SOLD!
Having watched the housing market decline gain momentum in the UK over the past few months, we have today bucked the trend and sold our last remaining property and exit the buy-to-let market. It’s been a bountiful few years in the housing market and we managed to ride the wave and make some money out of it. Our first purchase was a small one bedroom property in Folkestone which we quickly followed up with a similar property in Leeds.
I find it amazing that we were able to buy a property by picking it off the Internet, not physically visiting to view it, and then rely on agents to deal with the sale then the subsequent search for a tenant. On both these properties we were lucky to find long-term tenants who created no serious problems for us and then we were easily able to sell the properties with the tenants still in place to other investors. Each sale allowed us to make a tidy sum of money that we then leveraged as we bought and sold the properties we lived in so that we could move up the housing chain.
Our final buy-to-let property was our Docklands house, which was our main residence for several years, that we decided to remortgage and rent out rather than sell. This was probably our most risky move as the mortgage payments were considerably high compared to other purchases and any changes (i.e. decrease) in our employment income would mean considerably higher outgoings compared to our income. Thankfully our agent was able to find tenants straight away although we had to accept a house of 3 students and accept the risks this would cause. I remember being a young student and the way we lived at the time so I went ahead knowing the likelyhood of ongoing repairs due to general damage students cause.
Our tenants were fairly well behaved although of course quickly wore out the carpets, random bathroom parts, and nearly all the furniture. We also had to make other general repairs so, as expected, we made a loss comparing rental income to mortgage and other payments. This did not matter as like most people riding the housing market, we were banking on our equity steadily increasing as the house prices continued to ride.
Our turning point came in January 2008 as the tenants moved on and the house required a lot of work to make it presentable for new tenants or indeed to sell. We progressed with most of the work but those costs along with the steep mortgage payments opened our eyes to the risks we took on so we decided to put the house up for sale at the market value. We had a few interested buyers immediately but they had issues raising the finance as the housing market started to dip and well publicised financial market issues came to light in the media. Again, our new agent did us proud and found another investor who was still buying properties in the area. After some quick negotiation to account for outstanding repair work that we passed onto the buyer, the offer was accepted and we went through the sale process. Today marked the completion day and everything went through without any issues and we’ll soon be paying a reasonable chunk out of residential mortgage. Now every time I see a new headline bemoaning the rapid slide of the housing market I will be thankful that we invested well and got out at the right time.