beginner in property investments

[markandspike]

Hi all

I have a house that I just recently started renting out. It is worth roughly £130,000 with no mortgage on it with a rent of £450 a month coming from it. What would be the next step if I want to increase my property portfolio.

Thanks
Mark Jackson
Derby

[Stevie]

What do you want to do?
Buy To Lets so you can get an income from the rent with investment in bricks and mortar for the medium to long term.
Purchase property to renovate etc. and sell on short term.

You need to do your homework.
Where is there a demand for rental property eg near university or hospital

With regards to financing the deals that's easy you can just release equity in your property.

[markandspike]

I want to start to build up a number of buy to lets. I have some home work but still learning. I think i can lease about £95,000 for my house at a value of around 130,000. Which would be to put against 2-4 houses. Does this sound about right.

[Stevie]

You need to have a good team behind you ie broker and solicitor as a minimum.
On your current mortgage do you have any redemption penalties?
If not I would remortgage on a flexible drawdown mortgage which enables you to take money out when and if you need it, bit like having an open cheque book!
But when purchasing properties negotiate gifted deposits with seller to save your deposit.

[markandspike]

Thanks Steve. I do not have a mortgage with the current house i rent out i own it outright but will be funding my next houses from it. What do you mean about a gifted deposit.

[Matt Churchill]

You could quite easily raise some cash against your current place which would then give you some cash to fund some further properties.

My advice would be to go at a steady pace, it is easy to rush at this and not have a lot of control over what is going on.

Some lenders will give you a "war-chest" to draw against as and when you like subject to values etc., which may be easier to do than looking at a mortgage each and every time you come to buy a property. Naturally you "may" pay more for this freedom. That having been said, the thing with rates to understand is what a rate differential actually means in real terms (as in monthly payments/interest charge).

The other issue is whether you own your own home, and whether it is worth looking at releasing equity in this to bolster your cash. As Stevie says this is where a good team comes into it, to point you in the right direction.

Matt

[Stevie]

When you are buying property below the asking price you could negotiate with the seller to gift the difference between the asking price and your accepted offer. This could save you with your deposit and also get a better mortgage deal as you may have a lower LTV mortgage product.