Here’s what happened when I bought my first property
Those who say buying property is easy are either:
- Have been in the game for years
- Zen monks that have a high tolerance to stressful situations
Before I looked for my first deal, I interrogated anyone I met who had already completed one.
Where is the property? How did you source it? Was that the best way to source? Will you source for me? How much did you buy it for? Who’s your broker? What’s its cashflow? Is it BMV? Why did you buy it? Who is your solicitor? How did you raise the deposit?
I asked so many newbie questions. I must have driven everyone insane.
Actually, I still ask them……
Anyway, here are my answers to all the nosy questions I asked everyone else.
How did you source the property?
I found the property through an estate agent in Coventry.
Please note, I visited this agent regularly. I drove up to Coventry from London once a week for at least 6 months. The sole purpose being to build up a relationship with the estate agent and a couple of others.
The purpose of building a relationship with estate agents is so you are the first person they call BEFORE a property goes on the market.
Questions I like to fit into conversation:
- “What kind of things do you enjoy doing outside of property?”
- If they mention they have kids “Aww, how old are they?” If their kids are below ten years old, they will probably show you pictures which you WILL appreciate and gush over.
One time I went up with my Dad. He brought a packet of biscuits, marched into an estate agent and confidently said something like;
“I brought you some biscuits *Big smile as he presented the chocolate digestives*. Let’s have a cup of tea and you can tell us about all the great property deals you have for us.”
And sure enough, he made us some tea and told us about what he had on offer.
How did you stay motivated to regularly visit your area?
The drive there and back is a total of four hours. I would be on my feet all day viewing properties, making offers and doing the rounds visiting agents.
It was important that they saw my face regularly and knew I was still in the market looking for property deals.
After the first couple months it got really tiring. I started finding excuses not to go.
Then Dad started breathing down my back shouting, “40 offers Jess! Elite Legacy (the company I trained with) said make 40 offers! Are you at 40 offers?”
“Then you need to be in Coventry.”
Seriously, it’s like being at property boot camp.
I kept my motivation up by
- Making it as fun as possible
Luckily some of my favourite people from university still lived in Coventry.
So I had an excellent excuse to see them, plus if I needed to be in Cov for an extra day or so, my friends kindly lent me their spare room. Seeing my friends kept me motivated to keep doing the drive.
When people say they can’t choose between two areas I ask them, “Which area do you prefer visiting?”
Some say, “Well I have family in X who I would like to see more of.” Providing that area fits in with your strategy, decision made.
- I made a commitment
The other way I stayed motivated was by joining the Coventry PIN team (Property Investor Network). This meant every second Tuesday of the month I HAD to go to Coventry to help out at the PIN meeting.
Not only was it useful to network with investors in the area, but as a helper, I also got to go to the meetings for free ;).
This saved me £20 a time. Btw, if anyone wants a code to attend their first PIN meeting for free use ‘jessica01’. You can book online in advance.
Simon Zutchi, the founder of PIN, has set all us PIN helpers a challenge of who can get their code used most; so please use it here, as I am shamefully competitive.
What was the property like?
It was a cheap, damp, dark hole. A studio flat in a block of eight, with a jungle outside.
Despite this sales worthy description, it was located in a peaceful residential area of Longford, Coventry.
It was a nice place for professionals. Although it was not in my intended area (I usually go for properties near a university), there was good demand for professionals. Plus it was cheap.
And it came with a tenant. Fantastic! I thought. No need for me to go out and find one.
Initially this was great news because the state it was in, I would struggle to find someone desperate enough to live there. The guy who lived here was on housing benefits which paid £395 per month.
Unfortunately, he forgot to ventilate the place and the light in the bathroom had blown due to a leak in the flat above. To be honest, I think having a dark bathroom was a blessing. It hid the grotesque amount of mold spewed across the bathroom and onto the walls outside it.
Thus began my learning of why it is dangerous to buy a flat, especially if it is below another. More on this another day.
Did you have any idea how to renovate the flat or deal with the mold?
Nope. No clue.
Did I worry about it upon viewing? Yes, massively.
But then I started thinking about what I wanted for lunch… and the worry kinda disappeared until I went back in with a builder.
