I have £40,000 to start a new business. Ideas welcome!

[Gasgas125]

Hi all - I am due to return back to my full-time admin role in a couple of months after my maternity leave and I would really like to start looking at ideas now to start up my own business.

I'm not new to the game - I've got 4 properties that I rent out and previously had a successful ebay shop selling liquidation goods. That worked for me at the time, because I had a few good opportunities of stock to buy - but I struggle to find those sort of deals nowadays, so I'm not convinced that's the way forward for me.

I have the opportunity to sell one of my properties, to allow me to invest around £40,000... but I am struggling for ideas. I don't do things by halves, but have never had the funds or the confidence to really go for it. However, my kids are all the motivation I need now to get serious about it.

I have looked into a couple of ideas, but one thing or another has put me off. My strengths are online selling, customer service, I have a bookkeeping qualification.

Ideas I have considered but talked myself out of - bouncy castle hire, photo booth hire, soft-play.

Any ideas welcome!

 

[Mark T Jones]

Put your money into a savings account with 12 month fix.

It isn't lack of money that's prevented you from setting p, it's the fact that either haven't come up with the right one for you or haven't coherently thought through the ideas you have had.

Nobody's suggestion on here will rectify that.

By the time you've come up with, researched & planned your idea the saving will have matured - you can decide whether to invest in your business or keep it for yourself

 

[JEREMY HAWKE]

Window cleaning

I have some spare buckets here if you need any

 

[DoolallyTap]

What do you mean, you have the opportunity to sell a property, don't you always have that opportunity? First you must decide to sell the property and get the cash in the bank, while you do this think it through, Bouncy castle or photo booth or anything similar, all that running around dragging heavy stuff in and out put it up, take it down, you would soon probably get fed up with this.
With your previous experience, find a product, buy it in, set up your site and sell. Let someone else have the problems of manufacture, just invest in the right stock and move it in and out.

 

[macScot]

Why sell the property? Is the rental income not good enough? Keeping the property for longer is likely going to be a good investment.

 

[Socio South West]

If you have 4 properties you should have no problem raising a loan to cover start up capital.... and if the business doesn't work and you end up owing that would be the time to consider selling a property.

My advice to you would be not try to be so rich or so busy - Give your clearly young family the most valuable gift you can ever give them - Time! And have the time to enjoy them too.

Worry about businesses maybe 10-12 years down the road when they are getting out from under the proverbial wings.

 

[RodneyUK]

I hear NSI premium bonds is a good investment, but why not set up a home based accountancy business or look into franchising ? There's quite a few finance franchises out there.

 

[JEREMY HAWKE]

Why sell the property? Is the rental income not good enough? Keeping the property for longer is likely going to be a good investment.

Renting property us not all its cracked up to be
Where else would you shell out 300k on a business for just 12k a year return

 

[Paul Kelly ICHYB]

If you do not know what startup to invest your money into, don't invest it or start a business.

If you have nothing you like doing, have experience doing or are qualified for, you chances of failure are extremely high.

 

[Dandan2]

Hi all - I am due to return back to my full-time admin role in a couple of months after my maternity leave and I would really like to start looking at ideas now to start up my own business.

I'm not new to the game - I've got 4 properties that I rent out and previously had a successful ebay shop selling liquidation goods. That worked for me at the time, because I had a few good opportunities of stock to buy - but I struggle to find those sort of deals nowadays, so I'm not convinced that's the way forward for me.

I have the opportunity to sell one of my properties, to allow me to invest around £40,000... but I am struggling for ideas. I don't do things by halves, but have never had the funds or the confidence to really go for it. However, my kids are all the motivation I need now to get serious about it.

I have looked into a couple of ideas, but one thing or another has put me off. My strengths are online selling, customer service, I have a bookkeeping qualification.

Ideas I have considered but talked myself out of - bouncy castle hire, photo booth hire, soft-play.

Any ideas welcome!

It’s not so much the money you need to get an online business going, it’s TIME.

So many opportunities out there right now. Shopify store, Etsy store, EU dropshipping.

If you have the time to invest then there’s a ton of money to be made.

