A late starter who conquered the buy to let market

‘L’ is the kind of person whom one could listen to for a very long time – a gentle and calm voice, a smart lady and an interesting story.

She started investing in rental properties only 12 years ago after her divorce, but in just a few years she owned up to 7.5 properties (one she co-owns with someone else).

At 55 and with two sons in their 20s, she now owns 4.5 properties including her two mortgage-free homes in London and Brighton.

Although she could stop working as she is financially independent she says she doesn’t because, among others, she likes the little luxuries in life. Yet the day I chatted to her she had just watched the Netflix documentary ‘Minimalism’ and done her weekly shop for £30, which she was understandably chuffed about!

Background & first investments

L grew up in Hertfordshire where her father, an immigrant, owned a successful construction company and could afford to send her and her two brothers to private school. Yet the business had good years and bad years – at times there was not enough money to pay the school’s fees, which she found very embarrassing.

After graduating in business she found a job as a PA, and when an HR opportunity opened up in the same company, she went for it. She’s now been working in HR for 25 year and can show off a very successful career.

L defines herself as a feminist and a very independent woman who, unlike other women of her age, always had her own bank account and didn’t give up her career when the kids arrived.

Her ex husband was not frugal and liked to spend money on big brands and live in a large house, and took care of the family’s finances. They both had a strong career so money was not an issue.

In 2005 she discovered downshifting, and only later she discovered the FIRE movement.

When L divorced in 2008, she started taking care of her own money and initially had to take in a lodger. Again there were ups and downs. After selling the family home, she bought a place for herself and her sons. At the same time she started reading personal finance books including Rich Dad, Poor Dad.

During this time she freelanced for a while and joined a Women in Business networking group. Here another member introduced her to her husband who was a financial advisor – it is him who catapulted her into the Buy To Let world.

L’s first BTL purchase was a house near a US air base in south England. She bought it off plan (i.e. the building was not finished at that time) and put down 10% or £16,000 for the deposit. She says she was lucky she bought when market prices were low, but this was a very smart move nonetheless as the army has stable salaries and she knew her rent would be paid without a miss. She sold this property years later to another investor when Trump announced he wanted to pull US armed forces from England and she feared she would lose her ‘golden tenants’.

She remembers how scared she was about investing and that she had cold sweats, but she went for it anyway.

In 2009 she bought another one as a cash buyer, and the next one was a 4 bed house in Watford she bought for £280,000 putting down £90,000 as a deposit – it is now worth £450,000 and brings her in £1,200 / month after expenses.

Two of her other properties are two bedroom flats in Watford in which she converted the sitting rooms into a third bedroom and now rents them out as shared accommodation. She owns another property in West London which she rents out to a couple.

Further financial development

Over the course of a few years she owned up to 7.5 rentals, all with interest-only mortgages.

While reading more about personal finance she discovered index funds. So she decided to sell 3 of her flats – with that money she helped both her sons get on the property ladder, and moved the rest into index funds.

Looking at her impressive portfolio, some friends come to her for advice, which she is happy to give. She is the first one to say that her timing was good given the property prices in 2008 and after when she started buying and the more favourable conditions for BTL investors (lower deposit required and tax advantages).

But she also points out how she puts in the work – she does all her accounts (her business background helps) and takes care of all the maintenance helself. When she moved from Watford to London she engaged a friend to help out with the maintenance of her two properties there, for a small fee. And she uses an estate agent for properties she rents out to a couple, for which she pays a finders fee typically of £500.

Currently her portfolio includes index funds, ISAs and pensions besides her properties. She also owns equity in the business where she currently works.

Her advice to others

At first investing can be scary – but it is doable. She recommends Dave Ramsey’s baby steps:

Save $1,000 (or whatever your currency is) for Your Starter Emergency Fund
Pay off all debt (excluding home)
Save 3-6 months for a full emergency fund
Invest 15% of your household income in retirement
Save for your children’s college fund
Pay off your home early
Build wealth and give

In 2020 her rental income has suffered a bit as some tenants were out of work and unable to pay their rent. She took the hit as she could not – and would not – have evicted them. This shows how even with a large investment portfolio one needs to have an emergency fund to cope with a change in cash flow.

There have been times in the past she had credit card debt, but now her only debt is her BTL mortgages. She is proud that none of her sons are in debt, besides their mortgage. One of them is quite frugal and has never had a credit card, the other one likes nice things but is not in debt.

Nowadays to better manage her outgoings she uses ‘pots’ in her bank account where she saves money for birthdays, Christmas, gadgets and more.

Lessons from L’s story

I started taking financial freedom more seriously around 40, so seeing the portfolio she has built starting at a similar age is sooo reassuring!

Personally I never used a financial advisor. Now I am intrigued that he ignited her BTL so efficiently – he helped her find her a very good initial property and advising her on BTL mortgages, better rates, underwriting and how to leverage cash to generate deposits for more purchases.

Finally I admire her attitude of getting on with things, doing her own accounts and maintenance, and trusting her instinct.

I have found L’s story very inspiring – what do you think? Please leave a comment below and share this post with your friends who may find it interesting.

Are you a FIRE woman? Would you like to be interviewed in their series? Or do you know someone who would fit in well here? Then drop me a line in the comment below