plan having just left university is to convert these into desirable student digs and charge £4,000 per student = £12,000 a year before tax, mortgage repayments etc. I have zero savings at the moment as I have only just left university but i want to be earning twice my income now by the time I am 35 so I have 12 years to reach this goal... so help me God!

Having done some maths i realised I may have to do some serious savings before I can even look at a buy-let lender etc. so i have 4 questions.

-What is the best way to get started?  In other words where does everyone get their initial money from! I'm not lucky/unlucky enough to have inheritance money etc.

-Once I have finally bought my first buy to let house, how do I then turn that into 2 or 3 houses?

- How do I cash in on the added value should the let be successful.... my theory is a house generating £12k per yea should be worth £120k... giving me a 40k profit.

- lastly is this even worth it? new government policies don't look too promising for prospective landlords like myself! :~(

People get money to start their empire by saving/working or potentially releasing equity from an existing property.

You'll need a 25% deposit plus legal fees plus mortgage fees plus stamp duty fees plus the money to convert the houses.

Students are a pretty niche market and having just been one you probably presume they are money for old rope.  It's not a sector i'd get into as a first rent.

How does your theory of a 12k income on a house make the house worth 120k?

Have you bought your own home yet?

Quote from: Mrboatin on January 18, 2016, 12:37:52 AMHello all, I'm 23 years old and I have just started teaching - as much as I love my Job I am very keen to increase my income significantly as everyone knows teaching does not pay enough to meet the dreams of the average dreamer!

The Government tells us that Teachers are very well paid... I've seen the adverts, it looks very attractive.

Quote from: MrboatinHouse prices in my area are quite low - there are 2 bed houses which can be converted into 3 bed houses for sale at £80,000.

That's not cheap. In my area, South Yorkshire, you can buy tidy houses that are already 3 bedroom for £80,000 or less... £80,000 would be for one that has been quite nicely refurbished.

Quote from: Mrboatin...my plan having just left university is to convert these into desirable student digs and charge £4,000 per student = £12,000 a year before tax, mortgage repayments etc.

Good plan, let's go on...

Quote from: MrboatinI have zero savings at the moment...

Oh, shall we stop the conversation right here, then?

Quote from: Mrboatinso help me God!

God doesn't exist, for better or for worse.

Quote from: MrboatinHaving done some maths i realised I may have to do some serious savings before I can even look at a buy-let lender etc. so i have 4 questions.

Yes. That gave me a chuckle, I must admit... what maths did you do? What I need is anything that is > zero and at the moment I have zero? Seems more like logic than maths, but what do I know? Anyway, I'm ready for the questions...

Quote from: Mrboatin-What is the best way to get started?  In other words where does everyone get their initial money from! I'm not lucky/unlucky enough to have inheritance money etc.

Save money. Buy a house with a reasonable deposit on an interest only mortgage, let it out, hopefully make some income and save towards the next, potentially taking advantage of capital appreciation to re-mortgage your first property when the time is right. I don't do it like this, that's for sure, but it seems a kinda accepted route. If there's an assumption of everyone having some kind of inheritance that would be incorrect, I've never inherited a penny... but I did save a lot and I did work quite hard and I did pay off my first mortgage in 11 years by ridiculous overpayments.

Quote from: Mrboatin-Once I have finally bought my first buy to let house, how do I then turn that into 2 or 3 houses?

As above, but please don't think it's easy - about 80% of all Landlords only own a single property. Scaling-up is not a simple thing and not many do it.

Quote from: Mrboatin- How do I cash in on the added value should the let be successful.... my theory is a house generating £12k per yea should be worth £120k... giving me a 40k profit.

Can you explain that theory to me, please, as I don't follow it?

Quote from: Mrboatin- lastly is this even worth it? new government policies don't look too promising for prospective landlords like myself! :~(

No. It's really not. Some Landlords will be throwing themselves off bridges come 2021 (or whenever it is)... why aspire to be like them? Be a good teacher and bring on the next generation of Humankind... have some value to the work you do... it's not all about money (certainly Landlording isn't).

Property is about having some capital to start out - only then can you start to milk your fellow people for their hard-earned. No savings, no Landlordy!

I have no clue what either of the first two words of the title of your post have to do with your question.  Are you are troll ?