 

[Gasgas125]

Renting property us not all its cracked up to be
Where else would you shell out 300k on a business for just 12k a year return

I dont agree? I havent "shelled out" £300k - I have borrowed it via a mortgage, which has a monthly interest rate and I make a profit from that. No sensible landlord would buy a £300k property outright and expect to live off a £700 profit? Sensible comments only please...

 

[m4hmo]

"I have £40k and no idea what to do with it. I have 4 properties but it's clearly not enough (especially with £40k equity/profit from the sale of one)."

Stick to what you know or don't know. Add some value to those properties. Hmo them. Don't gamble £40k.

 

[m4hmo]

I dont agree? I havent "shelled out" £300k - I have borrowed it via a mortgage, which has a monthly interest rate and I make a profit from that. No sensible landlord would buy a £300k property outright and expect to live off a £700 profit? Sensible comments only please...

£300k should get you £25k a year if you have the brains, add value, add bedrooms. The crappy 5-6% typical return is the old school way.

Also you are not supposed to live off any petty profit in the early stages of acquiring property. Just keep aquiring and forget about it. Keep your day job.

 

[Gasgas125]

"I have £40k and no idea what to do with it. I have 4 properties but it's clearly not enough (especially with £40k equity/profit from the sale of one)."

Stick to what you know or don't know. Add some value to those properties. Hmo them. Don't gamble £40k.

I should have been more clear in my original post... I was earning a good profit on all of my properties UNTIL the recent increase in interest rates which means I am just over breaking even... which is why I want to move away from being a landlord. I'm not trying to gamble with something new, I just want to invest what I have in one of the properties in something else that could do better... as I'm not going to be making much now.

 

[m4hmo]

I should have been more clear in my original post... I was earning a good profit on all of my properties UNTIL the recent increase in interest rates which means I am just over breaking even... which is why I want to move away from being a landlord. I'm not trying to gamble with something new, I just want to invest what I have in one of the properties in something else that could do better... as I'm not going to be making much now.

You must hmo those houses if you want that profit. Loft conversion, single double storey side, single storey rear. Do whatever you can and come into the hmo game. I'm in the same boat and what's kept us strong is a low loan to value ratio, and all houses being converted to HMOs. It's going to take more than 10% interest for me to start getting worried.

 

[Gasgas125]

£300k should get you £25k a year if you have the brains, add value, add bedrooms. The crappy 5-6% typical return is the old school way.

Also you are not supposed to live off any petty profit in the early stages of acquiring property. Just keep aquiring and forget about it. Keep your day job.

I've done the hard work, the saving, the missing out on the things I want. Overall I have a lot of equity and have achieved more than I could have imagined. With interest rates the way they are, I am no longer making much profit and it's time for me to look at other options.

I've not once mentioned £300k for you to assume £25k? You don't know my interest rates, equity, etc to make an assumption on my overall property portfolio, so this suggestion has been of no help

 

[Gasgas125]

I've done the hard work, the saving, the missing out on the things I want. Overall I have a lot of equity and have achieved more than I could have imagined. With interest rates the way they are, I am no longer making much profit and it's time for me to look at other options.

I've not once mentioned £300k for you to assume £25k? You don't know my interest rates, equity, etc to make an assumption on my overall property portfolio, so this suggestion has been of no help

You also refer to me making "petty" profit in the early days... I am 34 but have been a landlord for 15 years so I am very experienced. I purchased my first B2L when I was 19

 

[m4hmo]

I've done the hard work, the saving, the missing out on the things I want. Overall I have a lot of equity and have achieved more than I could have imagined. With interest rates the way they are, I am no longer making much profit and it's time for me to look at other options.

I've not once mentioned £300k for you to assume £25k? You don't know my interest rates, equity, etc to make an assumption on my overall property portfolio, so this suggestion has been of no help

Easy for me to work out, I'm on £5million plus here, not long ago it was only £1.5million in 2010. I know a bit about this business. I will assume you are about 50/50 LTV with your worries. If you were 75% LTV you'd be in big trouble.

If you like, drop your asset value, LTV ratio, interest amount monthly, rental income, number of houses, types of houses, rough location. I'll give you a plan in 5 minutes. Hope you don't have any flats.

