BTL and gross yields

jamesn_2

F_T_Buyer wrote:

I wish you the best of luck, but your reasoning is flawed.

How will you not be losing money monthly after the first few years? I assume you mean you will be reducing the debt so the interest element is smaller, hence giving a positive cash flow.

But as you stated you will be losing money monthly, why don't you just save the money you would put towards the debt [capital] repayments. You would not need to minus your loses, therefore in a few years you could buy, and be better off.

The only way BTL makes sense is if the rent covers your interest, voids, maintenance and hassle. Some would argue they bought years ago, so would not want to sell, which is fine. But to get into a loss making investment from the outset is absurd.

Well, I was estimating that the losses will only last for a number of years because I am assuming a certain amount of increase in rental values and a decrease in mortgage payments (after inflation). Also, a percentage of my cost will be capital repayment.

So I will certainly get more out in the end than I put in.