I am 41 years old and have been on the property ladder since 2007 which in total amounts to 14 years. Wow time flies. Does this make me an expert; if experience and years in the game counts as points then I’d like to say I know some things lol.
I’m going to start off by telling you what I did to get my first family home which was my second property and tell you what went right and what went wrong.
Now first and foremost although my 2 beautiful daughters live in a lovely modern semi-detached property with a front drive enormous garden kitchen extension and free on street parking (a rarity nowadays) in a lovely neighbourhood looking back I could have done so much better.
But before I get into the juice let me explain the process.
In 2005 at the age of 25 while still an employee I saved up £20,000 with the assistance of my parents who gave me a bumper to get me to 20K the amount needed for my deposit to get a property I had set my eyes upon in East London. I chose this particular location because of the regeneration I had discovered was to happen in years to come plus a local train station which would situated 100 yards from the property. Goldmine and something I knew would increase in price as long as I could maintain the payments and keep the property looking fresh.
I ended up acquiring a 1-bedroom flat in what we call a warner building. A house that has been turned into two flats downstairs being one flat and upstairs another. The single entrance was gorgeous with a double-glazed front door and the street gave a homely warm feeling ideal for a new or small family. In my case my one bed first floor flat was ideal for a single person or even better a couple. I was blessed to have a polish couple whom I am still friends with today who stayed for 5 years and even had a son there (hence why they eventually had to move). I found them through a agency and they didn’t miss a payment once. 20th of every month they paid the rent. I managed their stay by creating my own tenancy agreement (downloaded from Google) and renewed the contract every 12 months.
To be honest at first, I was making a loss. A commercial mortgage during the economic crash was deep and I made no profit from their rent and at times I had to top up the payment (during variable mortgage rate times – I did what I had to do to stay afloat).
At the time I was living with family with my wife (at the time – now divorced) and two children trying to save on expenses waiting for my property investment or liability to turn into an asset. So many people are quick to call a property purchase an asset purchase….err nah. Until you’re making profit from it without doing anything it’s a liability. Living in it – liability, renting it our but not breaking even or on top – liability and ofcourse if the property is sitting there with no tenants and you don’t live there it’s a pain in the ass lol.
Naturally I went for the rent-out option, but it didn’t become an asset in my mind until winter of 2014
I purchased the property at 170K and within 2 years it was valued at 155K a loss of 15 thousand was a hard pill to swallow but I knew it would pay off eventually. In 2012 5 years after purchase, I couldn’t wait any longer for the property to become an asset and needed to move out of dodge (family home). We needed our own space (as small as it was) and decided to tell my tenants it time to move out and end the contract followed by me and my family moving in.
For the next 2 years we waited, as the breadwinner and being that the property was solely in my name, I took upon myself to pay the mortgage with the odd contribution from my then partner.
Couple years had passed, and Zoopla was telling me my £170k property was now worth £230K. I was still paying about 700-800 per month (my credit was crap and so was the deal I got on the residential mortgage). With this information I was now excited and ready to turn this soon to be asset to help me purchase a larger property for the 4 of us (it was too small and taking its toll on us). I’d like to use this point to highlight that in any elevation in business and finance there will always be sacrifices.
I put the property up for sale and in winter 2014/Jan 2015 I sold my flat for 280K – £105 property profit or what we call equity. I used the entire amount as deposit for a family home for £310,000 in a more affluent area. Again, the mortgage broker got me another crappy deal for 27% deposit and 3 years redemption (pay a penalty for selling within 3 years). I didn’t mind the more you pay the less years of liability and less interest.
The property was a 2 bedroom (yep for that price 6 years ago in London) and it threw me for a curve ball nor handled that much money before. Although my business was now turning over good money to have that much in one go was a shocker.
It took some persuasion to get it for 310K and to avoid time wasting I simply knocked on the door of the owner at the time with my then partner next to me to not appear intimidating. I’m a salesman closing is what I do.
The house is great and now I am not living in that property anymore nor paying the mortgage its working very well as a growing asset.
What went right
Neighbour left me plenty furnishing (for a fee ofcourse)
Was a good purchase not a great one!
Location was ok but was a middle home as it was a 2 bed the plan was to acquire a 3 – 5-bedroom house.
I bought it with my wife’s name on the deed something I’d advise anyone to avoid if you’re fronting all the money the deed should follow suit.
Why buy in London (great for equity but why place all your eggs in one basket)
I’d have rather mad e a portfolio and bought 4 houses in other cities like Nottingham Newcastle Manchester and Birmingham
So my conclusion to my experience in property purchase is go solo if you can buy around London but if you can have one in London but don’t start there if its going to take all your investment
Purchase cheap properties fix them up and sell until you have enough money to place a 40/50% deposit on a London based property thus acquiring a better mortgage rate.
Understand that it’s a slow process and you won’t make tonnes of money immediately unless you get lucky or are super amazing at reading the market.
Don’t wait if you can start now start – Remember God isn’t making anymore land.
Lastly if you own a council property, please please please buy the damn thing do what you need to do to make miracles happen and buy