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Shimmying up the housing ladder – how buying worked for me

Climbing the housing ladder is engrained in our society and it’s always billed as a sound financial decision. Here I tell my home buying story, and how it has worked out well for me. I want to acknowledge both my privilege and the choices I made that resulted in these positive financial outcomes.

I’ve been reluctant to share this story, as I’m a classic case of that old-fashioned narrative – doing well financially by buying a home. And this narrative isn’t the same for everyone, namely those who either didn’t have my privileges and experiences or were not willing to make the same compromises. However, I’d like to share my housing ladder success stories, or how I managed to shimmy my way up that elusive housing ladder.

Buying at 19

As I’ve mentioned before, my parents were of the property-owning is normal, middle-class persuasion.  And most importantly, we lived where buying property was generally affordable. I’ll state that again, we lived where buying property was not out of reach for most people, and moving up the housing ladder was normal.

Hence I didn’t see it as particularly abnormal that at 19, while a student, I bought my first flat. A little one bedroom flat, all for me. I saw this as my first step for freedom, moving out of the parental home and into a place where I could set the rules. And where I wanted to live – out of the small village, into the city. Where I could go out at night, and come home whenever I wanted. The 19-year-old’s dream.

The flat itself was in grim shape, reeked of smoke and looked unloved. Luckily as it was my first place, I got free parental labour to help decorate. Over a weekend, we transformed it with a lick of paint to a work of art, a palatial home, in my opinion. Being able to decorate everything the way I wanted was refreshing and made me feel like a million dollars in my own little palace.

How did I afford it?

Ms ZiYou Cash HouseWell, the main thing here was the price – the flat was only £27k, of which I put just over 10% down – £3k – and got a mortgage for the rest. My Dad kindly agreed to sign the mortgage as a guarantor, as I was a student. As I mentioned in my previous post, I have always been a saver and saved a lot of money even as a child. Birthday gifts etc were put in the bank, which I enjoyed watching grow. And then when I finally was allowed to get a job at 17, I got a low paid job over the summers and saved a lot of that money. Hence, I had around £5k in the bank and could afford to buy a place myself.

Compromising

Nonetheless, you don’t get a property for £27k without some tough compromises. And it’s fair to say this flat was not in a cool place. And nowhere near desirable. This was a rough neighbourhood, albeit not far from the city centre. The first compromise I made to be able to move was the location. I chose to move into an uncool place, which had a bit of an unfortunate reputation. I have quite a determined character and can handle myself in most situations, so I was not at all worried about this. My parents were a bit more worried, but not enough to stop me. Looking back now, it was a perfectly safe place to live, all the violent incidents associated with the area were overexaggerated and people who kept out of the trouble were not at risk.

The second compromise was the location. I bought a flat on the main road. There was a bus stop outside my window, and many buses an hour ploughed past. As did a lot of heavy traffic and sirens. In fact, my Dad joked that he heard more sirens in 2 days in my flat than had since moving to the mainland 25 years prior. So the flat was on the main road and loud, but interestingly this compromise also made the first compromise more bearable. The main road aspect of the flat meant the location felt much safer than a side road.  And I got a great door number, over five hundred, which although common in the US is rare in the UK.

And the third compromise? I bought a flat in a rough area, on the main road, on the ground floor. Ground floor flats are cheaper, as they are less desirable. You have to live with noise from your upstairs neighbours, and people can see in your windows. But there were a few mitigating factors; it was an elevated ground floor flat, with bushes in front of the windows. By making all of these compromises, I was able to buy a home at 19.

My time as an accidental landlord

As I mentioned above, I was a student when I bought the flat. And when I finished my course and had a shiny degree in my hand, I wanted to get a job further away, that would let me explore more of the world. I was craving wider experiences and felt I had explored the city as much as I could. So then I ended up as an accidental landlord. And you know what? This cheap flat made a great rental. The rental yield was over 20%, so I rented it out when I went off to work and experience the world.

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Making a profit

Finally, I sold this flat, and I did very well out of the sale – I made £13k, which is a 48% return in 4 years. I think this will be one of the best returns I’ll ever see on a property. Although it may seem that this was a lucky profit, there was a bit of educated risk in it as well. The area was showing signs of regeneration, and right next door flats were being built, with asking prices much in excess of the £27k I paid. I correctly predicted that once the newness of those flats paid off, the values of the flats would equalise. And they did, leaving me with a handsome profit, to use a deposit on my next place.

Then again at 23

We then pick up my home buying journey when I was settled in a new location and I wanted a cat. So the urge to buy came up again, and I followed a similar path to above. I did not stretch myself but instead found a place in a less desirable neighbourhood that I could afford. This place has very similar characteristics to the above, a cheap area, near to the main road and not far from the city centre.

