For A Young Couple That Have To Sell Their Home

Couple who became ‘accidental landlords’ when forced to rent out their home due to negative equity now have £5m property portfolio

For A Young Couple That Have To Sell Their Home

  • The pair had negative equity during the house price crash in the 1990s
  • Went on to renovate eight properties, making up to £70,000 per house
  • Now employ 10 staff to help run their property company

The house price crash in Britain in the early 1990s brought many misery through negative equity and repossessions.

In 1997, Rick and Lorraine Gannon were initially mortified to discover the new-build house they’d paid £84,000 for had fallen below the amount they owed on their mortgage.

And so they became “accidental landlords” and kept hold of the property in Nottingham, renting it out until the market recovered while they lived elsewhere.

“It was not something we planned to do,” says Mr Gannon. “Those were the days when it was easier to get a second mortgage.”

It was a wise decision and they got lucky 18 months later when their house shot up in value due to the area being developed, making them £100,000 in profit on the sale.

Rick and Lorraine Gannon now employ 10 staff in their property business (Photo: Rick Gannon)

Investing still appealing

“There are still plenty of opportunities to make money in property investing for someone prepared to be proactive and graft”

Rick Gannon

This was the start of a venture that would see them eventually quit their day jobs to become property investors with a portfolio worth £5 million and 120 tenants.

Nowadays, investing in property is much tougher than it once was, thanks to a stamp duty tax crackdown on buying property investments and changes in tax relief for landlords.

House price rises have also stagnated in many areas, denting the prospect of making money through property inflation, plus there’s the uncertainty of the effect of Brexit on the market.

But Mr Gannon, a father-of-two, believes investing in property is still appealing, even for the first-time buyer. “Whatever happens with Brexit, house prices will still go up in the long term.

“There are more challenges now but you just have to adapt. There are still plenty of opportunities to make money in property investing for someone prepared to be proactive and graft.”

A before photo of one of the properties the couple has renovated (Photo: Rick Gannon)The kitchen after (Photo: Rick Gannon)The living space and kitchen (Photo: Rick Gannon)

Renovating properties

“We avoided houses that needed real structural work doing to them and went for ones that needed repurposing”

Rick Gannon

Over the next five years, Mr Gannon, then a policeman, and Lorraine, an accountant, used the profit from their Nottingham house to buy and renovate eight properties around Worcestershire where they moved to.

Neither had a lot of experience with DIY but taught themselves the skills as they went along. This made them a tidy £15,000 to £70,000 profit per property.

“We avoided houses that needed real structural work doing to them and went for ones that needed repurposing to make them suitable for families.

“Tired, outdated looking properties that needed the s of rewiring, a new bathroom and kitchen, perhaps a wall knocking down between an old-style separate toilet and bathroom.

“Cosmetic stuff – needing new carpets, decorating, the garden landscaping.”

Rick and Lorraine look for properties they can add value to (Photo: Rick Gannon)The transformation shows how they use the most of a space (Photo: Rick Gannon)

From hobby to business

“The majority of our properties are house shares as they can potentially bring bigger rental yields”

Rick Gannon

The Gannons had a break from property for a few years, but the care needs of their disabled first child Ben – and his future financial needs – prompted them to turn their side-line into a proper business.

The profit from renovating had largely gone on paying off debts, but they had £20,000 left, and with a family member also investing, they bought a five-bedroom house in Worcester for £187,000 and spent £20,000 on renovation, including a downstairs bathroom and turning the living room into a sixth bedroom to rent it out as a house share.

This brought in a monthly income of £800 – shared equally with their family member, as was the equity – and two years later they remortgaged it to allow them to buy another house, and the property was valued £100,000 higher. Mr Gannon says a mix of their alterations and the area being regenerated, including a pub next door being sold, helped the price rise.

“The majority of our properties are house shares as they can potentially bring bigger rental yields,” said Mr Gannon. “We do have about 30 single-use properties. We don’t dismiss them as long as we get a good price for them.

“We look for properties to add value to through adding an extra bedroom, using a loft space, or building out on the back with planning permission. It all increases your rental income with a house share.

“Without the potential to do something extra to a property it probably isn’t worth us going for.

“That’s the model we’ve continued with – buying at a good price in the right area, adding value by renovating, and re-financing to invest again. We call it ‘momentum investing’.

“The peaks and troughs of the housing market don’t worry us, as we’re prepared to buy and hold.”