The OP is trying to demonstrate that they are not well-off?

Is the goal to (i) double your (pre-tax by the way) income by 35 years old...or (ii) become a landlord?
If option (i) then two other ways to achieve other than work hard and save deposit:

1. Marry someone seriously wealthy
2. Work hard and get further post grad teaching qualificaition and go and teach in a private/grammar school for a few years.  This will give your CV enough gravitas to get on the expat teaching track...teachers in Singapore, Beijing etc in 'English' schools earn WAAAY more than double a UK based teacher....you would be a good person then (teacher) as opposed to evil scum (landlord)   

option (1) might be easier, but I never tried it....if I had only thought it through years ago   

Slightly seriously though...BTL now is a tougher proposition than it used to be....certainly not easy, consider other ways to meet your goal as well.

Quote from: Riptide on January 18, 2016, 12:59:16 AMHow does your theory of a 12k income on a house make the house worth 120k?

Have you bought your own home yet?

Not bought my own home yet but I think that was just a misreading if I'm honest from an article in the telegraph where a chap claimed he is earning £20,000 a year from a buy-to-let investment and also mentioned his property is now worth £200,000 because of this...

Quote from: Hippogriff on January 18, 2016, 07:55:51 AM

Quote from: Mrboatin on January 18, 2016, 12:37:52 AMHello all, I'm 23 years old and I have just started teaching - as much as I love my Job I am very keen to increase my income significantly as everyone knows teaching does not pay enough to meet the dreams of the average dreamer!

I love teaching, it's what I worked my whole life towards, but I also have dreams of other things. My parents are into property at the moment as a side income, and have a house on an interest only mortgage in London (where I am originally from) which they let out.

However the property market has changed a lot and they asked me to seek professional advice before I dive in too, and so here I am in this forum! haha!

Having come up from London to Hull where I am based now 80,000 seemed quite cheap and on an interest only mortgage it worked out that I would have to pay roughly £250 a month (just on the interest) and therefore will be making £750 a month in rent.... £9k p/year before other expense (these are the sums I have done!).

I know the rule is you need a tight-laced repayment plan on an interest only mortgage... but am I wise in thinking I can use capital generated from rent over time to purchase new investments, over the 25 year period? and perhaps even sell the house 10 years into the mortgage and hopefully walk away smiling?

I could also just save the capital as a healthy retirement fund.

I don't plan to give up teaching and I am not in it for the money, with my degree i could have a boring office job which pays a lot more, but I want a healthy side income as well as teaching?

I just want to hear from people who have done it themselves whether they would tell me to shove this idea under the rug and move on or give it serious thought as it is worth the risk?

Nothing wrong with the theory at all but do bear in mind that we are in a time of historically low interest rates and what generates a profit now may not always do so. Also, things do go wrong and every landlord needs a fund for this so don't cut things too tightly. Personally I stay away from the student market but one of our landlords dabbles and in SW London gets an 8.5% return whereas if he was letting to families he would be lucky to see above 4.5%. The amount of grief he gets is really quite substantial but the houses are close to a university and basically "let themselves" so no agents fees to pay. They are empty over most of the summer (but students are still paying rent) and he uses those months to some much needed general maintenance.

With six weeks summer holidays I do hope you're handy with a paintbrush as it makes sense for you to do as much of the maintenance work as possible. Lettings legislation is a bit of a minefield so use this time to become an expert on all aspects of it as sooner or later you will run into a tenant who thinks they know more than you!

Quote from: MrboatinI just want to hear from people who have done it themselves whether they would tell me to shove this idea under the rug and move on or give it serious thought as it is worth the risk?

You have no capital to start out... so it's not me saying shove it under the rug, it's your circumstances.

I've let to Students in the past, only 2 of them sharing, dirty things!

Quote from: David M on January 18, 2016, 06:08:24 PM

With six weeks summer holidays I do hope you're handy with a paintbrush as it makes sense for you to do as much of the maintenance work as possible. Lettings legislation is a bit of a minefield so use this time to become an expert on all aspects of it as sooner or later you will run into a tenant who thinks they know more than you!

