Mortgage Free - so good they'll do it twice! Wynnvegas aiming for the big house

Twiddy

Hi Billy

Just done my usual weekly catch up on your thread and I've got to be honest, I'm not even involved and wouldn't know you if I fell over you in the street, but this latest news excites the bejesus out of me mate!!

If all that comes off you will be seriously laughing all the way to the Falkirkian Hills!

The only thing that concerns me is making sure you and Moyra still get some time together during it all. Don't let yourselves get buried in it (the money that is!!).

All the best anyway mate, thats great work...

T

wynnvegas

Cheers Twiddy,

I'm with you. I enjoy other people's successes a bit too much as well! Further progression today to be sure and tomorrow is shaping up to be an interesting day...

Cheers,

Billy

wynnvegas

Evening All,

Off we go on a Billy diatribe again...

My newest guy has proven to be a star already and I'm looking forward to the second boy coming in. Still waiting on the Sales guy coming back to me but we'll hopefully get that rolling to a conclusion next week. Business strategy has stalled a wee bit but not enough that we aren't realising some decent progress. No matter, we're getting closer and we'll get it resolved shortly.

Had some decent progress on the volunteery bit today. I've got three appointments next week to get involved with assuming I like the people running them. The three organisations are the local CAB (Management Committee Member) anti-poverty project, the local Youth Action Project (Committee Member) which gets involved with the 12-21 age group to improve employability and provide life skills and advice and on the local Get Into Work organisation (Trustee) which does exactly what it say on the tin (or at least gives it a good go. I've picked four (the fourth one is local and deals with families in financial crisis - uber MSE!!) that I can help to run and also get involved in the day to day workings a wee bit. Looking forward to a bit of variety and making a bit of a difference.

Buy to let has gone a bit mental. We've got the first 4 options through. Happily, the majority seem goers. Happier still, there is at least one which certainly belongs on the "have you seen this!?" board - the true blue kitchen from hell which I'll post when we've bought / not bought as necessary. Tuesday evening is the first visit of all 4 properties from 7-10. Popped into the bank today to get something like a second opinion and ended up with an idiot trainee who couldn't turn the computer on because he didn't have the appropriate accreditation through yet. That's the second 15 minute waste of my week and I haven't appreciated either of them even a wee bit. Needless to say, me and Santander are very nearly done. The transfer to the Co-op should be done in the next couple of weeks and I'll wash my hands of them.

No more progress on the land. Other than the estate agents have asked us to ensure that we make sure none of the sheep which inhabit a bit of the field escape onto the road. I haven't asked yet whether or not we get the sheep if we buy the land!

Cheers,

Billy

wynnvegas

Onto some of the fun facts and figures...

We're going to release something along the lines of £120,000 of the squalor value into an offset - still to get the detail on what that's going to look like. As far as I understand the plan to be, we may, in the same house, become mortgage free many times over as we'll be using the squalor equity to fund the BTL deposits and then, at te right time, put the borrowing commensurate to the deposit into the BTL property to re-establish the equity in the squalor with a view to potentially repeating the process over and over again. It's a black art to be sure but it's all starting to make sense.

BTL prospect 1 is a flat worth £80,000 which is available for £60,000. To get to the requisite 40% LTV, we need a deposit of £12,000. I'm going pessimistic as we're being offered fixed-term borrowing at 1.99% to 2014 but I'll be using 5.5% to give ourselves some breathing room. The mortgage then will be £294.76 per month (25 years repayment as I'm not convinced at all on IO) with insurances of £50p/m and letting fees of around £50p/m (we'll guess at that just now as I'm not yet sure of the costs of that piece). Total cost to us should be £395p/m with a rental income of £450p/m. Initial purchase costs are likely to be the deposit, an estimated arrangement fee of £1,000 every time, estimated £2,000 of a distressed property finders fee every time, estimated £2,000 conveyancing fees every time and an estimated survey of £450 each time we spin the wheel. That makes the initial outlay of a maximum £5,450 but more realistically £2,500 (lawyers at £1,500, no survey as most have home reports, no arrangement fee and a finders fee closer to £1,000 per property). Right off the bat, we're at £20k equity with this one and, aside from a £3k bathroom revamp, it looks not too shabby.

BTL 2 is a weird shaped semi detached house with some odd decorating taste. Worth £115,000, we'd get it for £86,250. Mortgage of £423.72 with all the usual costs. Not a lot of work needing done and no clarity on rental income as yet but likely in the region of £575-600.

BTL 3 is a small ground floor flat (with, wait for it, a shared drying green as a major selling point). It should also be noted, in all seriousness, that the drying green is an excellent place for "just sitting in". Hard to resist already!! THis is the one with the quality colour scheme throughout. Living room - purple. Bedroom 1 - purple. Bedroom 2 - cream (oh wait, purple). Kitchen (housing a collection of dodgy teapots) - bright, bright blue. Bathroom - turquoise. There was clearly a sale on on dodgy paints at the local B&Q when the current inhabitants went shopping to decorate. Valued at £70,000 but available for £52,500. Mortgage of £257.91 with a rental income of £450 or thereabouts.

BTL 4. Massive 26 page survey but no pictures as yet. Value £95,000. Available for £70,000. Mortgage £350.02. Rent around £550.

I'll let you know how I get on.

Cheers,

Billy

Tilly_MFW_in_6_YRS

Hi Billy, really interested in seeing the progress and there's no question that it will be a success. Good luck with everything Tilly and DH

wynnvegas

Thanks Tilly,

I still need a bit of convincing that what I'm being told is absolutely correct. At the moment (and I am looking hard), I can't find anything to negate the story from the Letting Agent and the Financial Advisor. Not that I don't trust them - just that if I was doing the sales pitch for a similar thing, I'd be accentuating the positives whilst glossing over the negatives.