Mr Gannon with daughter Charlotte and son Ben (Photo: Rick Gannon)

Adapting as you grow

Two years ago, Rick, now 47 and Lorraine, 42, bought 28 flats in Worcester for £1.1 million and refurbished them into luxury accommodation. When they recently re-financed, they were valued at £1.75 million.

“We spent £175,000 on renovating, so again, just the house we bought with a family member, it has cost us nothing to buy them and set them up and we’ve made a profit on their value and now they bring in a good monthly income.”

The pair have never used a property management agency, preferring to keep costs down by dealing with with the collection of rent and repairs themselves. But their growth brought the need for extra help and they hired a team of 10 staff and opened an office.

“I knew landlords who were trying to save a couple of hundred quid by physically going to deal with a broken washing machine themselves, even if it they had to drive for hours to get to and from the property.

“That’s when you get caught in the ‘landlord trap’. That time trying to save a little can be better spent growing your business.

“Eventually you need to use an agency or get your own staff.”

The Gannons, who also invested in commercial lets, pubs, and holiday lets, also found themselves overwhelmed by all the emails and paperwork involved in managing the properties and, having teamed up with a software company, developed their own process to automated it all using a single system.

They then added another arm to their business – Go Tenant, a property management software which they sell to landlords.

Read more: Woman with no DIY skills makes £85,000 in a year from buying and renovating houses after watching tutorials

Grabbing opportunities

The Gannons bought 28 flats in Worcester which they turned into luxury apartments (Photo: Rick Gannon)

In total, the couple’s business, New Era Property, now brings in £480,000 a year. Their goal is to keep growing their business and retire in 10 years’ time.

Mr Gannon says Brexit won’t deter him from investing, despite widespread uncertainty over the effect it will have on a hefty proportion of private tenants who are EU nationals.

“We do have a lot of foreign renters,” he said. “But no-one knows what the legislation will be and we don’t know what’s going to happen to house prices.

“The way I look at it is, if someone had held back from investing three years ago when Brexit started they’d have missed a lot of opportunities.

“The market has slowed but if you are on Right Move and Zoopla day in day out you’ll find good deals, you never know when someone’s personal circumstances change and they want a quick sale at a good price.”

The Gannons’ advice for making buy-to-let profitable

Get your maths right – Finding a property at the right price is just the start. Make sure you’re being realistic about how much work on it will cost.

Location – This is key to attracting the right kind of tenant. Bear in mind the distance to schools, shops, GP surgery and public transport links, as being closer to these things is ly to raise your property’s appeal. If you want to let out a house-share to students, being nearby their university is important.

Add value to the property – Look for houses that you can extend or repurpose by knocking down walls to enhance the space. Make spaces functional to increase your rents and add capital value. All tenants want space to live in and store their stuff in.

Vet your tenants carefully – A good tenant will pay on time and look after your property, keeping your running costs lower.

Systemise – Systems save you time, energy and money. Find tools to automate your business. Agents take high fees and percentages, if you can find a way to self-manage you can increase profits.

Be cost conscious – Shop around for materials, mortgage rates, insurance, maintenance and other services.

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How to own a home by the age of 25

For A Young Couple That Have To Sell Their Home

By Cherry Wilson BBC News

Image copyright Mark Hepburn Image caption Mark Hepburn and his partner Laura bought a house with a 5% deposit

Owning a home by the age of 25 has become an unachievable dream for many over the last two decades.

Soaring property prices mean just one in five 25-year-olds own a property, compared to nearly half two decades ago, according to one recent study.

But as the government unveils its Housing White Paper, there are some young people who have managed to buck the trend – without help from the bank of mum and dad.

Here four young homeowners – all couples – who bought properties in 2016 – reveal just how they did it.

Mark and Laura

Name: Mark Hepburn, age 23. A debt collector on £18,500 a year

Lives with: Partner Laura Starkie, age 25. An accountant on £20,000 a year

Location: Oldham, Greater Manchester

House price: £125,000 for a three bedroom semi-detached house

Deposit: £6,250 (5%) with the Help to Buy mortgage scheme (which ended in December)

Why buy a property?

We were sick of living at home with each of our parents and wanted our own space. I'd rather live in a house than just a bedroom. We discussed moving out and renting, but we both agreed it was dead money.

How did you do it?

There was a lot of budgeting. I literally know where every penny goes. I had to drill it into Laura a little bit, but she got used to it after a while. her make-up – she had to go for a cheaper brand. We were both working at McDonald's when we were saving and if there were extra shifts, we would take them.

