Buying my First Investment Property: How to Make Rental Income UK

Welcome back this blog that is all about helping entrepreneurs just like you to build an empire in a way that feels good for you.

Today I’m going to be talking about buying my first investment property so that you can learn how to make rental income. 

So if you want to leave work or you want to give yourself the financial breathing space to perhaps start a business or you just want to go and lie on a beach somewhere then this video is perfect for you. 

Make sure you stay until the end because i’m going to give you the exact breakdown of all of the numbers so all of the costs and the profit. 

So let’s dive right in. The first thing I want to talk to you about is my personal circumstances and where I was in my life when I bought my first investment property. So I was 23 at the time and almost 24. I was working full-time in London and I was on a fairly average graduate salary of around 30 000 pounds. 

I’d never bought a house before so I was effectively a first-time buyer and I just knew that eventually I wanted to do my own thing.  

The sooner that could happen the better um and i just read a lot about property and i started educating myself in property and i

Thought this would be a really good way for me to be able to leave my job and to go and start a business. What I really want to stress here is that I had absolutely no savings at the time when I bought this house. 

I was living the high life in London as a grad. I was travelling loads and I wasn’t saving anything which isn’t good. I’m sure you can do better than me but what I’m trying to say is that if you want something you’ll find a way to make it work. 

If you know you want to buy an investment property then start taking all of the actions like the necessary steps that i’m going to tell you about and then I truly believe that you will somehow find a way to make it work. So when I found my property which I’m going to tell you about I just got really creative with the financing and I found the deposit somehow so don’t let that put you off. You can get creative when you need to. 

You may or may not know that to buy an investment property you have to get a specialist mortgage so it’s an investment or a buy-to-let mortgage and you have to put up more equity or more capital than you would with a standard residential property. 

So with a buy-to-let your deposit is typically 25% of the property price and obviously you will need to get a specialist type of mortgage for it. I would say if you want to invest one of your first steps would be to go and see a really good mortgage broker. 


The first step should be going to see a good broker and then they can ask about:

  • Where are you at?
  •  What are your finances like?
  • What are your plans for the future?

Then they can kind of give you an idea of what finance you have access to and therefore how much you can borrow. Because how much you can borrow is gonna determine what price of property you can start looking at. 

If you are in employment it is going to be a little bit easier but if you are self-employed again don’t let that put you off. A good broker will get creative and they will try and find a good product for you. 

Again if you are self-employed and you’re a first-time buyer and you’re getting your buy-to-let mortgage it’s not impossible.


The next thing you want to think about is the location. When I knew I wanted to buy property I was living in Essex at the time and I was commuting to London for my job. So I thought that because I was working full-time I should get somewhere that’s close to home because I obviously didn’t have the time to be travelling across the country and investing somewhere else where I could get more rent for my money. 

So I decided to invest in Basildon. Now I don’t know if you know Basildon it’s just got this like giant hollywood sign which is so ironic because it’s actually not a very nice area however it does have all of the fundamentals of a good rental area so it’s important to remember when you’re investing in property you’re not necessarily looking for a really nice area if anything you want to be investing in an area that probably isn’t very nice right now but is likely to be um improved and gentrified in the future. 

The reason I say Basildon has good fundamentals is because it’s commutable to London so you could get into London in less than half an hour. It’s on a really good train line that isn’t super crowded like mine. It has quite a lot of supermarkets, it’s quite small, you can buy relatively good property close to the town centre and there’s a big variety of different tenants. 

So there are a lot of people that would live in social housing um there are really well-off areas and there are a lot of young people renting so I just knew that if I bought a property there and I did my research that there would be demand for it. 

So when you’ve identified an area that’s close to home or that you can travel to if you have more time just because you want to be close especially if it’s your first one as you get more experienced you can start investing really far away because you have like the system set up and all of that. 

But for your first one just identify an area that’s um close to Home that has all of these good fundamentals that i’ve just spoken to so you just need to do a bit of research and then finally you want to start Looking at the rents in that area and this is really really straightforward you’ll just want to use right move and you want to narrow down to where you want to invest and look at similar properties to let now the important thing here though is that you filter by let agreed as opposed to um properties that are just on the market to be let.

It’s the same thing with when you’re looking at house prices always look at sold or let as opposed to what is actually on the market because that’s just what the seller or landlord has put them on for.

