Advice on first purchase

[Muggy0101]

Hello there. I’m just looking for some advice really. For the longest time I’ve always wanted to do what my father and my family do which is be a landlord for a second income. However I’m quite muddled as to what I need to achieve before I can.

I’m 20 year old working full time with an income of under £25k P/A (roughly £20 k plus as I earn commissions etc)

I’ve never purchased a home before.
However i’ve been working with the company I work for for almost 2 years now coming up. I save up a lot of money every month, and also expect to pay roughly 30% deposit on a property I purchase if not more.

im just wondering if I were to purchase a first time HMO, would I ever even get accepted for a mortgage ?

im quite sensible with my finances I must say and also My credit ratings/ score etc are all very good according to the 3 Credit Beaures.

does anyone on this forum know would it Be possible in the near future to even obtain a mortgage for this in my scenario or no as I’ve been blindly saving up over the past few years but never even thought about if I would get accepted.

[Beswick]

For a first time landlord, I'd advise you avoid an HMO and just go for a straighforward (maybe 2 bed) house with single tenancy. In my opinion, starting off with an HMO would be like learning to drive in a Ferrari. There's much more work involved with an HMO (you mentioned you have a full time job), and multiple tenancies gives you more chance of landing a problem tenant.

loanarranger can give good mortgage advice, and, from memory, Hudson01 is an HMO landlord, so has experience

I've edited text from a previous post of mine here:
Use Rightmove or Zoopla for your research. Choose your desired areas (my advice is to stay local if at all possible). Bear in mind that, from 2028, it will probably need to be an EPC grade C. So, if it isn't already - how will you get it there ?

Search daily ... what they're selling for, what they're renting for, how quickly they turn 'SSTC' (assuming you'll want to sell one day), how quickly they turn 'Let Agreed' (gives you and idea of the demand).

Buy to let isn't as good as it was - for tax, for returns on investment, or for the amount of legislation (already here and also on its way). But as an outsider coming in, with your money stuck earning 1% in the bank, it's generally (but not always) better. Always remember, it IS possible to lose money on a buy to let.

Use a mortgage for 75% of the funding - don't put more than 25% down. It will avoid sinking your life savings into something you might regret. If you decide it's for you, you can use the leftover money to pay down the mortgage further down the line - or use it for additional deposits to increase your portfolio.

How are you going to find your tenants - website (like OpenRent) or agent ? Agent management or self-managed ? Get to know the paperwork you will need to give the tenants, and how to check them out properly. The property will need a Gas Safety Certificare and be checked for electrical safety by getting an EICR.

Maybe do a training course with the NRLA (or similar), but steer clear of property seminars and 'get rich quick by investing in property' classes - they're a total con. They'll dangle the carrot of the secrets of investing just to get you to buy further courses and classes.

Oh, and keep using Landlordzone - there's a wealth of knowledge and experience on here !

[loanarranger]

Lending to someone with no property ownership makes the ability to get into the BtL sector extremely difficult, this is further complicated by having an income below the normal minimum of £25000.
The key to Pandora’s box for this sector is to have the involvement of your father given that he can meet all the criteria demanded by lenders and would be fundamental if you were making the quantum leap in HMO accommodation as a starter unit. Once you can demonstrate such ownership for at least one/ two years then as a “ Property Owner” your individual qualification is enhanced with evidence of income from Land & Property.

[Muggy0101]

Good afternoon. Thank you very much to both of yous for your response. I've got my father and also my older brother who deal with multiple properties managing them aswell, so I wanted to follow in their footsteps as they would have the experience to assist me in the right directions.

What I had in mind was I wanted to purchase a property (at least 25% deposit if not more) as a form of investment and also who wouldnt want a second stream of passive income ey?

A HMO would mean a higher income than a single occupancy (i would have thought), but you are also correct in terms of it being difficult to manage since I work a full time 9-5.

The only problem I have is if tomorrow I decided I want to purchase a property, theyre going to want me to prove I have more than £25k coming in. Weirdly enough this financial year I did earn roughly £22k so neither here or there , nevertheless they would scrutinise it all. Ontop of that I dont have a property at the minute so a first time buying a House as a landlord would prove difficult no ?

What would be the ideal resolution? Would Lenders be likely to offer me a loan based on my age/ income/ outgoing/ Credit/ so on so forth

in regards to the properties themselves I briefly have a look now and again but this is something I would definitely look around for way before I even purchase one.

Since I was 18 i wanted to purchase a property, but all ive been doing is saving and saving again and again but never thinking about if anyone would even offer me a load.

in my head to make it nice & simple i wanted to purchase a property with high demand with a good deposit as its my first buy, then make it a MDU/ HMO if it isnt already and have this as a good form of investment with a stream of income finding tenants either privately, or websites that advertise such things.

[OneSmallStep]

I've got my father and also my older brother who deal with multiple properties managing them aswell, so I wanted to follow in their footsteps as they would have the experience to assist me in the right directions.

Aren't they both in a great position to offer detailed advice and financial support?

[jpkeates]

What I had in mind was I wanted to purchase a property (at least 25% deposit if not more) as a form of investment and also who wouldnt want a second stream of passive income ey?

A HMO would mean a higher income than a single occupancy (i would have thought), but you are also correct in terms of it being difficult to manage since I work a full time 9-5.

I think you need to be realistic.
The chances of someone lending a 20 year old earning £22k per annum money for an HMO are probably nil, even if you owned your own home mortgage free.

Getting funding for any BTL would be pretty challenging and you'd most likely fail.
I'd worry about any financial institution prepared to take on that kind of risk.

Getting a residential mortgage would be a possibility and there are almost no better investments than one's own home. Obviously, it doesn't really make a lot of sense if you're happily living rent-free (or at low rent) at home, but I don't think what you're trying to do is going to be possible.

[loanarranger]

As a follow upto my post , the fact that either your father or brothers are homeowners as well as established landlords eliminates the need for you personally to have a minimum income and prior Landlord experience to qualify for an HMO. As part of your learning curve the other partyto the mortgage will ensure that you comply with everything required of a Landlord since they would be jointly responsible for the property and mortgage.

[Gordon999]

Muggy0101,

I think what loanarranger means by "Involvement of your father" is to buy the first rental property in joint names with your father; and you can register the buyers as "tenants in common" to take a larger interest in the property.

I suggest you study the Clydesdale bank online website because they accept borrowers from age 18 and you will be acceptable. So its for you to decide if their mortgage interest rates can be covered by the rental income of the property.

[loanarranger]

Gordon thanks for clarifying what I tried to communicate.

The normal minimum age of an applicant is 21 and sometimes 25 but there are several lenders including Clydesdale who will accept persons having attained 18 years of age