 

[m4hmo]

You also refer to me making "petty" profit in the early days... I am 34 but have been a landlord for 15 years so I am very experienced. I purchased my first B2L when I was 19

Please don't take my way of talking as being rude. I'm actually trying to help and yes the profit is pretty when putting down 25% on a buy to let with the usual numbers. I remember them from when it was me. £800 mortgage, £1600 rent. It was bollox back then.

 

[Gasgas125]

Why sell the property? Is the rental income not good enough? Keeping the property for longer is likely going to be a good investment.

Yes I agree long-term, but I have 4properties so I am willing

Why sell the property? Is the rental income not good enough? Keeping the property for longer is likely going to be a good investment.

Yes I agree and have always seen it as a long-term investment, without realising how much I relied on the profit. I have all mortgages on interest-only and overpay them regularly using the profits. However, the current interest rates are proving hard to make any profit, so I would like to keep 3 of the 4 properties and try something else...

 

[Gasgas125]

Easy for me to work out, I'm on £5million plus here, not long ago it was only £1.5million in 2010. I know a bit about this business. I will assume you are about 50/50 LTV with your worries. If you were 75% LTV you'd be in big trouble.

If you like, drop your asset value, LTV ratio, interest amount monthly, rental income, number of houses, types of houses, rough location. I'll give you a plan in 5 minutes. Hope you don't have any flats.

I dont think you are being rude at all, I just dont want people to make assumptions based on my brief original post... I feel like I have established a good property portfolio considering it was never my plan and I have achieved what I want from it in in terms of being able to provide for my 2 kids... I dont need any more from the property, so anything going forward is a bonus. HMOs dont interest me - i am comfortable with having (very) nice families in the houses I have, I couldnt imagine anything else and to be honest, I dont like the sort of people HMOs attract (nothing personal, I have just been very very lucky with long-term tenants being families and I don't want the hassle of quick turnover of people. I am too attached, you probably see yours as a business (which is great) but it's just not me... although I appreciate your suggestion and agree it would be the best option for me financially.

 

[MOIC]

I am due to return back to my full-time admin role in a couple of months

When you've returned to your full time work, how much time (realistically) will you have to devote to the new business. This may well restrict your options.

I would really like to start looking at ideas now to start up my own business.

Ideas are 2 a penny. Given you are comfortable financially, think what interests you, have some experience in and have the budget for (40k).

I don't do things by halves

So, commitment (time, focus and expansion) will need to be factored in to your new business venture.

My strengths are online selling

Stick to what you're good at!

my kids are all the motivation

Is sending as much time with them, part of your vision?



If you're financially comfortable, look at something that will allow you to stay in your full-time work and have a business that has limited hours to manage, as well as allowing you to spend quality time with your kids. Youcan't turn the clock back, once they've grown, you've missed the best part!

Having full-time work and running any business is the hard part.

If your strength is online selling, find one product that interests you, research and more research, then get it on top of Google, but take into account you'll need to devote more time, the more successful it becomes. Do you have that time?

You're in a good position, take your time.

 

[JEREMY HAWKE]

I dont agree? I havent "shelled out" £300k - I have borrowed it via a mortgage, which has a monthly interest rate and I make a profit from that. No sensible landlord would buy a £300k property outright and expect to live off a £700 profit? Sensible comments only please...

You don't live where I live
Ok 250k

Nobody on here would spend 250K for a return equivalent to 12K a year and what's more borrow the money ??
My mate has 7 houses and it's not worth the hassle until he sells them all but that will be after years of hassle of replacing vandalised bathrooms and kitchens and chasing debtors with no assets in the courts.

Landlording is not for me

 

[Newchodge]

Renting property us not all its cracked up to be
Where else would you shell out 300k on a business for just 12k a year return

But you still have the asset worth 300K, so you haven't shelled out anything.

 

[MBE2017]

Depending on your LTV OP, your mortgages should be a maximum of £225k. No one can say for sure regarding interest rates, they should start to be coming down in the next year, so you might be able to weather the storm.

I see you rent to family, have you checked your rent is correctly priced? Have you put any increases through recently? In my area, 12% annual increase seems to be the norm.

As for what to do, only you can decide. Long term property is unlikely to be beaten, but property price rises could pause over the five years, or they could continue. We live in very uncertain times.

