Singing Pig

Hey,

Came upon this site whilst using google to find out more information. Myself and 2 other friends who all study at University in Manchester have decided that we don't want to rent property next year and thought it would be better if we invested in a property for the next few years. Being students and never really thought about investing in property before we don't really know what to start. We want to know what 3 of us can do to invest in one property and what we will need to do (such as have a contract maybe? not sure obviously). Investing in property by yourself seems a lot simpler and clear but i'm not too sure when it is 3 people.

The background of us are:

Me:
Getting £6900 in grants and loans for going to university, Job earning around £100 a week. In touch with mother with no property on her name (lives in fathers property which is mortgaged).

Friend 1:
Getting £5000 in grants and loans from university, £4800 allowance from other sources (family), and in touch with mother who owns a house on her name, Job earning around £120 a week.

Friend 2:
Getting £3200 loans from university, and has extra funds available from both parents. In a more better financial situation than the other 2 hence why did not receive a grant. House owned by parents and on their name mortgaged, Job earning around £150 a week.

Now we have decided we want to invest in a property NEAR the city centre ideal for student housing. Quickly looking property prices vary (apartments) from £140k to £200k. Is there a way that we will be able to gain an available mortgage / loan / funds for the deposit of the property aswell as to pay off the property. What should we do to get this idea really going and into action? Thank you.

Buzz
 

Have you had a chat with a decent mortgage broker?

A few mortgage companies have recently released products targeting 3 or more contributing parties. I think it's a great idea. I don't know what the salary requirements are though.

Agreed, chat to an independant mortgage advisor about a self-certification mortgage, they usually wont charge you a fee. Also be very careful that you can trust your friends as essentially you will be entering a 25 year contract with them. Decide what you will do after you finish uni etc.

 Try and stay away from new apartments, they are built cheap and the management fees can be £1000 per annum and will increase!

I would recommend going for a small house as close to oxford road as possible, make sure your figures stack up and good luck!

 
Untill then become a sponge and soak up every bit of information you can!
 

fellas ... you may not like this!

i would caution against property investment just yet ...

1.  you have very low incomes, which, even combined, mean you will struggle to raise the deposit.  it's possible to borrow the deposit, perhaps as a personal loan, but i would question the sense of it ... a very high LTV (with mortgage and loan added together), combined with very low incomes means you are in a precarious position.

2.  i would suggest that getting your own principal private residence (which, of course, is the easiest property to manage!), is the first priority, before BTL.

3.  have you really thought through whether you want to be landlords while still at uni?  this could place a serious strain on your finances (trust me - things go wrong with houses ... and you have to have the cash to fix them!), not to mention your friendship, and finally ... detract from your obtaining the best degree you can (you will do far better with a 2.1 or higher than a 2.2!)

4. if you are aiming at the student market, the house will be a HMO ... and so you will have to spend a lot of cash on HMO compliance ... not to mention the increased wear and tear from renting to students!  if you are going for apartments, these are are unlikley to be HMOs, but the yield will be much lower ... and even £140k for an apartment is a lot ... !

i would be more inclined to salt away your cash with a view to putting together a decent deposit.  when you graduate, and each have a job, you will be in a much stronger position.  also, by your own admission, you know little about property - now is the time for you to rectify that ... you have the time to do it (i remember having about 10 hours of lectures a week myself!). 

i do understand the "itch" to want to dive in, but, be careful ... if things go pear-shaped (tenants don't pay, trash the place, etc) ... you need to be able to weather that storm ... oh, and don't forget to enjoy uni ... you'll be working, have a mortgage etc, before you know it!

i absolutely agree with Pod  - this is a VAST business, and the amount of research you will need to do will keep you busy for months - read SP from front to back, and have a look at the booklist  - go to networking events, enjoy uni, and  dont even think about property till you have a decent income as a cushion. 

One of my landlords will be getting a bill for £975 for damp repairs next week  .....

how would you cope with that on a £100pw job ? 

Buzz,

Hi there. What did you decide to do in the end?

Whilst I agree with Pod and Clottie on most points. It really does depend on your motivation at this point. Manchester is a good location given the vast student population. Thus location needs to be accesible to the Uni, which incidentally includes all Uni's in the vicinity including salford and possibly bolton.

If I were you I would be looking at 2 up 2 down terraces as my principal residence. Look for a good broker and try to source a residental mortgage (self certified) and rent the other room out. Advise the other 2 to do the same.

If this were london, I would understand the need to buy with others - however weighing up the risks and potential heart aches that could ensure, I dont see that this is warranted in Manchester with much lower prices - that is provided you dont want a mansion.

In summary then - dont just think about it, do something

Cheeks

Cheeks:

In summary then - dont just think about it, do something

i have to say ... i think that is reckless advice.  thinking, researching and planning are vital before you "do something" ... that is not the same as procrastination. 

also, frankly, for students without a solid income ... or their own PPR, to be getting into BTL, in the current difficult market, when they have no experience or cash ... and as a joint venture (!!) ... is madness. 

any business strategy should consider the down-side risk ... here it is massive!

Cheeks:

In summary then - dont just think about it, do something

i have to say ... i think that is reckless advice.  thinking, researching and planning are vital before you "do something" ... that is not the same as procrastination. 

also, frankly, for students without a solid income ... or their own PPR, to be getting into BTL, in the current difficult market, when they have no experience or cash ... and as a joint venture (!!) ... is madness. 

any business strategy should consider the down-side risk ... here it is massive!