Haha thanks for the advice, Its nothing I am ready for yet financially, but having witnessed my landlord rake in 32,000 a year from an 8 bedroom shit hole as a student I cant resist but inquire. I would of course use my experience to make it a much more desirable student house to live  (as cheap as possible) and therefore as you put earlier, "the property should let it's self"

In terms of the costs etc. my parents are willing to help me initially should i present to them a very good business plan. would you say the interest only route is a good gamble?

Quote from: Hippogriff on January 18, 2016, 06:41:18 PM

Quote from: MrboatinI just want to hear from people who have done it themselves whether they would tell me to shove this idea under the rug and move on or give it serious thought as it is worth the risk?

You have no capital to start out... so it's not me saying shove it under the rug, it's your circumstances.

I've let to Students in the past, only 2 of them sharing, dirty things!

haha yes I lived in a house of 8 students but was threatened with heavy costs so we were forced to keep it tidy! - another thing I have learned, have a tight inventory and check it regularly.

I have ways of gaining capital in the next 3 -5 years - family are willing to back me  for half the deposit should my business model check out and myself and my partner are capable of saving 12k ( the other half of the deposit) in the next 3 years.  understandably there are other costs involved so we will seek to save slightly more than the deposit required

Just to clarify, you seem like a man with a lot of experience, I feel like i am  just literally discovering the world as an adult, which is why I have looked to this forum for advice. Do you believe gaining capital from rent on an interest only mortgages and then selling before the 25 years is up a feasible plan ...or simply a blind punt

I can only comment on my own approach. I think I buck the trend a little bit. When I need a mortgage I only ever get repayment fixed ones. I am of the age now where my terms need to be 20 years. So the rent achieved should generally be £200+ over the mortgage payment. The mortgage is fixed for, say, 5 years but the rent is not. That simply means, over time, you win-out in a big way.

Example 1 - house, family Tenants, mortgage is £378 until 2020, rent was £550, £570, is now £590 and later this year will be £600 or £610. The payments can be quite low if you put a good deposit down to get the best mortgage product.

Example 2 - apartment, professional Tenant, mortgage used to be £568 but I've just signed a new 2 year deal making the payment £494, rent was £925, now £1,100 and in February will go up to £1,200 (already agreed)... so I overpay the mortgage to £800... will end in 13 years instead.

Quote from: Mrboatin on January 18, 2016, 05:43:06 PM

Having come up from London to Hull where I am based now 80,000 seemed quite cheap and on an interest only mortgage it worked out that I would have to pay roughly £250 a month (just on the interest) and therefore will be making £750 a month in rent.... £9k p/year before other expense (these are the sums I have done!).

Have you done any research?

These are £1000 per month and under (as per your figures) are these 80k?

http://www.rightmove.co.uk/property-to-rent/property-38640621.html

http://www.rightmove.co.uk/property-to-rent/property-35995611.html

http://www.rightmove.co.uk/property-to-rent/property-38721636.html

Quote from: Riptide on January 18, 2016, 09:04:00 PM

Quote from: Mrboatin on January 18, 2016, 05:43:06 PM

Have you done any research?

These are £1000 per month and under (as per your figures) are these 80k?

http://www.rightmove.co.uk/property-to-rent/property-38640621.html

http://www.rightmove.co.uk/property-to-rent/property-35995611.html

http://www.rightmove.co.uk/property-to-rent/property-38721636.html

Yes I have done my research, I live in the area you have quoted and this area is nowhere near the university and the houses are marketed at young professions/ families, in the far more desirable suburbs of hull. The initial cost of these properties will be far too high for me to even consider starting there as a buy to let opportunity. The university is actually in a very poor side to the city where house prices are much, much lower. There was a 8 bedroom property going for £130,000 just 5 minutes' walk from the university on "on the market.com" .... Still out of my affordability at the moment but I once live in a similar 9 bedroom property where each of my flat mates paid £4,000 each.

https://www.onthemarket.com/details/2250730/

for example this property is something I would go for and is only down the road from the uni, walking / cycling distance and near some very appealing night clubs

And this is 2 streets away http://www.rightmove.co.uk/property-to-rent/property-57308480.html I'm not getting your 80k = 12k rent.

Quote from: Riptide on January 18, 2016, 09:59:17 PM
And this is 2 streets away http://www.rightmove.co.uk/property-to-rent/property-57308480.html I'm not getting your 80k = 12k rent.

turning out to be the battle of the web links, but what you sent is not exactly a desirable student property is it?

http://www.accommodationwarehouse.com/property/1_falmouth_street

this is literally taken from the website of my old land lord.... doesn't show the price per person per week but i guarantee you its no less than £76..