When it comes to mold, I did discover the two best friends to have:
Best for ceilings and doors (I use the HG brand from B&Q. Costs £4 if you have a Trade point account with them).
It eats through the mold within minutes. I usually leave mine on for an hour or so. Then you wipe it away with a sponge and ta-da! The moldy ceiling looks brand new. I LOVE IT!
Seriously, some men can’t even compete with this type of satisfaction.
It’s like a thick paint. Remove the moldy surface with a steamer/scraper/sander, and paint on the area you wish to protect.
I used it behind kitchen sinks attached to exterior walls and in bathrooms.
What did you do once your offer got accepted?
Freaked out. Cried. Called a property help line. Freaked out some more. Manned up.
Then I did what any sane person would do and applied for a mortgage with my bank, Natwest.
Unfortunately, Natwest is controlled by a pack of un-evolved monkeys who are yet to learn common sense.
Therefore, the mortgage did not go ahead and I had to go to plan B: Hustle.
Why did you get rejected from the mortgage?
There were a couple of reasons, but mainly it was my
Lack of experience borrowing credit (Click here for tips to increase your credit score)
In my head, I was their perfect customer. I’d been with them since I was fourteen, I had never been in my overdraft, never needed to take out a loan.
I had never even had a credit card!
Even as a student I had to have a minimum of £2000 in my bank account or I would freak out. £2000 was other people’s equivalent to £0. I know to some to may seem like I was a pretty well off student, but I didn’t view this £2000 as spending money. To me, this was emergency money or money to save for later investments.
Natwest could see from my bank statement I was good with money and spent frugally.
To my horror, I discovered that I’m actually not their perfect customer because I don’t make them any money. When people borrow money that is when banks make money.
Anyway, Natwest said they would give me a mortgage if my Dad was signed on it too.
Dad agreed – cool.
So after a bit more form filling, the Natwest mortgage adviser resubmitted the application.
However, Natwest also has a policy of lending only if the property value is a minimum of £50,000.
My flat purchase price was £48,500. The broker said he will contest it with the underwriters as it was only £1500 under there criteria.
The underwriters said, “No” and the broker told me, “You either need to give the seller more money or raise the money in the cash.”
This made me so angry. I told him it was a stupid rule and in an emotionally fueled declaration I committed to raising the money in cash. I then proceeded to storm out of his cubicle whilst unsubtly suppressing my huff.
What a load of bollocks. Was he serious? And how dumb are these underwriters/computers?
£1,500 they couldn’t overlook. I maturely concluded they were “Total nobfaces.”
So how did you get the finance to pay for it?
I raised the cash VIA student loans plus friends and family.
Before I started uni I invested time researching scholarships and grants I was eligible for. I qualified for an Enterprise Scholarship worth £2000 each year and successfully applied. I was stoked. Thanks Coventry University!
I also worked three part-time jobs while I was at uni and ran a few small businesses. This provided me with enough money to live on. Therefore, I had the ability to invest £5,000 from my student loan in a stocks and shares account with HSBC.
This investment conveniently matured around July 2014, just as I needed it. Total interest gained was approx £1,000 so I had £6,000 to start off with.
I had been managing properties in the months leading up to the purchase. That gave me a few thousand more, but I was still way off what I needed.
I asked dad for a loan. He refused. What????? Was he serious???
But he made me a £100 bet with me. He said “Put this phrase on your Facebook and I guarantee you’ll get the money.”
I argued and told him it wouldn’t work. He told me “Jess the worse that can happen is you’ll be £100 closer to your goal if it doesn’t work.”
You guys have heard the phrase “Don’t ask, don’t get” right? So, as trivial as it sounds, I put a status up on Facebook.
I can’t remember the exact words, but it basically said:
“Can anyone help me?! I need £48,500 to buy a flat, I’ll offer you four per cent interest. PM me if you’re interested”.
I was extremely surprised when I received messages from two people. They inquired about what I was doing and how it would all work.
I put together a message which provided three exit strategies, explaining how I would get their money back out:
- Remortgage in 6 months’ time (surveyor valued it at £52,000 so Natwest’s minimum property value should not be an issue)
- Sell the property
- Provide investors with a guarantor – if for any reason I cannot repay the loan, my guarantor will.
