Are you considering giving up the day job to go into property full-time? It can be incredibly tempting, especially if you have already dipped your toe into the world of buy to let and are doing just fine.
That’s great if your property venture so far is a success. But let’s face it, one property isn’t enough to sustain you. You can deal with it at evenings and weekends and so far, it’s all gone smoothly without any void periods or big maintenance issues.
Giving up a full-time job, so that property becomes your main income, is something different altogether. It needs a lot of thought and it has to be at the right time. So, what sort of planning do you need to do? Here are some tips:
Look at your job objectively
Even if you hate your job right now, it’s still giving you an income and allowing you to pay your bills. It also means it shouldn’t be too difficult to get a mortgage (try applying for a mortgage without a full-time income when you’re just setting out in property). And, even later down the line, it can be difficult, since many mortgage lenders don’t count rental income. You’ll only really be fine when you have enough properties to justify becoming a limited company – then you’ll get a mortgage from a high street lender.
Do your sums
Giving up a full-time job to go into property means you’ll have to make what you’re earning with your job, then double it. Why? Because property isn’t as stable as your regular job. Tenants come and go (with void periods in between). If several leave at the one time, that’s a huge hit to your monthly income. A big repair bill can set you back quite a bit too.
Choose the right strategy
A couple of rent to rent properties can be something that’s manageable, while you have a full-time job. Get four rent to rent properties and you could be bringing in £4,000 per month. If you’re already earning £2,000 per month with your job, then it’s double what you’re earning and the security you need for when you give up your day job.
If your strategy is for single let rooms and you’re making £150 profit a month (when they are tenanted), then you’ll need 16 to 18 rooms to cover £2,000. That’s taking into account 10% for voids and 10% for repairs (bringing your profit down to £120 per month).
Flipping is a difficult property strategy to embark on while you still have a full-time job. It’s quite intense in that you need to regularly check what’s going on and be available to turn up at the property for tradesmen etc. It’s also sporadic in terms of income – you only get the money when you make a sale or rent it out.
Work on self-discipline
How are you going to fill those 40 hours you spent in your day job? Plan a schedule, so that you don’t waste time and always have something to work on with your property business, whether that’s networking, viewing, reading up on other strategies etc.
You’re not going build up your property portfolio overnight. It can take years to get to a place where you feel comfortable enough financially to take a step back. After all, we’re assuming you want to earn more than you currently do in your day job and at the same time, improve your lifestyle.
Find out how Sourced can help you to build your own property business. Download our Sourced Prospectus today.