If you have no capital at the moment then you have have few options, however, you do have some options.

The hardest is probably going to be saving some money up, but this will depend on your income and other financial circumstances.

You say you own your own property, how much equity do you have? If you have sufficient equity, you can remortgage, thereby releasing some capital that can be used to fund your deposits. Only do this if you are comfortable with the risks and are sure you know what you are doing!

Another strategy you can pursue is to bootstrap the deposit through other unsecured borrowings, however this is going to be very expensive. I wouldn’t consider this option myself as it can leave you too heavily geared with the cost of the debts being greater than the rent received on the property.

Another idea is to negotiate a “gifted deposit”, whereby the vendor agrees to sell the property to you with, for example, a 10% gifted deposit, meaning you can buy it “no money down”. Lots of lenders won’t allow this with new properties, but with a good solicitor and the right lender, you may be able to do this on a 2nd hand property where the values are more settled.

I would like to start my own property business but with no initial capital to invest, I do not know how to get started.

I have my own property (on a fixed mortgage and ending next year) and I am in full time work. I would appreciate some ideas to get it going or pointers?

If libor comes down, which it should do, then the recent BOEBR cuts will be passed onto new borrowers (rather than just existing borrowers) which will start to give the housing market a kick up the backside.

From my experience arranging mortgages over the past few years I can see that a lot of the current housing market problems have been caused by the lenders, as a result of the credit crunch.

I had plenty of customers that could afford a mortgage, but were not granted one from the lenders, or were offered terms that were so marginally better than staying on SVR that they decided to wait it out. There are a lot of people just sitting tight, waiting for the price of money to come down.

I too manage my properties myself (I am a chartered surveyor so it’s second nature anyway) if you read my comment again you will see that I say in some areas you cannot do this. This is because websites like Gumtree are not widely used in certain areas and therefore tenants tend to go via agents to find properties. I only rent out properties in London so this does not apply to me, but it would to people in SOME other areas and that’s why I said it, to flag it up to potential landlords in such areas.

I just put the numbers down as an example of what I’m achieving right now by accident, I hadn’t intended on becoming a landlord just yet!

All good points though, especially the accrual for maintenance / redecoration / void periods.

For my property, I’m paying significantly less than the 5.69% mortgage used in the post, so there is a much better return. We will be using this profit to create a “reserve” to be used for void periods / maintenance / redecoration.

One thing I perhaps disagree with is the need to pay an agent, we managed to let the property through advertising for free on various websites. I did all the background checks (credit check, employment history) on the tennants myself, and we are managing the property ourselves - we didn’t want to pay an agent a monthly fee.

£180 Rental voids say 1 weeks per year (ave)
£950 letting agents fees (in some areas there is no real market place without using an agent)
£250 sinking fund to allow for redecoration every 4-5 years
£720 maintenance and repairs.

The above adds up to an additional £2,100 per year and reduces that yield (return on capital) from 6.7% to 1.55%

Great detailed post. I hope it all goes well for you.