Consider all of the houses though as to potentially selling them, any properties which do not meet EPC C are likely to require expensive improvements to help reduce energy bills and carbon useage. Originally this was meant to happen in 2025, but nothing has been confirmed and I hear this measure might be postponed for a couple of years. There will be overall limits on any improvements but it will cost a lot.

Without knowing your properties it is hard to say much else, normally you can increase the value via various things, but with a single family renting you tend to be limited.

Lastly, consider how you hold these properties, in your name or a ltd company. Talk to a good property accountant, you might be able to claim hefty allowances.

 

[m4hmo]

Well if you don't like the hmo game, and assuming you have a normal 3 bed house, you could do 2 x 1 bed flats, upstairs and downstairs, 2 internal doors in the hallway. This would up your rent by 30%.

The above is also classed as a hmo, but not the style you are thinking.

Beginning to accept property is not really for you. It looks like developing what you already have is not an option, even though it might actually be your best option. !

I dont think you are being rude at all, I just dont want people to make assumptions based on my brief original post... I feel like I have established a good property portfolio considering it was never my plan and I have achieved what I want from it in in terms of being able to provide for my 2 kids... I dont need any more from the property, so anything going forward is a bonus. HMOs dont interest me - i am comfortable with having (very) nice families in the houses I have, I couldnt imagine anything else and to be honest, I dont like the sort of people HMOs attract (nothing personal, I have just been very very lucky with long-term tenants being families and I don't want the hassle of quick turnover of people. I am too attached, you probably see yours as a business (which is great) but it's just not me... although I appreciate your suggestion and agree it would be the best option for me financially.

 

[Onthebrightside]

I hear NSI premium bonds is a good investment, but why not set up a home based accountancy business or look into franchising ? There's quite a few finance franchises out there.

We have money in NSI Income Bonds and Premium Bonds and their both performing well. We count down each month on the premium bonds to see what we've won. Never less than £25.00 a month and sometimes between £175 and £250, so good return. Interest rate in Income Bonds is also really good.

 

[Onthebrightside]

You must hmo those houses if you want that profit. Loft conversion, single double storey side, single storey rear. Do whatever you can and come into the hmo game. I'm in the same boat and what's kept us strong is a low loan to value ratio, and all houses being converted to HMOs. It's going to take more than 10% interest for me to start getting worried.

Mmmm I had a property I rented out as an HMO and it was no end of trouble between the tenants, also they didn't treat the property very well, repairs were quite expensive between tenants for the rooms.

 

[Onthebrightside]

If you don't want to go back to your admin job you could consider working for yourself from home using something like https://virtalent.com.

Virtalent are always looking for people to assist other small businesses with things like marketing, bookkeeping and other admin, additionally, you can get access to their 'opportunities' where you might pick up some ideas for your own business

Meanwhile, I agree with the advice already given here. If you can't think of anything you'd like to sink your teeth into yet, sell the property and stuff the cash into NSI Bonds, you'll get a return and time to consider your options and until you find something you really feel is up your street.

I agree with you also, HMO tenants in my experience are nothing but hassle, don't treat the property very well, complain about everything and are often slow in paying.

 

[JEREMY HAWKE]

Nin

But you still have the asset worth 300K, so you haven't shelled out anything.

Well Cyndy my business is not worth that and that's if I can convince any of you to buy it! but it has provided me and my family with considerably more than a rented house would have realised over the years and that's why I say that being a Landlord is not all its cracked up to be!

During my lifetime studies I experienced the afternoon that Norman Lamont raised the interest rates by 5 per cent two brothers I know who are landlords where very worried as they had borrowed the money.
How times have changed these scumbags nowadays would just put the rent up to cover the increase

Unless your running a proper rental business you are not really a business
The is a massive difference between a business and a passive investment. We should not get the two mixed up

 

[MBE2017]

How times have changed these scumbags nowadays would just put the rent up to cover the increase

Unless your running a proper rental business you are not really a business
The is a massive difference between a business and a passive investment. We should not get the two mixed up

No different to the scumbags who would increase the cost of shipping goods due to increased fuel costs?

As for rentals, anyone who thinks it is easy, passive or any of the other myriad of “buzz” words used by the idiots out there soon realise property is a business like any other. There are no easy businesses, they all take hard work, we all live in a competitive world.

