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  • Starting your own business

    Been wanting to do this for a while now,so when a friend asked me last night in the pub I was pretty made up.

    We're looking at buying to let properties to students, in other words renting out student digs in places like Manchester, Sheffield, Leeds, Liverpool etc. Now I was wondering if anyone has done this before and has any tips or even on setting up your own business.

    Bit of background. I work in sales myself, have done for nearly 4 years. Studied Business at college. My best friend (who aksed me last night) is a training certified accountant. Hes nearly qualified and has been doing the job 7 years. Final person who's in is another friend who recently graduated uni studying political studies. Between us we should have enough skills to get where we want to be.

    For people who have done this before, what rout did you take? Did you go down the route of being a sole trader / partnership or did you set up a holding company ie My Company Ltd and run everything through that?

    We arn't looking to go ahead until around dec 09 / Jan 10 to give us time to get together some capital, circa £10k each which should give us a nice deposit for the first property while allowing house prices to fall a little further due to the recission etc.

    Business plan would be to provide affordable housing to students, offering clean, modern living while undercutting competition by 10-20%. Example offering a room in a 4 bed house for £70per week (average seems to be about £85-£90per week) would bring in ~£14k per year, IF were paying ~£10k a year for the mortgage/etc that would give us £4k profit, granted not much between 3 people but it is a starting point.

    Anyone see any major flaws in the plan, or have any tips for making a success of it?

  • #2
    Only flaw I see is students making a mess of the house and you left to foot the repair bills.

    I guess that's a risk you take when renting any property though

    Good luck in the new venture though mate

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    • #3
      Hopefully taking deposits would stop that problem. ie 6weeks rent up front returnable when they move out if theres been no damage.

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      • #4
        Not quite as simple as you think. You can't just buy a 4 bedroom house and rent it out, there are regulations that need to be followed if you have locked internal doors, which means allot of work 30min fire resistant floors, fire exits etc and it's expensive. And as none of you are in the trade it's going to mean paying someone else to undertake the work.

        And if you need to do work on the house you can't just get a mortgage it will mean borrowing off the bank (if they'll let you at high interest rates as well) until the house is mortgageable. Think you will struggle to get one even with 30k unless your can get one of you parents to assure it. You will still have to pay tax on what you earn and upkeep is going to add up with gas and electric checks (every year) not forgetting letting agents and their fees. And if your plan is to take out an interest only mortgage and pocket the change I don't think there will be allot in it (not 4k each). And there might be times where it's going to be empty and you have to cover the mortgage, bills etc.

        I don't think trying to uncut people is a great idea if it's worth x amount a month then thats pretty much all there is to it.

        Sorry I could be wrong, but I don't think it's that worth while with 3 of you involved.

        Feel free to prove me wrong though.
        Last edited by Drunken Master; 21 December 2008, 10:20 PM.
        I see dumb people.......
        .....they're everywhere
        .....they walk around like everyone else
        .....they don't even know they're dumb

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        • #5
          Going into business in my opinion would be one of the most worthwhile and rewarding things you could ever do....I am planning on setting up in the new year, have a couple of plans of what to do for myself. Not going to be a millionaire from it, but it would supplement my income very nicely.

          My advice would be this;

          Dont go into business with your friends, just because they are friends- only partner up with someone that will bring a different set of skills than yourself- no point in having two people that can do the same thing- you come from a sales background, your accountant friend will keep the books looking good, what will the other bring that you two cant do? Be objective with absolutely every decision that needs to be made.

          Set up as a limited company- you must must MUST do this. If the bottom falls out of your business plan, you lose your property etc, you will be held personally liable. The company can be folded and you walk away with no crippling debts around your neck- get plenty of advice about legal entities and where you stand with each 'set up'.

          Have a very clear set of objectives including time frames. Make sure you have all the money behind you to cover all start up costs- if a property you buy needs re-wiring for example, wheres the money coming from? All the time that the property sits empty, its coming out of your a55 pocket.

          Make sure you call in all favours, if you know a builder, plumber, electrician, solicitor- get them all a pint in this christmas- they will owe you!

          Anyway, whatever you end up doing, good luck with it all!!! I hope it works out (and it can work- your not the first and wont be the last to make a mint from business- just make sure you got your a55 covered at all times)

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          • #6
            i think its good skot, you want to start your own business
            i have run my company for 7 years now and it never goes to plan at first, alwas hiddem costs that can coc k you up, but stick with it, as long as you work hard and be careful on your investments you will do ok


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            • #7
              If it was easy and straight forward, everyone would be in business! Deffo go for it mate, you literally have nothing to lose (as a LTD lol) and everything to gain.

              Dont take my word for it though, ask Richard Branson if he thinks setting up a business is a good idea

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              • #8
                The type of business you're looking to go into is risky, just make sure you do your homework and stick with it.
                All the best!

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                • #9
                  Originally posted by Shane_Eddie View Post
                  If it was easy and straight forward, everyone would be in business! Deffo go for it mate, you literally have nothing to lose (as a LTD lol) and everything to gain.

                  Dont take my word for it though, ask Richard Branson if he thinks setting up a business is a good idea
                  I actually work for Mr Brandson... Virgin Media haha. I'll still be retaining my full time job, as will my friends to help cover costs, but still plan to put 100% in to this too. I know it will be hard work, and I know it could be risky, but I don't want to be stuck working for someone else all my life

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                  • #10
                    Originally posted by skot View Post
                    I actually work for Mr Brandson... Virgin Media haha. I'll still be retaining my full time job, as will my friends to help cover costs, but still plan to put 100% in to this too. I know it will be hard work, and I know it could be risky, but I don't want to be stuck working for someone else all my life
                    You could always ask Mr Branson if he wants in? LOL

                    If your all keeping your own jobs, then its no great risk if it does go wrong ie your not going to lose an income from it, just the initial outlay.

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                    • #11
                      Originally posted by skot View Post
                      Hopefully taking deposits would stop that problem. ie 6weeks rent up front returnable when they move out if theres been no damage.
                      Stop a student being messy? Best of British to ya mate!
                      sigpic

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                      • #12
                        Originally posted by S666MAH View Post
                        Stop a student being messy? Best of British to ya mate!

                        If you had to lose £300 for being messy would you be messy? haha. I don't mind mess, just when they move out they tidy up

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                        • #13
                          Originally posted by Johnson10 View Post
                          The type of business you're looking to go into is risky, just make sure you do your homework and stick with it.
                          All the best!
                          but it is a great business to go into at the moment with things the way they are, but alot of things go in favour of the tenants and not you no matter how badly they treat your property, a guy i know had three students in a house, who called him out to look at something only to discover they had ,had a camp fire in the kitchen which was now black and ruined he threw them out there and was in a bit of trouble lol but go for it mate good luck to you

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