£76 a week x 52 weeks x 4 tenants - you seem to better at maths than I so maybe I have finally proven my point?

Quote from: Hippogriff on January 18, 2016, 08:25:45 PM
I can only comment on my own approach. I think I buck the trend a little bit. When I need a mortgage I only ever get repayment fixed ones. I am of the age now where my terms need to be 20 years. So the rent achieved should generally be £200+ over the mortgage payment. The mortgage is fixed for, say, 5 years but the rent is not. That simply means, over time, you win-out in a big way.

Example 1 - house, family Tenants, mortgage is £378 until 2020, rent was £550, £570, is now £590 and later this year will be £600 or £610. The payments can be quite low if you put a good deposit down to get the best mortgage product.

Example 2 - apartment, professional Tenant, mortgage used to be £568 but I've just signed a new 2 year deal making the payment £494, rent was £925, now £1,100 and in February will go up to £1,200 (already agreed)... so I overpay the mortgage to £800... will end in 13 years instead.

Thanks for the advice I have seen repayment mortgages (from sites such as Alexander hall) where I will be paying back £356 a,month from £1000 rent (potentially) so that's a good £644 purse before various outgoings.

Will look into your method in more detail

Quote from: Mrboatin on January 18, 2016, 10:06:07 PM
I so maybe I have finally proven my point?

You have but even better.  You are going to buy a 2 bedroom house for 80k 'convert' it put 4 students in there who pay every week of the year and get 15K.  These students will be so stupid that they won't look to see what they can rent for their combined £1317 per month.

Well, it's not my method as such... I didn't invent it or anything.

Your plan... caters for expenses, does it? I expect it does, with it being a business plan and all, but at what kind of level?

Quote from: Riptide on January 18, 2016, 10:33:20 PM

Quote from: Mrboatin on January 18, 2016, 10:06:07 PM
I so maybe I have finally proven my point?

You have but even better.  You are going to buy a 2 bedroom house for 80k 'convert' it put 4 students in there who pay every week of the year and get 15K.  These students will be so stupid that they won't look to see what they can rent for their combined £1317 per month.

Its happening as we speak! I have lived it which I why I have made inquiries to start my own small scale. I know only 2% of what I need to know but it's very early doors and I've joined this forum only for advice from the experienced

Quote from: Hippogriff on January 18, 2016, 10:38:36 PM
Well, it's not my method as such... I didn't invent it or anything.

Your plan... caters for expenses, does it? I expect it does, with it being a business plan and all, but at what kind of level?

I'm not sure! You tell me, I'm not a know it all, I've said what I know so far which is how much I can make before expenses... Now its over to you to educate me on potential monthly costs on a student let, any advice is much appreciated!

The only expense I am 100% aware of is mortgage repayments... If property is inclusive of bills I need to work that out too.

I joined this forum to hear real life examples not demonstrate how little I know haha!

Quote from: Mrboatin on January 18, 2016, 11:01:20 PM
I'm not sure! You tell me, I'm not a know it all, I've said what I know so far which is how much I can make before expenses... Now its over to you to educate me on potential monthly costs on a student let, any advice is much appreciated!

Suspect you'll not get many more replies. Good luck.

Quote from: Hippogriff on January 19, 2016, 06:17:29 AM

Quote from: Mrboatin on January 18, 2016, 11:01:20 PM
I'm not sure! You tell me, I'm not a know it all, I've said what I know so far which is how much I can make before expenses... Now its over to you to educate me on potential monthly costs on a student let, any advice is much appreciated!

Suspect you'll not get many more replies. Good luck.

perhaps not! but I have picked up a few bits of valuable information. Thanks for taking the time to initially read my post

Thanks for sending me the personal message with request for advice,but I don't think I can add much to all the answers already given.Absolutely nothing is without risk,and for sure you will not make as much  money as your calculations suggest.It is much harder than when I started (down payment 5k,interest only mortgage) late 90's, when quick capital appreciation enabled me to have a portfolio of 6 very modest rentals within a few years.I still have five of them-and financially it did make sense .