Once they confirmed they were happy with the arrangement and the *interest rate I offered, I draw up a personal loan contract. I wanted my investors to have as much security as possible.
I made it clear to them getting repaid was not dependent on the success of my property deal. Therefore I was personally liable for replaying the loans should everything go tits up.
Wanting to give my investors as much security as possible is also the only reason I offered monthly interest payments. I needed to build their trust. Now I pay them at the end, but initially I felt monthly interest payments were more appropriate for the circumstance.
*Interest rate was 4%. As it was my first one and I didn’t want to over promise and under-deliver just in case.
To summarise: I brought the flat in cash for £48,500 + legal fees, surveyor, cost of money. In total, it cost around £51,000.
I paid my investors (aka friends & family) monthly interest which came from the rent.
I then renovated the property when the social housing tenant moved out.
There is so much more to this story then the tenant simply “moving out” but I will save this part of my property journey for another day.
What was the process of buying a property and how long did it take?
It basically went like this:
- Offer accepted
- Found a solicitor
- Began finding the money (put together a one-page document detailing how much money I needed, what percentage I’d offer investors, and how I planned on returning their money. Then showed it to investors).
- Paid for legal searches
- Got a home survey done
- Finished finding the money
- Exchanged (transfer 10 pre cent of purchase price to solicitor)
- Completed (transfer the remaining 90 per cent of the purchase price to solicitor, plus legal fees, plus stamp tax)
- PICKED UP THE KEYS TO MY NEW PROPERTY!
I put no. 9 in bold as the seller had not arranged for any keys to be given to me and I was none the wiser. Yet another story for another day.
I ended up having to borrow the letting agents keys and paying to get another set cut.
Remember to arrange with your solicitor or estate agent when and where you can pick up your keys from.
From offer accepted to completing, it took three months. I thought this was ages. There were no delays from my side of the buying process, I was pushing to complete ASAP.
The seller’s delayed responses to his solicitor and other legal things held up the process a lot.
Funnily enough, I got the money two months before I needed it. Great for stress levels but I had to pay interest on it.
Now when estate agents say exchange and complete ASAP or within 28 days, instead of worrying, I agree and say I am happy to. I do include the caveat that the seller’s solicitors need to perform to that deadline too.
How was the experience overall?
There were lots of bumps and humps during the buying process. At some points, I pulled my hair out and screamed at every member of my power team (dad, broker, estate agent, solicitor).
I go through this most times I buy something (although I’m getting better at not freaking out).
I found the most helpful places to ask my property questions are: Facebook property forums, property networking events, and more experienced property investors.
Sometimes you may even think the sale is never going to complete, and sometimes it won’t. Through no fault of your own, a lot of your accepted offers will fall through for one reason or another.
Don’t worry it happens all the time. It is the nature of the business.
The six most important things I learned.
- Visit your estate agents regularly and take a genuine interest in them: This is a people game. The agents will give you good deals based on two factors: you are a serious buyer; they like you.
- Invest in an area that works with your strategy and that you enjoy visiting.
- It’s OK to freak out and cry:. It can be an intense and scary experience. If we didn’t have the lows we wouldn’t have the highs.
- Borrow small amounts of credit via credit card and pay back in full each month: This will build your credit footprint and prove to lenders you are able to manage credit and pay it back on time.
- Everyone has a strength when it comes to raising finance: Figure out what yours is e.g. Are you able to get mortgages? Do you have parents who can loan you the money? Does a wealthy investor want to work with you providing you do all the leg work? Don’t play the victim and make excuses as to why you can’t raise the funds. Keep pushing. If it is a good deal the money will come.
- Don’t worry if you completely f*** up your first deal: It’s all part of your learning. If it costs you money, see it as an investment in your education. Next time it happens, you will know what to do.
Enjoy the adventure!
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Editor’s note: if you enjoyed Jess’s story here are a few other articles you may enjoy reading
- Trick yourself into becoming a money magnet
- 7 deadly sins of property investors
- Property Event Junkie or Action Taker?
- 6 Essential Folders required to run a successful property business