Image copyright Mark Hepburn Image caption Mark and Laura say they had to change their lifestyle in order to save money to buy their home

Did you make any sacrifices?

There was definitely a lifestyle change when we were saving. We would buy supermarket budget stuff instead of brands. We didn't go on holiday during the time we were saving up – and that was a massive thing for Laura.

How does it feel to be a home owner?

I feel ridiculously happy. I feel proud and our friends are too because they know we worked extremely hard for it. Once you get there, you don't need to worry as much.

What if you need to move?

I recently went for a job in Bolton, which is not that close to where we are now. The salary was £27,000 per year, but I wouldn't move house for that. It would have to be significantly higher to consider jobs away from where we are now.

Image copyright Mark Hepburn Image caption Mark says you need to watch your money if you want to save up to buy a home

Reaction from friends?

I can't count how many times our friends have asked us how we've done it. We just explain you need to save, watch your money and cut back. They're happy for us and we are just trying to get it into them not to leave it too long and to start saving.

Should more young people be able to buy a home?

I have got mixed opinions. When Laura and I were at McDonald's we were on a combined salary of £23,000 and we managed to save up £7,000 between us within a year.

So I don't see how people can't do it. But then we don't have any kids. The Help to Buy mortgage scheme was a God-send.

But if you're stopping something that's so good and helping young people, it's going to cause mayhem.

Ruby and Sam

Image copyright Ruby Willard Image caption Ruby and Sam have bought a two-bedroom terraced house

Name: Ruby Willard, age 22. A recruitment consultant on £19,000 a year plus commission

Lives with: Partner Sam Bardell, age 22. An engineer on £24,000 a year plus overtime

Location: Havant, Hampshire

House price: £182,200 for a two-bedroom terraced house

Deposit: £18,220 (10%) with the Help to Buy Isa

Why buy a property?

It was a case of living at home. I moved back into the box room of my mum's house and I hated it. Sam lived with his parents too so we thought if we can, let's do it – so we decided to save and go for it. We were looking at renting but to us it was throwing away money.

How did you do it?

Being quite tight is probably the answer. When we decided we were going to buy, I thought I'm not going to spend money elsewhere when I don't need to. We did still have a nice holiday to Greece. I get commission and Sam gets overtime so we probably earn £55,000 overall, which meant we were in a position we could borrow maybe more than people on minimum wage.

Image copyright Ruby Willard Image caption The couple's home cost £182,200 and they saved up a 10% deposit

Did you make any sacrifices?

We may have not had such a big social life. We still did things, but we were conscious. What I did was save what I knew I needed to save, and lived on whatever I had left – which was usually about £200 a month. I wasn't buying lunch at work, which would save about £25 a week.

How does it feel to be a home owner?

It was weird at first. When we got the keys it was “are we on holiday?” When things started to come together it felt such an achievement. Everything we had chosen not to do, not going to the cinema one night, helped towards it.

What if you need to move?

We would be open to the idea, but we would probably look for work closer to where we bought a house, so it probably would affect future decisions. If we did decide we wanted to go somewhere else, we would probably look to sell the house and hopefully we will have made some money on it.

Image copyright Ruby Willard Image caption Ruby says owning her own home feels “such an achievement”

Reaction from friends?

It's been quite positive. I have got friends that have bought houses, but a lot of them have had big lump sums of money given to them.

Should more young people be able to buy a home?

Neither of us completed three years at university, so we probably established a career path earlier than those that do go. I speak to a lot of people that have graduated, and they cannot find jobs that will allow them to borrow enough. It takes years to save a deposit, and then house prices go up and they can't borrow enough. I think this is how it is now.

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Andrew and Kirsty

Image copyright Andrew Douglas Image caption The couple have been told they are “adulting hard” because they have bought a home

Name: Andrew Douglas, age 23. A social worker on £31,000 a year

Lives with: Partner Kirsty Lamb, age 24. A pharmacist on £35,000 a year

Location: Moredun, Edinburgh.

House price: £145,000 for a two-storey terraced house with two bedrooms

Deposit: £21,750 (15%) with the Help to Buy Isa

Why buy a property?

We decided we wanted to get on the property ladder as quickly as possible. If we get on it now, we would be able to buy what we want by the time we are older and looking to have a family.

How did you do it?

We started saving at the beginning of 2015 and were probably saving between £400 and £500 a month each. We did go on a couple of holidays, so although we've been saving, we've still been living. We weren't scrimping, but we do only spend about £30 a week on food. We check receipts and look for the best deals, so that is more thrifty than most people.

