Malcolm and Julie retire thanks to property investment
With property investment mortgage rates at all-time lows, increasing numbers of property investors are considering remortgaging to take advantage of profitable property investment opportunities.
Here, I want to introduce you to Malcolm and Julie. They’re in their early fifties, and they’ve just retired. And they have property investment fuelled by a carefully planned remortgaging strategy to thank.
Malcolm and Julie needed to take control of their lives
We first met Malcolm and Julie a little more than ten years ago. Like so many people, they felt like they had lost control of their lives. Then in their forties, they were slaves to their professional life. They got up, commuted to work, came home, and went to bed.
They both had good jobs in the City but were both tired of the daily routine. One day melted into another. Weeks swept by. They had saved a fair sum and had good pension plans, too. But they didn’t relish another quarter of a century doing the same thing day in, day out.
After our initial meeting, they decided that buy-to-let property investment could be their ticket out of the rat race.
Remortgaging to kick off an investment property portfolio
Malcolm and Julie decided to keep their cash savings where they were – in tax-efficient ISAs – and release equity from their home to invest. They remortgaged and took out nearly £100,000 from their home.
Julie was apprehensive at first. She was worried that property prices would fall. But she also knew that the couple had to do something to break free from the rat race. They got real about the risks and took precautions to de-risk off-plan property investment to maximise their profits.
They opted to concentrate on property investment in London. With their £100,000, they put deposits on three off-plan properties.
“Actually,” Julie told me later, “once we’d taken that first step, a huge weight lifted from my shoulders. Finally, we were doing something positive to change our lives. Of course, there were risks involved, but we could manage those risks. We projected our cash flow to the nth degree, and always made sure we had an emergency pot of cash in place – just in case something went drastically wrong.”
A decade later and Malcolm and Julie just retired
Malcolm and Julie now own 18 apartments in London, Manchester and Birmingham.
They’ve built up their investment property portfolio by cashing in on rising property values and using the money to buy more properties. The success of this strategy depends on two things:
- Property prices rising
- Buying in the best places to invest in property UK
After they had invested in their first few properties, the UK property market was hit by the Global Financial Crisis. But their properties were hardly affected. In fact, they were able to use the depressed state of the market to buy off-plan property at an incredible value.
“Because we’d taken advice and bought in areas that benefit from the property fundamentals – shops, schools, transport links, major employers and major investment – none of our properties fell in value by more than around 5%. And, what we witnessed was an increase in the number of people wanting to rent,” Malcolm says.
“In fact, the GFC (Global Financial Crisis) worked well for us. Interest rates fell, and rental prices went up. A couple of our properties that had been in negative cash flow were suddenly creating income for us.”
Property investors, but not owners
As their investment property portfolio grew, they decided to spread their investments. They bought in Manchester and Birmingham, where property prices are lower. Again, they searched for properties that were near shops, schools, and major employers.
As property prices increased, they grew their portfolio. It’s now valued at over £4 million, but they aren’t under the false impression that they are multi-millionaires.
“We don’t own any of our properties. They’re all mortgaged. We’ve been able to grow our portfolio by remortgaging. So, the mortgage we owe is huge,” says Julie. But there’s not that concerned look in her eye that she had when they first invested in property.
Property investment for income in early retirement
Malcolm and Julie could sell their properties today and walk away with a healthy profit. They’ve got a fair amount of equity in the portfolio. But that’s not what they want to do.
“We’ve set our portfolio up to produce income. With these low-interest rates and such a big demand for rental properties, almost all our properties are producing positive cash flow. The cash flow is so good, and we’ve decided to retire.
“Our tenants pay the mortgages. The rental income is enough to pay for professional investment property management. And because the properties we invested in are new build, the maintenance costs are low. The result is that we’ve got enough rental income to allow us to retire and do what we want to do,” Malcolm told me.
What do they plan to do, now they’ve retired in their early fifties?
I asked the couple what their immediate plans are. Right about now they should be on a plane to the Far East. They plan to visit five countries and tick a few things off their bucket list – including standing on the Great Wall of China, riding an elephant, and eating in a Singapore street market (where you can eat Michelin starred food for just a couple of pounds).
“When we return, we’ll decide our next steps. We’re thinking of buying a few more investment properties,” Julie told me.
Are you tired of the rat race?
Would you like to discover how a strategy of remortgaging could help you retire when most people have just started saving for their retirement? How could you use property investment to escape the rat race?
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