However, I did make one splurge, this was the crucial upgrade to a house with a garden, so I could have a cat.  This house was £68k, and as I mentioned before, I am a natural saver, so and I had a lot of cash to put down here, and only ended up with a £38k mortgage. And I loved this house, despite people seeming to pity me living in an uncool place – it was perfect for my needs at the time. Again this house was not pretty – there had clearly been an interesting story with the previous occupants, and it had a smashed window, some interesting painting and grim carpets everywhere. But I knew I could easily sort that out with some graft and paint.

I lived in this house through the house prices bubble of 2007/2008 – and watched the price rise to £125k – an identical neighbour sold for that – then swiftly fall back down as the UK property market crashed. So, when I eventually sold this property for £80k, it was bittersweet. I felt sort of aggrieved that I had lost out on the peak price, but glad I didn’t actually lose any money on the house. That old loss avoidance mindset is hard to avoid, although I know it is irrational.

And finally at 30

Then my big move to London happened, you can read about my love letter to London here. I love London, but as you may know, housing is expensive here. Despite my sizeable deposit in hand, lots of London was unaffordable to me. Hence I concentrated on where I could afford and narrowed my search to those areas. Compromise featured heavily in my house choice, and I really wanted a cat-friendly 3-bed semi with a large garden. And by going a little further from the station than I desired, and considering outer London, this was possible.

I maximised the things I wanted and compromised on things I was less fussed about. Again the house was not pretty or perfect. The boiler was older than me, and both my father and I did not recognise it as a boiler. The bathroom was positively vile, featuring no bath but a shower cubicle coated in limescale. And a downstairs toilet with a plastic cistern and no sink. Like how grim, if you used the toilet downstairs you’d either not wash or use the kitchen sink?

I bought my house for the frankly frightening (at the time) number of £250k. I got a £185k mortgage on a ~£44k salary, and it did feel tight. But as my income grew, the mortgage became more and more reasonable. Some may say I overstretched myself, but I was happy taking this risk, for a property in outer London.

Nowadays the house has benefitted from the rampant London house inflation and would sell at around £400k. But I’m not planning on selling at the moment, as I’m planning to FIRE and go travelling in just under 3 years, as detailed in the 1000 days left to go post.

Random thoughts Buy-to-Let

As an aside on home buying – I have to say I swing left wing on this. I believe buying property is for living in, not for profiting from. Hence I don’t believe in buy-to-let. Whilst I am happy with people buying houses to live in and appreciate in value as a residential home, adding in a profit margin from other people’s homes feels wrong. This may not be a popular position, especially as I’ve just detailed how kind the property market has been to me. And that I’ve been an accidental landlord. But I do believe we need to sort out the housing problem and make sure the market is sustainable for the long term, so other people can follow my path.

Can everyone do what I have done?

Can everyone successfully climb the housing ladder? Is it a skill? Or is it a matter of privilege? Next week I want to tell you another tale – my brother’s housing story. He is someone with the same if not more privilege than me and yet the housing market hasn’t been as kind to him.

But I want to leave this story on a positive, that buying rather than renting has worked out well for me personally. Even if my reasons for buying were for freedom from parents, then freedom to have a cat. As let’s face it, cats are the answer to most problems, after you have exhausted 42.

Over to you

  • Have you bought a property?
  • If so, what age did you buy your first?
  • Do you believe it was a good / bad decision to buy?
  • what is your experience of the property ladder?

Thanks for reading – please leave a comment below and join in the conversation. You can also connect on Twitter or Pinterest.

Looking forward to your thoughts and ideas – all are welcome. 

26 comments on “Shimmying up the housing ladder – how buying worked for me

  1. I’m so impressed you purchased a home while being a student. That is something few people could manage. Except, it sort of happened to me, because I talked my boyfriend into purchasing a half-plex when we were dating, and then married him just before I graduated. Does that count? Then it became a rental when we bought our home that we still live in now, 31 years later. Instead of buying up the ladder, we used a ladder and other tools, to add on and renovate. So we stepped up from within. Then when I quit my job and my husband was still working, I bought myself a house/job in 2011, just as the housing market started to recover. That one is a rental now and has appreciated a lot. The cash flow is so good that with both of us early retired, we are not yet drawing from savings, except for an odd extra. So yes, housing has been very key for us.

    1. Hi Susan, yeah, here’s to all student home buyers! Not sure I know what a half plex is!

      I love that you DIY’d to add value and make the property bigger. And that’s really interesting that rental income is providing enough to live on, and saving you from drawing down investments.

