Buy to Let - How I made £100 @ month

lowis

tassoti - if property management is your main source of income / job then that is fully understandable, 60k seems ok. out of interest, do investors/btl people with a large portfolio view £100 a month (after costs etc) as a fair return per property?

Gorgeous_George

My view is that DSS tenants are likely to be home more and therefore wear and tear would be greater.

For the OP, it seems to be a borderline investment and only worth the hassle if prices rise, which cannot be guaranteed. Income tax, CGT, running costs and voids all eat away at the profitability.

Have you got a Landlord's Certificate for gas and electricity systems? I believe the gas is mandatory (if the house uses gas) and the electric one cost me £100+ with a £500 bill to correct the faults.

You sound as if you are in a position to absorb the risk and so no problem - but that could not be said for everybody.



GG

Tassotti

lowis wrote:

tassoti - if property management is your main source of income / job then that is fully understandable, 60k seems ok. out of interest, do investors/btl people with a large portfolio view £100 a month (after costs etc) as a fair return per property?

my lowest yielding property returns about £90 per month. My highest returns about £450 per month.

Actual rental income from property is about 96K per annum, but isn't my main source of income.

lowis

thanks, was just wondering what sort of figures would be acceptable at a minimum for someone with a portfolio.

missk_ensington

Tassotti- how do you manage £450 a month when a Commercial Loan is around 7.5% (surely you haven't bought all the properties outright?) Even on a £100,000 loan the interest alone would be around £650 a month, unless you've been doing this a long time and have raised cash to buy the properties with little or no loans.

My Mum has a large portfolio of properties, but only gets around £100-200 a month after costs on each rental. She doesn't mind because it was never intended as an income to live off, more a long term investment as the loans are only 15 years and so in a few years they will be loan free, and the return will be much much bigger as a lot of her properties are Freehold Commercial Properties, thus earning her £80,000 every 15 years in just selling the lease, plus rent at £1200 a month.

Tassotti

when you say 'commercial loan' I take it you mean a BTL mortgage?

Ah..just re-read your post regarding you mum's commercial property investments.

None of my BTL mortgages are anywhere in the region of 7.5%

The highest is 5.2% lowest 4.69%.

The £450 property I bought in 2001 and haven't released any equity on it .....yet (about 60K)

Theoretically I could HMO up a few properties and receive around £600 profit per month on each one, but it really isn't worth the hassle with all the new regulations.

missk_ensington

Wonder if my Mum can get BTL mortgage instead? Think its because she in a Company that she has Commercial Loans. It has its bonus' though as she pays no tax! Because its a company she always ensures a profitable rental is cancelled out by a rental which has had thousands spent on it. Thus, never officially making anything, and equity isn't profit :rotfl:

Tassotti

I don't think you can get BTLs for commercial properties, as they are based on residential property.

Creative accounting can always be applied to any business

Hereward

missk_ensington wrote:

Wonder if my Mum can get BTL mortgage instead? Think its because she in a Company that she has Commercial Loans. It has its bonus' though as she pays no tax! Because its a company she always ensures a profitable rental is cancelled out by a rental which has had thousands spent on it.

Most BTLers offset the interest of their mortgages against their income to reduce their tax liability, so in theory the only benefit of swapping to a BTL mortgages is that the rates are possibly lower.

Thus, never officially making anything, and equity isn't profit :rotfl:

Unfortunately that isn’t true. When your mother comes to release the equity in her portfolio (through selling it) any rise in the asset value is considered to be profit, but some costs and relief’s can be used to reduce the liability.

missk_ensington

Hereward, they are never intended to be sold. The idea is that in 8 years when the loans are paid off (started at 15 years) she will have a comfortable living from the rent of 20 properties and barely any costs. No doubt she will pay tax on this but it will be such a large sum coming in that I don't think she'll care.

She wouldn't pay tax when she releases equity and sells one, because she'd go and live in it for 2 years first and make it her main residency :rotfl: