£50k cash into £1.5k per month in 20 years? Buy to let?
Discussion
I was thinking about buy to let but am open to your ideas too.
We've got some money in the building society which we assumed we would add to the equity in our current house when we move. However, my pension has been changed and I'm going to get quite a lot less than I was expecting and not be able to retire as early. I supose the £50k is money we could afford to lose in that we enjoy our life as it is, and £50k would still leave us with an "emergeny fund". Not too much risk though please. My wife will soon stop work so that may have tax advantages (currently we both pay 40%) if we put it in her name.
Very back of an envelope:
100k flats / houses round here seem to let for over £500 per month. Using an online mortgage calculator, I recon that if we bought one using the £50k as deposit, let it, and used all of the rent to repay the loan as quick as possible, we could pay off the mortgage in 10 years. Lets call it 12 to allow for expenses. Then we would have a £100k house and a £500 a month income. I assume we then would buy another one, levering against the first and then do the same again. I would be in my early 60s in 24 years, a good time to retire. Could we compress it in time so that we could have 3 house / £1500 per month (thus fully restoring my pension)
I've ordered a book on buy to let but got over excitied waiting.
Ta
We've got some money in the building society which we assumed we would add to the equity in our current house when we move. However, my pension has been changed and I'm going to get quite a lot less than I was expecting and not be able to retire as early. I supose the £50k is money we could afford to lose in that we enjoy our life as it is, and £50k would still leave us with an "emergeny fund". Not too much risk though please. My wife will soon stop work so that may have tax advantages (currently we both pay 40%) if we put it in her name.
Very back of an envelope:
100k flats / houses round here seem to let for over £500 per month. Using an online mortgage calculator, I recon that if we bought one using the £50k as deposit, let it, and used all of the rent to repay the loan as quick as possible, we could pay off the mortgage in 10 years. Lets call it 12 to allow for expenses. Then we would have a £100k house and a £500 a month income. I assume we then would buy another one, levering against the first and then do the same again. I would be in my early 60s in 24 years, a good time to retire. Could we compress it in time so that we could have 3 house / £1500 per month (thus fully restoring my pension)
I've ordered a book on buy to let but got over excitied waiting.
Ta
If you get £500 month rent for a flat doesn't mean you earn £500. You may have letting/management fees which can be 10-12%, then a common charge on the building could be £800 for a 100 grand flat , maintenance and if the flat doesn't let then no rent money you may not always have a tenant
Also a hundred grand flat with a 6 % yield isnt so great.
Also a hundred grand flat with a 6 % yield isnt so great.
greygoose said:
As an alternative why not look at good dividend paying shares and reinvest the income every year?
As an example Shell is a sound investment without the troubles tenants can bring.
A tenant can't spill millions of barrels of oil into the sea and get a $20bn+ fine though As an example Shell is a sound investment without the troubles tenants can bring.
Edited by raptor600 on Wednesday 12th September 09:35
S6PNJ said:
Shoestringracer said:
I've ordered a book on buy to let but got over excitied waiting.
What book have you ordered and what made you choose that particular book?Timmy35 said:
Paddymcc said:
Timmy35 said:
Isn't is very hard to get a BTL mortgage these days?
Pretty straight forward as long as you have the minimum deposit ad earnings should the s
t hit the fan and it sits empty.
Any recommendations, other than a quick Google bash?
For my last BTL I put an offer in on a house, and need the mortgage secured quickly.
All was done and dusted, including the valuation survey, in 4 days. This wasn't just a drive by, as there were comments about the internal structure.
I can give you his details if you want, however there is probably a resident broker on here.
Edited by 98elise on Wednesday 12th September 13:11
jonny70 said:
If you get £500 month rent for a flat doesn't mean you earn £500. You may have letting/management fees which can be 10-12%, then a common charge on the building could be £800 for a 100 grand flat , maintenance and if the flat doesn't let then no rent money you may not always have a tenant
Also a hundred grand flat with a 6 % yield isnt so great.
And there is tax to pay, which could be 40%Also a hundred grand flat with a 6 % yield isnt so great.
You can mitigate this by being clever with the ownership (if wife/partner not working etc)
I would go with the argument for shares - you can incorporate shares in Property Companies if you want exposure to Property.
But if you prefer direct ownership of flats, why not tweak your idea slightly:
Buy one flat with the minimum deposit that you can. Go interest-only if possible to increase net income and reduce taxable profit whilst you're both paying tax at 40%.
If its going well and you want to buy more, buy a second when funds allow (remainder of cash, plus any extra savings, plus net income from the first BTL). Back of a fag-packet maths suggests this might be year 4-6 without extra savings. If wife's taxable income has reduced below 40%, change mortgage(s) to repayment of capital & interest if you want to then.
If you still want to, repeat each time that funds (and net rental income relative to mortgage payments) allow.
But if you prefer direct ownership of flats, why not tweak your idea slightly:
Buy one flat with the minimum deposit that you can. Go interest-only if possible to increase net income and reduce taxable profit whilst you're both paying tax at 40%.
If its going well and you want to buy more, buy a second when funds allow (remainder of cash, plus any extra savings, plus net income from the first BTL). Back of a fag-packet maths suggests this might be year 4-6 without extra savings. If wife's taxable income has reduced below 40%, change mortgage(s) to repayment of capital & interest if you want to then.
If you still want to, repeat each time that funds (and net rental income relative to mortgage payments) allow.
sideways sid said:
I would go with the argument for shares - you can incorporate shares in Property Companies if you want exposure to Property.
.
Put them in a ISA and you will barely pay tax on dividends, if you spread the risk across blue chip shares you might get a 5% yield ,and growth on the share price long term , you wont have leaky pipes ,finding a tenant and expenses to pay..
Also property looks bleak in the next decade in terms of growth which is primarily what you want .
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