Image copyright Andrew Douglas Image caption Andrew and his partner saved around £400 a month each for their deposit

Did you make any sacrifices?

We spoke about going away for three weeks to somewhere Australia, but we thought – it's going to cost £2,000 each and we can put that towards the house now rather than waiting a few extra months.

How does it feel to be a home owner?

It feels strange. It does feel quite a lot of responsibility – I didn't realise how much. Things taking out mortgage protection. Our friends call it “adulting hard”. They're renting and not really thinking about owning a place and they're “wow, you've bought a house”.

Reaction from friends?

Lots of people think it's really good, other people say they're nowhere near that stage. I don't know if they're thinking I'm growing up too fast. It's generally been positive. I don't know anyone who has done it without a partner, so I think it would be difficult to do it on your own.

Image copyright Andrew Douglas Image caption Andrew and Kirsty bought their home with a 15% deposit

What if you need to move?

With a big move we might give it a trial, and rent out this house while we lived somewhere else.

Should more young people be able to buy a home?

I do think people complain they can't afford to buy a house but they go out every weekend, they smoke or they eat out all the time.

But property prices have also shot up in the last 20 years with more people buying second homes. There are also people who don't want to have the responsibility.

I think it's good that the government is helping with Help to Buy schemes and it needs to do more to help first-time buyers.

Rebecca and Adam

Image copyright Rebecca Thompson Image caption Rebecca bought a three-bedroom home with her boyfriend Adam in Irlam, Greater Manchester

Name: Rebecca Thompson, aged 23. An information analyst on £21,900 a year.

Lives with: Adam Drinkwater, aged 25. A bank administrator on £16,500 a year.

Location: Irlam, Greater Manchester

House price: £126,500 for a three-bedroom semi-detached house

Deposit: £6,300 (5%) with the Help to Buy mortgage scheme and Isa

Why buy a property?

We lived in a rental flat together for 18 months and realised that the amount we were paying in rent was more or less the same as we would be paying with a mortgage. When we were renting there were a lot of things we couldn't do, decorate or move anything around.

How did you do it?

It was difficult. I was working part-time in my final year at university so I saved my entire wage and lived off my student loan, which wasn't much. We didn't go on holiday that year and saved as much as we could.

Image copyright Rebecca Thompson Image caption Their home cost £126,500 with a 5% deposit

Did you make any sacrifices?

We came straight from university, where you're living on a bit of a shoe-string anyway, so we probably sacrificed but not realised, because we've not been enjoying the extra income we've had since graduating. We would have probably gone on some more holidays or gone out more and probably bought a few more clothes.

How does it feel to be a home owner?

It's brilliant. I feel it's a really secure base while I'm going on to develop my career. It's one less thing. A lot of people are aiming towards saving a deposit while I've got past it.

What if you need to move?

It would be really difficult, and it's definitely an attraction for staying where I am. In my career there are a lot of opportunities down south, but I wouldn't want to entertain it because of the house prices. It would take us five times longer to save up a deposit, and the amount of income you need to get for a mortgage is totally unobtainable for the average graduate.

Image copyright Rebecca Thompson Image caption Rebecca says there needs to be more affordable housing

Reaction from friends?

Some live in a more expensive area and I think they were surprised. It's not something that's on a lot of people's radar, owning a home at this age. Particularly if you're not in a relationship, I don't think it is affordable.

Should more young people be able to buy a home?

I think cultures have changed a bit. When my parents were growing up, their parents drilled into them 'sort yourself a house, get married and that's when your life begins'.

Now there's not as much of an emphasis. I think homes do need to be more affordable.

It's silly that the town where we live in, a lot people can afford to buy – whereas only as far south as Birmingham no-one can afford to buy a house earning what we do.

First-time buyers: The numbers

  • The average age of a first-time buyer in the UK is 30, says lender Halifax
  • The deposit paid by first-time buyers was on average more than 20% of the property price in 2014
  • The cost of a home for a first-time buyer was 4.

    5 times their annual income in 2014

  • The median income for a first-time buyer household in England was £43,000 in 2014/15 – £16,000 more than all households
  • Nearly a third had help from friends and family for their deposit
  • The average price of a UK home was £217,928 in November 2016 – 6.

    7% higher than the previous year

Source: ONS, Department for Communities and Local Government, Land Registry

Where can I afford to live?


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