  2. Snap! I bought my first property at 19 with my Mum guaranteeing the mortgage. Different situation though as I had a 4 week old baby and Mum got students in for the other rooms in the house to help pay the mortgage. She gave me all the profit from that house when we sold (about £7k) which I used as deposit for 1st house with husband. We wouldn’t be able to afford that house now as it was in North London and I moved out before the London bubble happened.

    We’ve moved locally a few times and usually made money, but then everyone does in a rising market. Never entered BTL world even though hubby is in the construction trade. Fear of all our eggs in the one basket.

    1. That’s so cool we were both 19 Tuppenny. Your mum sounds ace, supporting you and baby and ingenious house hacking filling the rooms with students.

      And yes, the all the eggs in one property/basket is a massive risk with BTL – it either goes well or does not, there is not much in between.

      As for the rising market, it’s a very good point (and I’m sure it saved a lot of people who disregarding Sarah Beeny’s advice).

  3. Thank you for your story. It is extremely daunting to think of buying a house today, the mortgages are so extortionate, I think we’d have to me out of London to be able to afford but then I’d lose my salary so it’s a vicious circe for a young buyer these days.

    1. Hi FreedomPot – thanks for stopping by and commenting. I agree London prices are extortionate at the moment, I do believe London only works if you have a high salary or absolutely love it other ways and are prepared to compromise.

  4. Hi Ms ZiYou, I think your story is very impressive! I think you should be pleased with how it’s all gone. It takes a lot of guts to do what you did, and you got a pretty good reward for that. Capitalism rewards people who take risks – that’s how it works. As with all things, it’s a mixture of skill and luck (except maybe chess, but that’s why I can’t stand it!) As you’ve experienced, the luck can go both ways.

    I don’t have a problem at all with people who’ve had success in the housing market. Although some distinctions should be made. I don’t find it impressive when we hear about slumlords buying homes on huge state-subsidised margin. Almost all of the benefit of that was the government effectively giving you cheap money and un-taxed returns to fund the “business”.

    I also don’t find it impressive when we hear about (some) baby boomers who bought a house for ‘cheap’ and then sell it on at a huge profit, having done very little maintenance or improvement (see below). Many buying on interest only mortgages.

    But to reiterate, I do find it impressive when I hear stories like yours (or the Fireman’s over on the Escape Artist).

    In terms of Mrs YFG and I. We bought our home in 2015. It was at a ‘good price’, mainly because the elderly lady who had owned it for a long time had let it fall into disrepair. We’ve spent 3 years ‘fixing’ pretty much everything. Our home is great now, it was such a shame how badly the property had been treated.

    We had previously got pretty close to buying a flat in Zone 1 London in 2013. But there were some legal issues which we could be bothered to deal with. If we’d bought it (and things didn’t go pete tong) then we would have made out like bandits. But I’m very glad we bought our home instead as it is such a lovely space.

    On the property ladder, it was incredibly depressing trying to buy in London back in 2013-2015. We were pretty much blown out of the water by foreign buyers, landlords and cash-buyers. We couldn’t compete. Flats would go in a day. Most were sold via an ‘auction’. It sounds like since the stamp duty and tax-changes, first time buyers have got more of a level playing field. It certainly wasn’t when we were trying to buy back then.

    1. Hi Mr YFG – I agree that the changes (and no doubt Brexit) have cooled the London property market considerably. I don’t envy people buying in that previous market when prices just kept rising and rising – it sounds like gazumping hell. I was very lucky in my timing, getting in near the trough before all the madness started.

      And slumlords taking advantage are so unethical, taking out profit, govt incentives and cheap mortgage rates. Then screwing over their tenants – no cool. Babyboomers are an interesting case – clearly, their generation won, but then again as your purchase confirms, the actual conditions they lived in were very dated.

      1. Have to say I completely agree with Mr YFG’s point about slum landlords, but I can see the business case, even if it is horrifically unethical and an abuse of the state.
        Baby boomers who’ve made huge sums off the markets upswing are nauseating. There’s no work or effort gone into those wins, just pure chance. But, as I have to remind myself, one house will always be worth one house.

        I wish I could have been as disciplined as you MsZiYou, but sadly I was not a frugal student. Too much rough cider and cheap ale. We bought four years ago in our mid-20s. We did the classic of buying the worst house on a good street, but paid over the odds for it. We spent four years renovating, and complete next week on the sale with a 15% return (of which about 5-10% is local price inflation).

        There will always be a profit to be found in renovating and restoring dilapidated properties. I only hope the days of the baby boomer dreamers buying on interest-only mortgages and hoping for a massive house price increase are over.

