Property Investment For Beginners: How To Start A Buy To Let Empire

This is the story of my first time.  

Make a coffee or grab a beer this is a l-o-n-g post with occasional fruity language.  You have been warned.

*  *  *  *  *

“I guess I’ll learn whether to sink or swim…alternatively the shit will hit the fan and it’ll be a mess”.

Words from my leaving email I sent to a colleague 10 years ago.

June 12th 2004 was my epiphanous moment.

Thanks For All The Fish!

There was nothing special or fancy about that moment.  There wasn’t a great lead up – apart from the fact I worked insane hours, travelled the world first class and stayed in 5* hotels – but you know – there are worse things in life.

I am sat on the same sofa now, where I was then and I just had this overwhelming realisation on that sunny Saturday morning:

“I cannot do this any more”

Followed by:

“I have to get out.  I have to do something else”

And just like that – it was mind-stunningly quick – I knew on Monday morning I was about to quit my career in Marketing.

Which was odd really.  I was well-paid, great at what I did, and I’d only had a “proper” job for 3 years.  Hell, I’d even done an advertising diploma in addition to holding a degree and a Masters because I wanted this career so much.  And yet here I was about to chuck it all in.

Oh, and did I mention my boyfriend had been made redundant from his job and I was the sole wage earner?

Oh, and did I mention that the agency I worked for had gifted me some shares worth £15k which were about to mature?

Oh, and did I mention how fucking small my share pay-out was compared to every other person in that company and how angry that made me when I worked so damn hard and brought in so much money for somebody else and how the directors of the company netted over £35 MILLION each?

Oh, and did I mention looking back I still feel that anger in my belly now.  I feel my throat constricting that I worked so hard for some other MF to get rich.

I know I was junior when I started – which explained my lowly pay-out.  But, I swore then, as I swore now.  Now, I make money for me.

It doesn’t matter how little or how much – my time is mine and what I do with it will be my choice to make.

And it may surprise you to learn, I had no great plan or idea how I was going to make money.  I just thought: I’ll find a way.

That was it.

Failing that, I figured, I have a three month notice period, I’m sure I’ll come up with a new idea before then.

People were surprised by my decision – after all I had a mortgage to pay and was still in debt with my student loans; £15k is not a life-changing amount of money.  Plus, all told it was a great career – which I had only just started.

I remember one day during that three-month notice period that I started to have a ‘wobble’ and when a head-hunter called me I agreed to go for dinner.  She took me to a wonderful restaurant in Mayfair, fed me divine food and got me drunk on delicious red wine.  She talked to me about all the opportunities which awaited me, the companies who would take me on tomorrow at a vastly inflated salary and what an exceptional career I could have.

And I recall nodding, feeling a mixture of excitement and fear.  I can still remember now drunkenly clattering down the cobbled street on my heels while trying to act professional and as though I wasn’t pissed out of my brains as she clutched my hands and told me to make the right decision.

How I Got Started In Property

I honestly cannot remember how the property thing started.

I don’t even know how I found the flat in Cambridge, which was to be my first project.  I am desperately trying to reach back into time and scavenge my brain cells for any signs of how, what, when, why.

But it’s a blank.

I remember when I told my dad I was going to buy a property and do it up to make money he went berserk.  He told me I was not a builder.  I remember facetiously telling him that I knew that, and that’s why I was going to be a property developer.  And I could hear his sneer down the other end of the telephone line.  And I know he was angry with me.  He told me so.

“You have spent all this time and money being an eternal student (the running joke in my family) you have got all this education and for what?”

And his disdain and disappointment at my choice was palpable.

But I was unrepentant.

Maybe more so – now that he’d told me I shouldn’t do it, couldn’t do it and was making a dumb-ass decision.

It makes me sad he’s not around now to see that it all worked out.  Incredibly, that £15k did change my life, and that when you want something enough, you can make it work.  It brings a tear to my eye that I can’t say to him “I told you so” and smirk inanely that I was right and he was wrong.

I guess that’s what all children want to do – prove their parents wrong.

Anyway, at some point in September 2004 I found a flat going to auction in Cambridge.  Cambridge is about 45 minutes from me.  The flat I found was a pig-ugly 1960s boxy-built block affair.  It had two bedrooms and was on the top floor.  It had good sized room proportions and as soon as I walked in, I loved it.

I had no idea how to do anything at all, but I figured I could do everything.  Somehow.

So I applied for a mortgage to buy the property (remember those were the heady days when earning money to pay back a mortgage wasn’t such a big deal, so I don’t think it made a jot of difference whether I had a job or not!).

