How to Invest in Property at Young Age…..

Samuel Leeds

How to Invest in Property at Young Age……

Samuel Leeds here. I recently met up with 18-year-old Tom and his mum, who showed me around their latest property investment. The property is a £60,000 buy, refurbish, refinance, rent (BRRR) type of property. But interestingly, the other houses on the street are selling for £100,000. So how did Tom and his mum get the three-bedroom property for such a significantly cheaper cost? The house required quite some work done.

Here’s everything I learned from the mother-son duo, who are also joint venture partners.

How long have they been players in the property market?

“I’ve been in property since 2003,” Tom’s mum revealed, also adding that she has a sizable portfolio consisting of about 100 tenants. Tom, whose predicted grades are 3 As, only recently decided he didn’t want to go to university and instead wanted to get into property full-time. And although his mum hoped he would go to university, she also did a good job “telling him about property and explaining to him that you don’t always have to … work for someone else.”

So when Tom paid £1,000 for my crash course, she wasn’t worried. In fact, despite her vast knowledge of property, she herself took the course. Tom now has a rent-to-rent that’ll be earning him a profit of £550 a month. And mother and son just entered into a joint venture partnership for a BRRR deal.

How did they come about the property?

Tom’s mum was browsing through properties advertised on Rightmove when she came across the property. An agency called yieldit had listed it for about £65,000, but there was a catch. The home had a sitting tenant, who had lived there for close to 40 years. And since the tenant had a protected tenancy, it meant they couldn’t legally raise the rent, which was £350, if they bought the property. “For me, it just didn’t stack.”

“So then what happened?” I asked her. “I left it,” she said and went to narrate that she got a call weeks later from yieldit, notifying her that the tenant would be vacating. She went for the viewing later that same day and placed an offer right there and then. “Yeah, you gotta be so fast,” I said. “You just don’t want to wait around for someone else to move in,” Tom’s mum agreed.

Why did this count as a good property deal?

Tom’s mum revealed that right opposite the property was a house they sourced for another investor seven years earlier for £56,000. “So I knew £60,000 seven years later was a belting deal,” she explained. Tom also added that another house across the street sold for £100,000 the month before. And they even confirmed from the agent managing the property that they indeed got the asking price for said property.

How did they split the cost of buying the house?

Tom put in £10,000, while his mother invested the remaining £50,000. The question is, where did Tom, who if I may remind you is only 18, get ten grand? He explained that he got the money from working long hours as a swimming teacher, amounting to about £100 a week. And from playing rugby for the Huddersfield Giants Academy, where he saved every penny he earned. And on top of that, Tom’s also investing his time by helping with the refurbishing.

What’s their plan for the property?

The mother and son are looking to refurbish the home and have it revalued, hopefully for £85,000 to £90,000. Here’s a breakdown of all the costs.

  • Buying price: £60,000
  • Rehab costs: £10,000
  • After repair value: at least £85,000
  • Estimated rental income (monthly): £600 to £650

 

“So if it values at £85,000, you’re going to pull out most of your money, leaving about seven grand. If it values at £90,000, you’re going to pull out pretty much all your money. And if it’s any more than that, I mean you could end up … being paid to have a house!” I noted. “Yeah,” they both accepted.

 

Refurbishing process

I was surprised to learn that they only spent £750 for a new kitchen and only £450 to get it fitted. “Where did you get the kitchen from?” I was curious to learn. “We bought the kitchen on Ebay,” he answered. Tom’s mum added that had it been up to her, she would have gone for Howdens, which would have likely cost them double the amount they spend. 

In one of the three bedrooms, they encountered an unexpected repair. Heavy rain caused the roof to start leaking, so they had to do some slate replacement and gutter patching. And it may surprise you to know that the repairs only cost them about £110. The renovation also included:

 

  • Putting up new wallpaper
  • Installing new interior doors
  • Installation of new tiles
  • Carpet replacement
  • Fitting in new radiators
  • Replacing light fixtures

 

What advice do they have for anyone who wants to start investing in property?

Some people may think Tom has it easy because his mom was willing to partner with him and his parents have years of experience in property. But he refuted that, saying, “it’s just playing with the cards that I’ve been dealt.” Tom seized the opportunity, and:

 

  • Begun saving to get a rent-to-rent and a stake in the 3-bedroom property.
  • Invested £1,000 to attend my crash course.

 

Tom’s mum has been in the property market longer than I have and even has a letting agent, but she also attended my crash course. She noted that, for experts in the field, the program is an effective way to:

 

  • Polish up on what one already knows. The crash course, as Tom described, “stays current … so it’s always applicable.”
  • Stay motivated by other people’s accomplishments.
  • Learn new property investing strategies, such as rent-to-rents and BRRRs.

 

Tom’s goal is to become financially free by June and to have a passive income of about £4,000 come next year. I reminded him that it’s not just about the money, but that experience is also just as valuable. All in all, I’m looking forward to hosting Tom on Winners on a Wednesday really soon!


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