How I made my First £100,000 . . . The lazy way
. . .the Lazy way
To whom it may concern,
I will be giving away the biggest cheat codes that I have found so far along the way in the next coming chapters. I ask that you please keep in mind that I am still young (28 years old) and will be sharing some hard facts about myself so do as Bruce Lee says "take what is useful and discard what is not".
I believe that no matter what you are going through, there is always a solution to your problems and the only person that is going to save you is you. You can't change your circumstances but you can change yourself.
Looking back I am surprised at what I have managed to achieve whilst going through a lot of life's curve balls (don’t like this bit but I was told I have to show you my credentials so you know the information is from a verified source).
Accomplishments to date:
I overcome depression, overcome PTSD, Decorated Police Officer giving 5 years' service, owner of £510,000 in property (in 2.5 years), became a skilled Software Engineer (despite having dyslexia), Author, Actor, happily married for 8 years and helped loads of people along the way.
The quality of your life depends on the questions you ask yourself. Instead of saying you can't do something, break the problem down.
I was on a £33,000ish a year salary, working approximately 60-70h a week as a police officer. I knew I wanted to own property all over the world but had no idea how I was going to achieve this. I started studying everything I could get my hands on relating to real estate or personal finance. Did approximately 40h a week of research (whilst still working), spoke to everyone I could that had experience in property, business or was thinking about property.
Before I knew it, I started solving problems for people who were in property and business way longer than I was.
Client 1:
A friend of mine told me he was selling his 3 houses which were all in his name. Bringing him approximately £500,000 in profit each when he sells them. This would have cost him approx £750,000 in taxes (1.5mill profit /2 = 750,000). I was in no way in hell letting my friend who pays a crap load in tax as an employee give the government £750,000 when we both haven't even seen that kind of money. I knew of the tax law that states that if you sell your primary residence then you do not need to pay taxes on it. I confirmed it with an accountant and then gave him the plan of moving into his houses and selling them one by one. . . In hind sight I should have charged him for that advice.
Chapter 2, the good stuff.
I knew what I wanted which was buying a lot of houses but I figured let me break the problem down of buying one house.
Most people have two problems when it comes to buying a house:
The deposit
Price of the house they can afford. The bank will only lend them approx. 4.5 times their salary.
So I tackled the second problem first because I knew I wanted a house, not far from the underground (train), freehold, 100% mine, in London and to be honest with my salary I was not feeling very optimistic.
There is two solutions to that problem, open a company and pay myself a salary for 3 - 6 months (banks usually only check that much, and it would mean you will be paying tax on that money) or get a mortgage with my wife. I chose the latter. This bought our joint salary up to £61,000 ish at the time, meaning we could now get a £270,000 loan from the bank for a house.
Our next issue is that the bank needed 10% deposit/down payment on the house to be in our accounts in cash before they accept to give us the mortgage for a house (even though the mortgage repayment amount was way lower than our rent).
I spoke to a lot of people and the idea of getting a loan from the post office taking it to the bank and being like I have the deposit money was stuck in my head. The next issue I found was that banks don’t want you taking out a loan for the deposit (as it will essentially become a 100% mortgage), so I sent that money that I got as a loan to my dad as a "gift", he then sent it back to me as a "gift", signed a word document I wrote up in 2 min saying this money is a gift and he has no stake in any house I buy and *(hey presto), I now had the deposit and the salary to get a decent-ish house in east London.
At the time I was looking for a house covid had struck, everything was uncertain and everyone around me was telling me to wait to see what happens before buying a house. I then remembered a two simple sayings. One that warren buffet said "be cautious when people are greedy and be greedy when people are cautious", the other was from Samuel Leeds which was "don’t wait to buy property, buy property and wait". I googled the statistics of house prices and checked price history for random houses on the street and I found that regardless of a recession or not, UK house prices doubled every 7-12 years without fail. This meant that all I needed to do was live in my house or rent it if house prices dropped.
We were looking every day for months and saw a lot of houses that needed a "makeover", until we found our home for £300,000. Completion on the house was delayed because of covid but this was a blessing in disguise as I was £270 short on the £300,000 and this gave us time to save for some work to be done on the house.
I won't bore you with the details but we were looking for approximately 2 months for any second hand kitchens and found an ex-display kitchen with all the bells and whistles for £475 (best bargain to date).
Strategy that no one talks about.
Step 1 - Buy a house to live
You only need a 10% deposit to get a mortgage on a buy to live property (you need less money and can afford twice the amount)
Step 2 - live in the house for 6 months (do any work you need to get it rent ready and ofc enjoy having the place)
Step 3 - get consent to let from the bank (most people don’t know that most banks will give you a piece of paper saying you can rent your house out whilst keeping the deposit at 10% and the interest rate frozen at what you agreed upon).
Step 4 - buy another house and do steps 1 - 4 on repeat.
Step 5 - when house prices go up, move into your houses and sell them one by one as you move into them as there is a tax law saying that if you sell your "primary residence" then you don’t pay tax on it. You may be taxed on the income from the rent but this is nothing in comparison to the amount you get from selling your house tax free after a couple of years.
Side note:
Whilst doing this strategy I came across many pitfalls that could have completely stopped me in my tracks and found many other more efficient ways to make your first £100,000 (Click here for the next article)
Disclaimer:
This is not financial advice nor is it the most efficient way of making an extra £100,000 in 2 - 3 years. This is just the solution I found to a problem that I can execute on whilst changing nothing/very little about my lifestyle. Please check with professionals on your own circumstances before executing on any on the information above.
Kind regards,
Mr Cheat Codes