My Property Investments
This is the first post in a series I will write about my journey into property investing. I currently have two investment properties, plus the home I live in with my family. If you have read Rich Dad, Poor Dad, you will know that the home you live in is not an investment! So I don't count that. In later posts I will go into all the details of how and why we bought the properties we did, what we did to them and how they are performing, together with all the ups and downs we have faced along the way. For now, let me set the scene.
Having decided we wanted to invest in property to generate additional income, my wife and I set about considering how we could achieve that. As usual, we wanted to do it now, not wait and save up until we could afford to do it in the future! We borrowed a lump sum against our home, which had some equity available to be re-mortgaged. Then we used that lump sum to buy our first investment property together.
Now, we have had a rental property before but it was jointly with family and we sold it several years ago, so I am not counting that. I might write about that another time, as there were plenty of lessons learned from that project!
Before we got started, I read plenty of books and blogs on property investing, watched YouTube videos, attended a training course and listened to podcasts (the Property Podcast by Rob and Rob is excellent for UK property investors - highly recommended). Then we set about looking for our first property.
Having considered all of the ways we could go about investing in property, the strategy that appealed to us the most was the idea of buying, adding value, renting it out and then refinancing to release equity to use for the next project. We were comfortable with the level of risk we were taking, as the mortgage payments were relatively small and we could cover them from our income if we had no tenants, so that is what we went looking for. We are buying in a cheaper part of the South East (as much as anywhere in the South East is cheap!) and where rental demand is strong. It took a couple of months of searching, lots of property viewing and making a lot of offers on properties before we actually agreed a deal on something. That process alone taught us a lot about property investing.
We ended up securing a 3-bed semi-detached house for around £145k, which was in need of a lot of TLC! Once we completed the purchase, it took just over 2 months of a lot of hard work in the evenings and at weekends to get the house up to scratch and ready to be let out. When we got that first rental income payment we knew we wanted to take this further. What an amazing feeling... the property we had worked so hard on was now starting to pay us back and could go on to generate a monthly income indefinitely! It's a fantastic feeling checking your account each month and seeing that money just drop in.
Anyway, fast-forward 12 months and we were ready to move on to stage 2 of our plan and attempt to refinance and release equity from the first rental property. We didn't manage the Holy Grail of property investing, which would have been to release 100% of the money we originally put in (leaving us with essentially a "free" house!) but we did get a good chunk of our original cash lump sum back to re-invest elsewhere because we had increased the value of the property to circa. £170k. Of course, the higher mortgage made a dent in our monthly profit but it was still generating a profit every month and the plan was that the second property would more than make up for hit that our profit had taken.
We didn't quite have enough capital to buy another house, which we would have liked, so instead we ended up buying a 2-bedroom flat. Although this had a twist because, by now, my brother (who had helped massively with the refurb of the first house) had caught the bug and released some capital of his own to invest. So we bought a semi-detached house between us 50/50, which had been split already in two separate flats, with separate titles, but was being sold as a unit including both flats and the freehold. This was too good to pass up and in a later post I will explain the detail of how we solved a title problem to get a good deal on the property and add value without doing any refurb this time. Total purchase price was £202k, so our flat cost £101k and my brother's was the same.
So that was around 9 months ago and the flats are performing well. Both had long-term tenants. Both have needed bit of money spending on them to fix some issues and make repairs but nothing too major. As time moves on over the next few months, we will look into refinancing this one too and then the process will start again... watch this space and follow along if you're interested in how that turns out. I'll be sharing all the details along the way.
Thanks for reading.
Jake
This is the first post in a series I will write about my journey into property investing. I currently have two investment properties, plus the home I live in with my family. If you have read Rich Dad, Poor Dad, you will know that the home you live in is not an investment! So I don't count that. In later posts I will go into all the details of how and why we bought the properties we did, what we did to them and how they are performing, together with all the ups and downs we have faced along the way. For now, let me set the scene.
Having decided we wanted to invest in property to generate additional income, my wife and I set about considering how we could achieve that. As usual, we wanted to do it now, not wait and save up until we could afford to do it in the future! We borrowed a lump sum against our home, which had some equity available to be re-mortgaged. Then we used that lump sum to buy our first investment property together.
Now, we have had a rental property before but it was jointly with family and we sold it several years ago, so I am not counting that. I might write about that another time, as there were plenty of lessons learned from that project!
Before we got started, I read plenty of books and blogs on property investing, watched YouTube videos, attended a training course and listened to podcasts (the Property Podcast by Rob and Rob is excellent for UK property investors - highly recommended). Then we set about looking for our first property.
Having considered all of the ways we could go about investing in property, the strategy that appealed to us the most was the idea of buying, adding value, renting it out and then refinancing to release equity to use for the next project. We were comfortable with the level of risk we were taking, as the mortgage payments were relatively small and we could cover them from our income if we had no tenants, so that is what we went looking for. We are buying in a cheaper part of the South East (as much as anywhere in the South East is cheap!) and where rental demand is strong. It took a couple of months of searching, lots of property viewing and making a lot of offers on properties before we actually agreed a deal on something. That process alone taught us a lot about property investing.
We ended up securing a 3-bed semi-detached house for around £145k, which was in need of a lot of TLC! Once we completed the purchase, it took just over 2 months of a lot of hard work in the evenings and at weekends to get the house up to scratch and ready to be let out. When we got that first rental income payment we knew we wanted to take this further. What an amazing feeling... the property we had worked so hard on was now starting to pay us back and could go on to generate a monthly income indefinitely! It's a fantastic feeling checking your account each month and seeing that money just drop in.
Anyway, fast-forward 12 months and we were ready to move on to stage 2 of our plan and attempt to refinance and release equity from the first rental property. We didn't manage the Holy Grail of property investing, which would have been to release 100% of the money we originally put in (leaving us with essentially a "free" house!) but we did get a good chunk of our original cash lump sum back to re-invest elsewhere because we had increased the value of the property to circa. £170k. Of course, the higher mortgage made a dent in our monthly profit but it was still generating a profit every month and the plan was that the second property would more than make up for hit that our profit had taken.
We didn't quite have enough capital to buy another house, which we would have liked, so instead we ended up buying a 2-bedroom flat. Although this had a twist because, by now, my brother (who had helped massively with the refurb of the first house) had caught the bug and released some capital of his own to invest. So we bought a semi-detached house between us 50/50, which had been split already in two separate flats, with separate titles, but was being sold as a unit including both flats and the freehold. This was too good to pass up and in a later post I will explain the detail of how we solved a title problem to get a good deal on the property and add value without doing any refurb this time. Total purchase price was £202k, so our flat cost £101k and my brother's was the same.
So that was around 9 months ago and the flats are performing well. Both had long-term tenants. Both have needed bit of money spending on them to fix some issues and make repairs but nothing too major. As time moves on over the next few months, we will look into refinancing this one too and then the process will start again... watch this space and follow along if you're interested in how that turns out. I'll be sharing all the details along the way.
Thanks for reading.
Jake
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