And then I went to auction.

Buying A Property At Auction

Before then I had never bought a property at auction.  Hell, I didn’t even know anybody who owned a property yet – let alone a second property.  I didn’t know anybody who knew builders, or solicitors or plumbers or any other profession that may have been slightly useful for what I was about to do.

Property was not my world.  I knew nothing about it – and nor did any of my peers.

And I can still remember the heat of that first ever auction.  The glitzy, sparkly chandelier, the masses of people.  And how very small I felt all on my own in the manic London auction room.

Shaking?

Nervous?

Scared?

I was out of my fucking mind with worry.  What the hell was I doing?  Who the hell did I think I was?  WTF was I doing?  Why was I in this packed auction room with all these professionals who had money?  Who was I to try and buy a flat with the only money we had in the world – plus a 25 year mortgage from a bank when I had no clear idea of how I was going to pay it back.

That’s dumb-ass.  My dad was right.

And when the auctioneer got to my lot, I swear to God I thought I was going to pass out.  Palpitations?  I think I was shaking from head to foot, but I remember telling myself to breath, look calm; poker-face.

The bidding started on my lot.  Low and slow to begin with.  I didn’t bid at first.  My hand was shaking too much.  I remember just watching.  Every single sense in my body was on fire.  Ragingly on fire.

And then the auctioneer starting calling that he was going to sell the property “Going once, going twice…” and I shot my arm in the air.  It was shaking as I held it there.  My fingers were pumped with hot blood.

Then somebody else bid.

I bid again.

They bid again.

And I was nearing my limit.  I felt physically sick.  So close to glory and it was as though my golden opportunity was about to be snatched from me.

I had no back-up plan.  I had no other property in mind for my alleged ‘property development career’, I had no other money to buy anything more, and I had no clue what I was going to do with my life if I walked out of the room that day with no property.

The bid was with me at £88k.  £90k was my limit.

I stood there rooted to the spot as the auctioneer called the property looking for more bids.

“Don’t fucking bid.  Nobody fucking bid” was all that went through my mind.

And they didn’t.

The auctioneer knocked the property down to me.

I punched the air, jumped and whooped.  Not auction etiquette – but I didn’t give a damn.  I had won my property – and so had started my new life.

And God it was about to get difficult.

Property Investment For Beginners*?!

I had absolutely no idea what I was meant to do next.

The day I picked up the keys to the flat was one of horror, shock and a little bit of pained excitement.  I walked into the property and said to myself: What the hell have you done?

I didn’t even know where to start.

So I looked in the local paper and found a classified ad “Bob the Builder Handyman Services”.  Corny but effective.  I called “Bob” who turned out to really be called “Bob” and he came round later that day.  He had a big, round, smiley, open face and I liked him.

He said his day rate was £150.

I said OK.  I had nothing to compare it to, so had no idea if it was a good price.

I just wanted to get started.  I wanted to get in and out as quickly as possible and make some money before the bills were due.

Insane I know.  I was insane.  You need to be when you get started.  Oh, and hungry, you have to be ravenous.

I remember working Bob hard.  The poor bloke didn’t know what had hit him as I got him to smash this, fix that and multi-task beyond the capabilities of any ordinary man.

And I was on site non-stop.  I can still feel the cold now, it was a really bitter October and I had come down with a bad cold.  I took to wearing a body-warmer and finger-less gloves to keep me warm while working.  But it was that sort of cold which gets deep down inside you and won’t let go.  I was trying to gloss doors in-between wiping my snivelling snot-ridden nose and thinking and wondering what had become of my life.

Just weeks earlier I’d been running a marketing workshop in the Bahamas and being paid handsomely for it, and now…

I turned the music up louder.  It’s a habit I’ve never kicked – 10 years on and I still react the same to thoughts I don’t like.

Despite the hardship, financial worry and lack of experience about anything I was trying to do, I remember that first project with great fondness.  I knew then that I was taking a big risk, but I felt OK with it.  I believed in what I was doing.

And to be quite frank, I had no choice but to make it work.

If I didn’t, I’d be back looking for a job trying to make ends meet to pay the bills and having to admit to my dad he was right all along.

And I wasn’t about to do that.

Three weeks later and the property refurbishment was complete.  I spent the grand total of £7.5k.  Boot-strapped all the way, but looking great I got the property on the market for sale.

Selling The First Property Renovation Project

£125k was the asking price.  Not bad I thought, for three weeks work.