        FireShrink

  5. Very impressive Ms Ziyou! Sounds like you had a smart head on your shoulders at 19. At that age I was busy blowing through my students loans living in Central London and eating out all the time. I think my partner and I might be priced out of buying in London – working for small non-profits and gallivanting around Asia has been the trade-off. But we will be looking into the market when we’re back (and probably getting super depressed about it!)

    1. Hi Mindy – have to say I am very jealous of your lifestyle too – sounds like you’ve had a blast working your way around Asia. Sounds a worthy trade off, and I’ll prob do the reverse – go travelling to Asia later!

  6. Hey there. Great article. I currently own my property mortgage free and have since 27. For me it feels great knowing such a huge outgoing is finished and that my house can’t really be taken away from me. It makes my FI stash required lower and acts kind of like me not putting my eggs all in one basket. I have no intention of moving so for me it works well. Worth every penny lost to opportunity cost lost if you lean that way.

    Chris

    1. Hey Chris, that is epic you are mortgage free by 27 – and completely sounds like the perfect decision for you. I’m a bit more of a risk taker and wanderlusty, so happy to keep a mortgage and invest, and could never commit to once place for ever.

  7. Very impressive that you got on the housing ladder at 19! I was a very slow starter as I didn’t get my first property until when I was 29 when I bought a house with my ex. When we parted ways, we walked away with just under £45k each, an ROI of nearly 70% (over 10 years).

    I used about £3k of the cash to finally pay off the remaining debt on my credit cards and the rest was sitting in a deposit account ready to be used as a deposit for my next house. However, my folks persuaded me to stay in the empty family home and for me to use the cash for a BTL. I bought a tiny little one-bed flat which is intended to provide some income when I retire. I understand people’s views regarding BTL and I agree that many landlords have been greedy by taking advantage of leveraging/borrowing and favourable tax benefits. Legislation is slowly putting a stop to these advantages. I still have a small mortgage on my flat but this will be paid off at some point. I don’t intend to buy another property for investment. Since I don’t own the home I live in, when my folks decide they want to sell, I’ll have to look for somewhere else to rent, so rental costs are factored into my FIRE plans.

    1. Hi Weenie, that is a mega impressive gain you got on your first place – 7% per year and somewhere to live. That was a good purchase for you both.

      There are definitely many good BTL landlords like you about, and agree that the legislation is helping to reduce the tax benefits for the greedy and unscrupulous. And that’s so nice of your family letting you use the empty family home once they left the country – here’s a question – did you move into the master suite?

      1. Haha, no – I still see the master suite as my parents’ room, although when other members of the family come to stay, that’s the room they usually take!

  8. Bought you first house at 19? That is impressive.
    We bought our first house at 24 and I think we did it more because it was the “thing” we were supposed to do. I wish we bough a triplex and rented the two other units instead. Overall it all worked out but didn’t make a killer profit on any of my houses except for a vacation property in Martinique I sold two years ago.

    1. Hi Caroline, that’s interesting you bought as you felt you should, I hear a lot about duplexes and triplexes, but they seem such an American thing – not sure we really have the equivalent here.

      That vacation property sounds interesting, cool location! And kudos on the profit.

  9. The property market has been extremely kind to me too. I bought a house in Melbourne back in 1996 for 136K and sold it last year for 1.7M.
    I estimate that it’s shaved 10 years off my working life. 🙂

  10. I have benefited from one property we bought but not necessarily two others. We bought a property in Chile for my MIL to live in and paid it off in 13 years. It has appreciated from $35,000 to $115,000 in that time. We took out a 15 year mortgage which was smart. However, we also bought a house at the height of the housing bubble in 2006, for $242,000, and sold it in 2010 for $209,000. We took out a 30 year mortgage on that one. We were “lucky” that my husband’s company paid the difference that we owed. But we lost our downpayment, equity, etc. Then, with our next house, we took out a 15 year mortgage, so we’ll walk away with quite a bit of equity built up. But the house hasn’t really appreciated much in the six years we’ve lived here, because it’s located in a small town. Like you, I consider real estate a place to live, not an investment, so while we’ll probably sell our next house that we’re in the process of moving to during retirement and move to a smaller place, once we won’t have kids living there, I’m not treating it as part of our retirement plan. How great that your properties have helped you “move up the ladder” though. We paid more attention to location for this next property, because I think that’s one of the keys for having our house appreciate.

    1. Hi Laurie – your property stories are really interesting – that’s fascinating the place in Chile has appreciated so much more than those in the US. And so nice of you ensuring the your Mil has somewhere nice to stay. Agree it’s lucky that you got the loss covered from your last house, but I suspect you would not have crystallised the loss if his job didn’t want you to move. Good luck on your forthcoming move, and hope you and the family enjoy the new house.

What do you think?