Is now the time to step into London property?
When they reached their mid-forties, Tom and Mary made a life-changing decision. They had seen their twin boys through university and were close to paying off their mortgage. Now they wanted a new challenge. They wanted to ditch their day jobs and become financially independent.
The story of how Tom and Mary built up a buy-to-let property portfolio and are now benefitting from time to spend their growing income.
The first step: releasing equity from their home
For most people, the idea of settling the mortgage and owing not even a penny to the bank sounds like financial independence. Tom and Mary realised that as long as they had to work for someone else, then they would never be free. Mary used to work for a bank, while Tom was a self-employed builder.
They’d heard of others making enough to retire from flipping properties, but, while Tom’s building background would help the couple to buy and renovate run down homes, this wasn’t what they wanted. They wanted to create an income, a stream of cash that would grow every year.
They decided on new-build properties. These, they hoped, would not only rent quickly but would command the best rental value.
Their first step on the road to financial freedom was to release equity in their home. It gives them a deposit to put down on a buy-to-let opportunity. Even though it was a big step – and plenty of their friends told them they were mad even to consider property investment – they raised more than £100,000, using the rise in the value of their home to do so.
The first purchase is the most difficult
That first purchased was the hardest. They kept banging their heads against one of the five insane excuses that people use to not invest in property. They either thought they didn’t have enough money, or it was the wrong time to invest, or they couldn’t find a great deal. Eventually, they found Gladfish. We showed them how emotional intelligence plays a role in property investment, and how to overcome their natural objections.
(Download “Property Emotional Intelligence” and discover why the rich get richer while you get left behind.)
They decided to take advantage of our property investment education resources and used us to find their first investment into off-plan property: an apartment in central London.
Doing due diligence
As part of their research, Tom and Mary undertook a lot of due diligence. They wanted to make sure that the cash flow created from their purchase would be able to sustain it. They completed a two-year cash flow analysis and, once they were happy that their investment return could be sustained if interest rates rose, they took the plunge and purchased their first investment property.
Using a sales progression team
Tom and Mary were both busy people. They didn’t have time to do all the chasing and liaising with solicitors, developers, and mortgage brokers. So they took advantage of Gladfish’s Sales Progression Team. It gave them a single point of contact. With Gladfish’s experienced team on board, there was little for Tom and Mary to do. Soon they had their first property in their portfolio.
Growing their portfolio
Tom and Mary accumulated more property by using the same strategy as they had done to kick-start their portfolio; only instead of releasing equity from their home, they were able to use the increasing value of their buy-to-let properties. With each subsequent purchase, it was easier to finance another.
They concentrated on properties that were close to local amenities, especially train stations in commuter towns, and where immediate communities were benefitting from infrastructure spend and regeneration.
A lifestyle desired has been achieved
Now, after a little more than ten years, they have a property portfolio approaching £7 million in value. The net income has allowed the couple to do what they set out to do: give up their day jobs. Tom plays golf and mentors youngsters in apprenticeships. Mary volunteers three afternoons a week at a cancer charity shop (she lost her father to the disease just before the boys graduated) and works as a teaching assistant at a nearby primary school.
Will you ever own a buy-to-let portfolio?
Tom and Mary’s portfolio is performing well. Because they researched and did their due diligence before each investment, it has weathered the storm of the Global Financial Crisis. Tom says that the couple had to alter their mindset:
“You never really own the property. You own a part of it, but the balance is mortgaged. That’s the beauty of this type of investment strategy – we’re making an income on money that isn’t ours. We’re leveraging our money and equity by using the bank’s money to invest.”
(Watch my video which answers the question “How much leverage should you use to build a property portfolio?”)
Being an investor, not a landlord
Tom and Mary also say that they never had the desire to become landlords. Instead, they used Ezytrac Property Management to do all the day-to-day work of managing a growing property portfolio. That allows them to concentrate on the important things in life: their volunteer work, holidays, and preparing for the birth of their first grandchild.