My 2nd Limited company was formed on September the 9th, 2019. Up until today, I have had zero properties within my company. Not the start I was hoping for.

This is the right time for me to set up my 2nd LTD company. It is a very straightforward process that I recommend if you want to build a portfolio. I am not an accountant or FA so seek professional advice before you set up a limited company if you are not sure of what you are doing.

Talk to your accountant and ensure you are aware of the basics. Start with tax and ensure you know everything you need to know about tax and if you are going to start a property business ensure you are aware of property tax.

I went on the Companies House website and started my Ltd Company within 30 minutes. I chose the name and decided on the SIC Code 98000 (Property Management) and I was ready to go.

DUFF PROPERTIES was set up for tax efficiency initially, but I also knew it was what I wanted to do as my full-time occupation.

Let me reflect for a minute and go back to late 2019 as I was pushing hard for rental no. 5. By November 2019, I had released money from rental no.4 and was ready to start bidding for my next rental. I had also been to see >50 potential properties as I was determined I would make up for lost time.

Right at the end of the year, a bid was accepted on a street house that I had been bidding on for 5 months. It is a potential HMO 6 miles from where I live, and I was going to rent it out as a Single Let initially but was open to switching it to HMO further down the line.

When I first had my eyes on it, the property was up for £110,000 and I eventually got the vendor to agree to £82,500 5 months later.

My confidence was increasing as I thought that BMV (Below Market Value) was the strategy for me. Not only was it BMV but the cashflow was excellent when I done my due diligence.

I would be making £300 pcm after expenses initially while I was doing Single BTL’s. If later on I decided to convert it to HMO, I would be looking at an £800 pcm profit after expenses.

Going into 2020 I thought rental no.5 was a formality. I was very wrong.

I received the survey report from my Financial Advisor. See below:

A retention of £6,500 has been applied

for the following.1). There is evidence of rising damp to several sections of ground floor walls and penetrating damp to sections of internal wall and ceiling to the first and second floors. The applicant must obtain a fill timber and damp report from an approved PCA member identifying the cause and remedial works required, together with an estimate of costs. These works should be implemented within 3 months and, upon completion, a minimum 20-year insurance backed Guarantee provided, a copy of which must be forwarded to the lender.2). The corrugated asbestos sheet roof covering one storey rear addition are in need of replacement. The applicant must of obtained in full report from an approved PCA member detailing the remedial works required, together with an estimate of cost. These works should be implemented within 3 months.3). The timber decking within rear yard id rotten and slippery and needs to be removed for safety purposes. These are small gaps within the party walls within the roof space. The gaps should be filled to comply with current Building regulation Requirements, ie. to provide a minimum 60-minute fire resistance. We shall proceed to offer on this basis providing all the remaining information has been received. Please note a re-inspection will be required which will incur a £100 fee.

Other than the rising damp that was an issue, what jumped out was the £6500 upfront fee I would have to pay on completion. I would get the work done then get the money back, but it wasn’t the point – I couldn’t stretch on my budget.

Putting this additional £6500 into the ROI calculation meant that my new ROI was 12.2%. Still decent enough but the initial outlay was my biggest concern.

My FA said I could negotiate a new price but even with a few grand knocked off, I was almost certain that I was ready to pull the plug on the deal.

I went back to the property for one last look. This would help me make my final decision.

After seeing the property again and taking more time to see what work needed to be done, I made my mind up. A new bathroom was needed, the kitchen needed replacing and the boiler looked on its last legs.

With rising damp costing me £6500 initially (the cost of the works would total roughly £6000 and then I would get the retention fee back if you catch my drift), and another £6000 minimum on the internal issues, my initial investment has moved from £27,000 to just short of £40,000.

Granted, it isn’t an ideal start to the year, but these things happen, and my attitude was that DUFF PROPERTIES moves on.

What I can say from this experience is that you really have to keep your emotions out of property investing. I worked out my calculations and was happy with the deal. The rising damp survey came back and messed up the deal. I wasn’t emotional as I pulled out and moved on to the next deal.

Then the madness begins. I get good news and have got a job with BP in Oman. This would be 4 weeks on 4 weeks off and I have got a contract for 12 months.

At this stage, I am thinking that in my time off I will be pushing hard to get rental no. 5. I went away to Oman in January and was back by mid-February.

Although I was only home for a few weeks (2 weeks so that I could fall into a 4/4 rota), I went to see several houses in February, and I had now viewed >100 houses looking for rental no. 5.

Leaving the house at the end of February didn’t go to plan. I didn’t go to Oman for the expected 4-weeks, I went for 11 weeks.

COVID-19 wasn’t just a nightmare for me and my family, it was a nightmare for everyone around the world for different reasons.

People lost loved ones and couldn’t even go and see them at the hospital and there are many heart-breaking stories. I won’t dwell on being in Oman for 11 weeks, I just wanted to highlight a reason for rental no. 5 being so delayed.

This didn’t stop me from thinking about rental no.5. From getting the keys for rental 4 to getting the keys for no.5 took has taken 19 months.

This was 7 months to take money out of rental 4; 4 months of agreeing to buy a property and then pulling out because of the survey; then a combination of work and COVID-19 meant another 7 months.

In that time, I was anxious about COVID-19 but that is a different story. The 18 months, it took to get rental no.5 over the line proved to me that mental strength can be taught. You can go from having a negative mindset to having a growth mindset (Growth Mindset, Carol Dweck).

Rental no.5 is an important milestone for DUFF PROPERTIES LTD. It is the 1st property within the newly formed LTD Company and getting it over the line is massive for me and proved I am ready to get some serious momentum and build an actual portfolio.

Having 5 rentals is no big deal, believe me I know. Especially when you factor in the 18 years, I have been a Landlord. My slow progress is all down to mindset and in my case a negative mindset.

A couple of weeks ago I was on a PIN (Property Investor Network) meeting over zoom and one of the investors was a young lad who looked about 16. He has managed to secure x9 buy-to-let properties in 12 months, so again I know x5 is 100% no big deal.

The big deal to me is the way that I have been mentally between rental no.4 and rental no.5. I haven’t once reverted to a negative mindset because a few things haven’t gone my way.

Both rental no.4 and rental no.5 have been bought BMV. This has benefits like the way I was able to re-cycle the deposit money from rental no.4 and put it down on rental no.5.

What I need to do though is learn that BMV isn’t always the right way to go. There are things that happened that were out of my hands but my obsession with BMV is part of the reason that there was a 19-month gap between rental no.4 and rental no.5.

I am looking for serious momentum and am definitely ready for a year similar to the young lad I met over Zoom.

If I could get another 9 rental properties within 12 months, it would mean 14 properties in total. This would mean £2800 pcm in profit and would push me close to FI.

To do this, I am going to have to build my property network and continue to go to PIN meetings. I will have to learn how to get creative as well to continue and add to the solitary rental property that sits within DUFF PROPERTIES.

The intention of this Blog is to raise financial awareness and encourage the reader to learn from my mistakes.

If you are starting your own property business or are thinking about it, try and have a bit of flexibility. Persisting with BMV has cost me and with hindsight, being more realistic in the way I was valuing properties may have led to more than x1 in 12 months.




Leave a Reply