The attraction with property for many has been based on the huge annual increases in property prices and rents, so you not only have the rental but capital appreciation to consider, plus any added value through improvements.

Of course, hit the top of the market, higher interest rates than recent times, and the next five years could see a stagnant market, or then again it could just surge upwards yet again.

 

[Lisa Thomas]

Renting property us not all its cracked up to be
Where else would you shell out 300k on a business for just 12k a year return

The net rental monies/profit are often higher than the interest would be so as a long term investment, this is a good idea imo.

 

[simon field]

The net rental monies/profit are often higher than the interest would be so as a long term investment, this is a good idea imo.

It would be if it wasn’t for the extra tax liability!

 

[Lisa Thomas]

Sorry my reply wasn't clear. In my head I meant net of tax when I said profit.

£150k in the bank makes peanuts in interest compared to the net profit derived from £750-1000 monthly rental income.

 

[Mark T Jones]

Sorry my reply wasn't clear. In my head I meant net of tax when I said profit.

£150k in the bank makes peanuts in interest compared to the net profit derived from £750-1000 monthly rental income.

A £150K property won't be pulling in £750 monthly income.

There will be liabilities associated with that income.

Without counting, I suspect I've met hundreds of 'property entrepreneurs' over the decades - some who were solid & professional but most were chancers riding the market.

Now that the market is stagnating (not even properly falling yet) we are seeing the chancers struggling.

This is when the obvious becomes rather less obvious..

 

[m4hmo]

So we were in the middle of buying a house, but seller pulled out. Oh well. Today we started a conversion on an existing house. Loft conversion phase one. Phase 2 single storey rear. Phase 3 double storey side. Current value of 3 bed semi - £650k. Current rent £2400pm. Mortgage 0. Not good enough now. End result will be a 9 bed 3 bath HMO with around £7k a month rent. Cost of works should be around £150k. End value I don't really care about. Have another 2 large HMOs like this already self managed so I know what to do and how to avoid low quality tenants. This is our business model. Simple, and very effective. On a small level you can add 2 Bedrooms in the loft of any house pretty much, then go from there.

 

[MBE2017]

HMO’s have a great future IMO. Not for the faint hearted, or lazy, still a real business dealing with lots of problems from problematic tenants, but you can’t argue with the value on returns.

Best of luck with the conversion.

 

[m4hmo]

HMO’s have a great future IMO. Not for the faint hearted, or lazy, still a real business dealing with lots of problems from problematic tenants, but you can’t argue with the value on returns.

Best of luck with the conversion.

Thanks mate. Honestly I stopped having non paying/bad tenant problems when I started referencing everyone via Openrent referencing service around 6 years ago. This was also after those 2 particular properties were renovated to a high standard. Before that it was like a squat (I inherited them around 14 years ago with loads of problems, aged 25). All of those problems taught me how to fix things myself. Now am qualified electrics, qualified gas, do carpentry, tiling, kitchens, bathrooms the lot. This latest project will give me experience in actual building, I'm looking forward to using a digger for the foundation footings - under my fathers guidance as he is a chartered structural engineer - this helps LOADS - we do our own planning applications for everything. Will be interesting to see the almost diy cost of a single storey 6 metre deep rear extension now in 2023 with more expensive materials. I won't be doing any block work or plastering - but everything else I can do myself.

 

[Porky]

This is a real interesting thread to me, especially the posts from @m4hmo who clearly has experience in the game and prepared to share experience of same here which is very decent of them and helpful.

I was thinking about this but on a smaller scale, diversifying about £600k into property locally in Staffordshire area. If you look on Rightmove within 10 miles of Stafford on average i'm looking at a 3 bed semi detached for £200k. So in principle i could look to buy 3 of them to start a portfolio off.

Mortgage rates are not a consideration as i'm a cash buyer, My only concerns would be a) I'm not a hands on tradesman like @m4hmo is so i would be using eternal for building works at cost b) i don't fancy the hassle of chasing rent etc so would probably prefer to outsource to local property agents albeit lose 10-15% in handling costs.

If you have any tips for the best direction for this i would appreciate it? To de-risk i would probably start with one. Looking to drive best ROI over say a 7-10 year window.

Thanks in advance

 

[Lisa Thomas]

A £150K property won't be pulling in £750 monthly income.

Mine does.