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  1. #1

    help needed budget 360k


    I put up a post a few months ago and now is the time I will need to decide what to do as an offer has been made and accepted on our family home my father owns in London.

    basically I have never brought a house or any other property before and I would like to live within 90 minutes commute to London my job doesn't pay well in London as I am a facilities supervisor who earns in the region of 20k so I am prepared to leave my job. My thoughts are buying a 3 bed house in Kent for 250k with a dining area and a lounge area on the ground floor from which I will turn into a bedroom for myself and a living room for myself and on the second floor where there are three bedrooms I will rent out and share the kitchen on the ground floor with the tennants and use the remaining 100k to put down on a property or properties up North as I am hearing that is the place to invest due too (HS2).. I am not married and will be venturing out alone so I am looking for advice on what people would do in my situation I am 37 years old if that helps and I don't want to make big mistakes with the opportunity I have.. Any advice would be greatly appreciated


  2. #2
    Some might see this as higher risk (as you’re borrowing more) but arguably it’s also spreading the risk. With one rental property, should you get any void periods, then you’ll find yourself having to use your own income to cover the mortgage. With 2 rental income streams, if you find your self with a void in 1 property, you’ll probably use one stream to cover the other mortgage and break even. With 3 or 4 wisely bought properties and a void, you should have enough rental income to cover the mortgage and some. I say wisely bought because if you pick the right areas, then the likely hood of having 3 or 4 voids at the same time vastly reduces!

  3. #3
    Well I would probably look for a HMO or multilet types as these typically give the best returns, although often will require more management. Birmingham technically falls within 90mins of London if you catch the over-ground train. And Birmingham, Coventry and Warwick are all student towns with demand for HMO type properties. You can currently buy 5-6 bedroom houses in each of the towns for 250k-350k where bedrooms may rent for 400 per room per month. 4 properties x 5 bedrooms per property… I’ll allow you to do the math

  4. #4
    Alternatively, with that kind of lump you could look at recycling your cash. ie identifying a property BMV, refurbish to force the appreciation and then refinance or sell to release the money you invested before going again. This in itself is probably a full-time job, but with your willingness to leave the work you currently do, this could be something to consider depending on how much risk you want to take on

  5. #5
    I think David makes some fair points, in particular about what you want and how you want to go about things.

    If house sharing in a debt-free home in Kent, whilst you dabble a little with some BTLs on the side, sounds like the perfect life for you, then who are we to suggest otherwise?

    I start with two things: your goals and your lifestyle preferences.

    Your goals - how much do you want to earn or have in net equity and by when (or other goals you may have)?
    Your lifestyle - where would you choose to live and how do you want to spend your time?

    Will the above be forever, or just 'for now'? At 37, you still have a lot of gas in the tank hopefully

    If it helps some, with say 360k and it reasonably well invested, you should be able to achieve an 8% ROI relatively straightforwardly (some will fare worse, others better). 360k at 8% ROI is the equivalent to 28.8k per year before tax and that sounds like more than you are currently as a minimum, you can expect income replacement from this windfall.

    If you follow your plan, buy your own home for 250k, assume debt-free and rent 3 rooms, assume for say 350 per month each...that would generate an income of 12.6k, although 7.5k of that would be completely tax-free under current rules.

    Then, following my 8% ROI logic, the remaining 100k if invested should generate another 8k per year. So, you would in effect have a similar income to what you have now, possibly slightly improved due to the tax breaks but would have no rent or mortgage to pay on your own home and would have a bit of capital growth upside potential on the investment properties as well. I would ignore capital growth on your own home as you will probably always need somewhere to live.

    The property investor route might get you higher income on your money, so 8% would get you around the 29k or so mark as stated, but then you might still have to fund somewhere to live as well, which would bring the gap down a bit most likely.

    If invested very well, then you can beat the 8% ROI figures, I certainly do...but not everyone does!

    You could also look at switching your Kent home-rental model for say Birmingham instead, if location is not that important to you. This way, you could possibly free up more cash to invest in rental properties and have less tied up in your own home.

    There are loads of things that you COULD do, but you need to figure out the answer to those key questions to determine what you SHOULD do: goals and lifestyle...what's it to be for you?

    Hope that helps frame the decision slightly differently for you,

  6. #6
    I am looking at Kent because it has everything that I feel that will make me happy the three areas I am looking at relocating too are Herne Bay/Whitstable/Canterbury .. Herne Bay and whitstable are both coastal towns which offer access into London in under 90 minutes and both towns are within 7 miles of Canterbury which holds numerous Colleges and Universities and is a very popular tourist destination and a vibrant town that offers decent nightlife access to beautiful countryside and only a few miles from the coast and canterbury can also get to St Pancras International ( Kings Cross ) in under an hour.

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