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  1. #1

    help needed budget £360k

    Hi

    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

    Regards

  2. #2
    Congratulations on your sale. It sounds like this sale could literally change your life. Or at the very least your current lifestyle! Everything from relocating to a new area, new job and new living arrangements

    A 90min radius is actually very big and opens up a lot of different opportunities all depending on your appetite for risk, the lifestyle you desire ie whether you’re investing for cash flow, capital gains or a mix of both

    My appetite for risk is probably more liberal than some. But I'm certainly don’t consider myself a high-risk investor.
    If I found my self with access to that kind of money and open to big changes, I would personally probably consider leveraging more. (This is by no means advice to you but more what I think I would do in your scenario)

  3. #3
    Instead of taking the 350k lump and using just on 2 properties, I’d probably spread this across 3 or 4 “high yielding” properties and probably live in one of them.
    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!

  4. #4
    Where do you buy “high yielding” property?
    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

  5. #5
    People will tell you that ultimately it depends on your goals. But I also think it’s about finding what works for you and what you’ll enjoy the most. There’s no point in leaving your job and sharing a house with people if you hate sharing your space with others. And likewise, if you enjoy being very hands on and don’t mind dedicated more time to being a developer/property manager, then this can very much impact the strategy you create

  6. #6
    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.

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