So my commitments of going to the gym & maintaining this blog have both spectacularly fallen off the wagon over Christmas! However I have good excuses as to why. Firstly both of all my business partners have been out of the country leaving me to do the lions share of day to day running of E-resistible. Secondly my lovely girlfriend and I have brought a flat which we have renovated and rented out.
Most people’s reaction to this has been “what?”/”how have you done that” or they assume it’s been brought for us by parents/some massive inheritance, neither of these has been the case. This is actually the second flat that I’ve brought and whilst we’ve had considerable support from parents and other family members this hasn’t been directly financial.
As I mentioned from my previous post how to make £10 per hour working at Pizza Hut from a few years hard work I’d saved up a fair amount of cash by the time I was 18, more than most of my classmates anyway and just enough for a deposit to get me on the bottom of the housing ladder. However, with just my Pizza Hut income and plans to go to university I didn’t stand a chance of getting a buy to let mortgage from a bank to invest in property. This then required me to think outside the box a little and prepare a business plan for my buy-to-let idea. I worked out that if I purchased a small 1 bedroom flat and fixed the interest rate for 3 years the rent I could expect would cover the mortgage and leave £85 left over each month as a contingency for if the flat was ever empty. I put this business plan to my parents in an effort to convince them to remortgage our family home! I was so convinced in the idea to me it was a no-brainier however unsurprisingly my parents were a little less enthusiastic about giving me access to their borrowing power. The trust that they would have to put in me would be substantial and was something I probably underestimated at the time.
After a few long conversations over dinner I convinced them that in reality we were only risking my savings as if it all went wrong I could sell the flat, pay off their mortgage and the loss would come from the deposit that I had saved up. Looking back the trust & faith that they showed in me just aged 18 is staggering and is something that I am truly thankful for.
Fortunately my plan worked and I had a succession of back to back tenants for the flat therefore repaying the mortgage and decreasing the debt to the bank all throughout my university years. I brought around 2 years before the housing bubble burst so the flat increased in value but also decreased during the recent recession. I sold this flat just before this Christmas for almost the same as I brought it for however with a vastly decreased mortgage and therefore a much larger lump of cash that I could use to put down on the next property.
As the housing market seems to be bumping along the bottom at the moment and most analysts expect it to grow steadily over the next 5 years it makes sense to stretch myself on affordability now to gain the most during the upturn in the economy. My girlfriend and I may also wish to live in a flat when she finished university next year so we found ourselves a lovely 2 bedroom flat in the centre of Cheltenham worth approximately 2x the amount of my 1st place which we could afford with her savings combined to my enlarged deposit. We’ve spend the Christmas period with both of our DIY Dad’s renovating the flat and it’s now let out.
My aims for 2010/11 are to get the mortgage transferred in to our names rather than our parents and keep the property venture running profitably as it ticks along nicely with very little input from my time once it is set up. I realise that I am very lucky to have such trusting parents and their ability to borrow has allowed me to do this however they have never had to give me any money and this venture has stood on it’s own financially.
I hope that somebody reads this and realises that with a little hard work and creative thinking what seems totally out of reach is actually very achievable if you really want it to happen.