You don’t necessarily know that that’s what people are going to pay cool so the next thing I’m going to talk about is the numbers so I’m literally going to give you a breakdown of all of the costs the profit and everything else so that you can start running the numbers for your own property investments but before i do that i just want to say that there are going to be a lot of likely going to be a lot of naysayers or people that like try and talk you down there might be people that say like this isn’t even that much profit when you account for tax then it’s actually not that much blah blah i don’t listen to these people because for me investing and property is a long game so even though this might not be that

much profit over a year i plan to you know hold my properties for my whole life so it’s important to remember that some years you might even make a loss but if you think about it in the long term that’s really not that important it’s the same as investing in the stock market some years you’re gonna make a loss and other years you’re gonna make a gain and eventually over time you you know if it’s a good investment then you will make money over time anyway let’s have a look at the numbers so the market value of this property was a

hundred and eighty Thousand pounds um i should probably show you what it looks like actually it’s just here um it’s not a sexy property but that’s not what we’re going

for it’s just simply a one bed bungalow and yeah it looks like this the market value of this property my little bungalow when i bought it was 180000 pounds and uh the purchase price so the price that i secured it for was actually a hundred and thirty thousand pounds now

that’s obviously quite a big discount which is why it’s such a sick investment if i do say so myself um but you just work off your numbers so you might not get such a big discount

but the numbers might still work just as an aside if you are looking on rightmove or if you are buying in the current market which is really hot right now um you are unlikely to get a discount like this because this was me going direct to vendor so directly negotiating with the

Seller but it’s 100 possible to get discounts like this depending on the market anyway with a purchase price of 130 000 pounds my deposit was 25 of that so it was 32 500 pounds

i then had to pay my solicitor 1 200 pounds just to like push some paper around i’m joking love you wendy if you’re listening so yeah that was my solicitor and then my stamp duty was

Actually zero um because i was just below the threshold but this is a really important one

to look at because it will depend on if you’ve bought property before and how much the property actually costs i then had to pay 250 pounds for a survey so just for someone to go and tell you that the property is like standing up and then my mortgage fee was 1050 pounds

so this is really going to depend um with a lot of mortgage fees actually you can like add it to the loan um so you basically pay it off as part of the mortgage as opposed to like paying it up front um but with this uh mine was 1050 pounds and then i paid my mortgage broker who

is an absolute legendi paid him 500 pounds and finally i spent around 400 pounds just um like making the property ready to let now all it needed was literally a lick of pain um so this was like fairly cheap but again this might be a big cost depending on the property that you’re buying so my total cost to purchase this property were 35 900 pounds right that’s how much cash or capital i needed to get into this property investment so that was the upfront cost

now let’s look at how the investment performs on a month-to-month basis so we’re going to look at the income coming in every month and then all of the expenses to find out how much profit i have left,

So my rent coming in every month was 800 pounds and then my mortgage payments are 200 pounds a month and then you also need to get insurance to cover yourself as a landlord and that comes to 25 pounds so that brings my net profit every month to 575 pounds and over a year that’s 6 and 900 pounds but that in and of itself doesn’t actually tell us that much because you know you could be making 10 grand a month but that property could have cost you one million pounds. You need to know um like what the profit is relative to how much money you’ve put in so the way we do that is we use calculation called return on capital employed there’s loads of different ways you can calculate the return on investment.

But in this case i’m using return on capital employed which comes to 19.2 which is actually really really good so how has this investment performed in the four years that i’ve had it it’s done really well um i’ve only had two weeks of voids so in the whole four years the property’s only been empty for two weeks and the kind of maintenance that i’ve paid so you know repairs and things like that has probably been around it’s been less than 500 pounds i want to say around 300 pounds um so as you can see it’s done incredibly well now obviously there’s going to be a time when i need to get a new boiler or you know spend thousands of pounds on repairs but the thing to remember is that you invest in property over time right so in just four years that I’ve had this it’s made me 35k net profit in total.

So it’s just really really important to have that long term vision and remember that if it’s good investment you will make money over time and I’ve an absolutely incredible tenant in there he’s this like giant tattooed guy called Chris hey Chris if you’re reading um hi and he’s just been absolutely great he loves living there he um has like repainted the inside and redesigned it.

I said that’s cool as long as he doesn’t paint it pink um so yeah this just shows the importance of getting really really good tenants that love living there they will look after your property for you and what actually happened with this particular investment is that i pulled all of that original capital back out so that 35 900 pounds i was able to pull that back out at refinancing so i essentially bought a house for no money which is absolutely mental.

So if you want to find out more about that i can do another video just let me know in the comments below now at this point in the video you’ve hopefully learned how to make rental income in the uk.

I do lots of other blogs on property investing and entrepreneurship so make sure to check these out as well:

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