So far, it could all go horribly wrong only if:

one or both of us loses our jobs and income and one or both struggles to find a new job (which we can insure against)
one or more BTL properties goes unlet for a considerable period of time (which again can be insured against - all advice seems to need to factor in 2 months p/a without tenants)
one of the properties has nightmare tenants who refuse to pay (again, we can insure against this)
we need to see one or more houses but no-one is buying and/or the housing market has crashed in a big way (which our initial 25-30% discount should protect us from to a large extent)
Interest rates go mental and we can't manage to get the rent rates up commensurate with the mortgage increase (the fix at 1.99% for 2 years and maybe a longer fix if that's the best bet - hopefully our 5.5% workings will cover us for a good wee while yet - 10 year fixed may be the way to go)

I have finally found out the reason for potentially going interest only. The income appears to be calculated as rent minus mortgage interest minus maintenance and repair costs. To that end, a longer term fixed rate seems sensible. That means that with the capital repayment part, it doesn't really matter whether it goes to the mortgage or comes into a pot that then is taken care of in some other fashion. So long as we don't choose to blow it every month, then everything will be grand. We'll then need to sort out the houses in Moyra's name as the income will be taxed at basic rate. Meetings with the financial advisor, a lawyer or two and an ccountant or two and a couple of folk who do this already are in the offing for the week ahead.

What this does do is give me a bit of pause about running the BTL and Big House projects concurrently. I'd feel a lot happier building up a significant pot of money to throw at the big house project as and when the time is right whilst all the time gaining more and more equity on the BTL properties. That may change this morning as the land today may be good enough that we decide to buy the plot we're going to see. If all that comes off, we may just hold our horses a bit on the actual build whilst we pay off the land purchase. All of that becomes a bit easier if out friends come in on the plot as that will half that cost and enable us to batter it down asap.

Cheers,

Billy

unhappy_shopper

wynnvegas wrote: »

Between us, we'll build up ownership of most of the country and then we can apply to have the whole place towed closer to the equator! I'm told (albeit by a man with a Sales hat on) that now is the best time to hit this market in the last 20 years.

I have finally found out the reason for potentially going interest only. The income appears to be calculated as rent minus mortgage interest minus maintenance and repair costs.

That may change this morning as the land today may be good enough that we decide to buy the plot we're going to see.

Hi Billy,

You have a way with words. Not to forget your tremendous enthusiasm.
I like your idea of towing the whole place nearer equator. :rotfl:

Yes, the BTL income is as you have quoted above. So, it is better to go for higher rate interest with lower application fee in your BTL mortgages and also choose Moyra as the BTL owner to take advantage of the lower tax band.

Just a small doubt: Are you planning to raise money by mortgaging your current property?
I was wondering where you managed to get a 1.99% BTL mortgage.
Ones I have looked into are all much higher rates.

Good luck with your land purchase and BTL ventures.

US

wynnvegas

Thanks US,

Yes, we're going to offset about £120,000 of the squalor. I've been at the sums again this morning so I'll get those posted as soon as I've run them through a few scenarios. I've very faith people will keep me right if I've missed something dramatic. For a relatively small outlay per property (c.£3k to actually buy the house), we could comfortably pick up a new house per month ongoing. We'll make the initial splash with places we like but we'll take a heavy lead from the letting agent as she knows her stuff and, rightly or wrongly, we trust her.

I'm currently trying to find out whether the initial renovations / improvements can all be amortised and offset against the alleged profit we're going to make per month. That is looking like quite an important aspect right away - particularly if the tax is going to come off at 40% (Moyra will be just under the wire when they bring the higher rate band down).

Cheers,

Billy

ETA: I'll find out about the mortgage next week from the advisor. I didn't ask too many questions at the first meeting but I've got a list for the second!

wynnvegas

Well...

I'm not prone to such internetisms, but, if I were, this would be an OMG moment. However, as I'm not, I'll let the prospective views from the potential Bog House do the talking:



Needless to say, we're sold. We've got Investor 1 popping along in the next 48 hours to have a wee look, the architect and surveyor primed to get cracking on the de-risking this week, the financial advisor will be early next week to begin to make this bit real. Whilst we may well get the land (and we're really hoping we do), it's likely that we'll take 3-5 years to actually build the big house as paying off the land will become a project in it's own right. Between the land, potentially buying houses from The Mother and Moyra's mum and dad and the BTL project, we'll have plenty to get on with but hopefully we'll inch ever onward to having our big house whilst playing the landlordy game to help fund the Big House project initially and then potentially fund new things down the line.

It must be said at this point that massive thanks need to go to Unhappy Shopper who managed to inadvertently point me in the direction of this plot. I owe you one.

Hope springs eternal...

Cheers,

Billy

waughc01

Hi Wynnvegas,
Have been reading your thread for the last six months you really have your head screwed on for such a young person. We hope to be mortage free next Christmas:j
Love the photos of the land you are thinking of buying for you to build your dream home. The views look amazing and it looks so peaceful,hope it all works out for you and Morya.
On the btl, i think we stay in the same area (west lothian) but not too sure. We have rentals in Bathgate and Livingston we have no issues renting these out. All our propertys are furnished to a high standard, lately more and more tenants are looking for unfurnished or white goods only. We rent these out ourselves (no agents) signs in windows or gumtree. 2 bedroom flats rent out for 500 pcm and 3 bed house 600 pcm. We never rent to family or friends it's a golden rule for us.
Good luck with all your new adventures:T