The flat sold to the first viewer who fell in love.  It took less than 48 hours.

I was elated beyond belief.  Here was the proof that I could start a new career.  I could do this.

And so the sales process got started, and I was soon to learn the harsh realities of the property business.

The property the couple were selling to buy mine got down-valued.  I recall it was something to do with a dodgy extension they had on their house.

The agent called me and asked if I would take £12k less as their property was valued at £12k less.

“No way” was my cold response.  “The surveyor valued my flat at £125k – it’s not my property that has got the issue, it’s theirs”.

The couple were desperate to buy my flat and strung me along for a good while longer with promises of finding the extra cash before I pulled the plug and told them to stop messing me about.

By now it was the 19^th of December.  Which is a great time to put a property on the market for sale.  Not.

Fucked off, messed about and with bills springing out of every orifice, the elation I had previously felt slipped away.  I was running on empty.

From Vendor to Buy To Let Landlord

I visited the property the next day on a crisp December morning and looked up at it from the outside.  I knew I was about to get ready for a long wait to find another buyer.  Christmas was all anybody was thinking about – not buying my flat.

While there I bumped into another owner of a flat at the complex who had also bought at auction.  We’d spoken a little while I had been doing the works and he’d been impressed with my results.

It turned out the neighbour was an experienced property developer.

“What’s your mortgage payments on this” he asked me, after I had told him the sorrowful tale of the sale falling through and my fears of how I was going to make ends meet.

“The rent will cover that easily” He replied.

“Rent it?” I exclaimed. “Rent it out? But I have put white carpets in there – it’s not been done to rent out!”

I was incredulous at such a suggestion.  I had (even within my modest budget) sourced designer sinks and taps, high gloss worktops and white carpet.  None of the property had been tenant-proofed.

It was a property that had been renovated for sale – not to rent.

“You’ll be waiting a while before the market picks up again to sell, and if you have bills to pay…” he trailed off.

I felt like I had been punched in the chest.  He had said out loud what I already knew – it was going to take months to get a sale through and monies in the bank.

Time I didn’t have.

So I called the mortgage company, told them all about the work I had done to the property and asked them to re-value the property.  If I could re-mortgage the property I could take out some money, rent it and carry on to the next project.

The valuer came out within days and the property was valued at £125k and I could take a loan of £99k.

I accepted immediately.

The flat let to the first tenants who saw it – and who despite the white carpets kept it immaculate.  They stayed for 6.5 years.

They loved the flat.  They loved it so much they even tried to buy it.  That was around 2007/8.  Just when the whole bubble burst.  Their mortgage, which had been approved, got retracted at the last minute – just before exchange.

I was on holiday when I found out.

Never ever expect a sale to go through, no matter how sure it seems, until the monies are in the bank.  Shit happens in an instant and you have no control over what or who may make a decision that will change your life.

So, 10 years on and I still own that first ever project; my flat in Cambridge.  I have new tenants now.  They’ve been there around 3 years.  They moved in the afternoon the previous tenants were leaving!  No voids there.

The white carpets are no longer – we decided to tile the hallway and put a more tenant friendly beige/brown elsewhere.

The designer taps, sink and high gloss worktop didn’t stand the test of time.  They’ve also been replaced with more practical, durable stuff.

But in terms of any other repairs, that flat has been an absolute joy with very little to report over the years.

And it’s funny looking back – as right now – this is almost 10 years to the day when I started this whole property adventure.

Property Hacks, Tips, Cheats And Rules

What have I learned?

Loads.  That’s one of the reasons I started writing the books.  I have learned so much from a standing nothing-ness of a start that I feel it’s only fair to share.  To help others who are now where I once was.

And it makes me feel quite sentimental when I think of all the properties I have loved and lost over the years, the people I have met, the stories I have heard, the tears I have cried, the sleepless nights, the joy, the pain, the everything that goes with having a career in property.

Every career is full of ups and downs, and life deals with us in different ways.  Do I wish I had taken the head-hunter up on that amazing career opportunity all those years ago?

Choices.

We all make choices in our lives, and then our choices make our lives.

It took guts to make the choices I did.  It still does now.  Choices don’t ever get any easier, once you choose one thing you are sacrificing something else.

And that applies to all of us in any walk of life.

We forget when we choose one thing, we have to sacrifice something else.

I read something the other day, I can’t remember where it was, so forgive me for not crediting, I wish I was so wise as to say this, but I know I believe it:

“You can’t do everything you want, but you can do anything you want”.

PS.

Thanks to the reader whose email to me inspired this blog post.