Multiple buy-to-lets - own personally vs own Ltd company

isofa

My wife and I are considering investing in several BTLs with the goal of making this our main living to give us the flexibility in life we need, perhaps also with one development property a year (buy run down, and turn around in a few months). I'd be interested to hear from others running 3 to 5 (or more) properties personally and whether it's more tax efficient (and/or sensible) to set it all up via a limited company which owns the properties.

Be interested to hear from others with similar ideas/portfolios.

JQ.

Is this to be a cash business, or are you planning to borrow money?

If you're planning to borrow, then I suspect you need to ascertain if any banks will lend to an inexperienced BTL'er who's just set up a limited company and at what rates they will lend. That could be your biggest hurdle.

kingstreet

You also need to differentiate between a letting business and a property development business. Lenders don't like financing the properties you intend to renovate and "flip" quickly on residential or BTL products.

isofa

The renovation side will be fully cash based with no leverage, and it'll be an occasional purchase if/when the right property comes along and only ever one at a time when there is a good margin to be made.

The BTL element, which we are considering, will be leveraged as I don't really want to tie up good cash reserves in 1 or 2 properties, when we could leverage out with BTL morts. for far more of a better investment and return.

Personally I have a long track record of running a successful profitable business (different sector) since graduating and the fruits of this business will be ploughed into our new family one - *if* we decide to go ahead - hence getting some advice and sounding boards!

If it's simpler / more efficient to run the properties personally rather than via a company, then I'd be interested to hear.

martinsurrey

isofa wrote: »

The renovation side will be fully cash based with no leverage, and it'll be an occasional purchase if/when the right property comes along and only ever one at a time when there is a good margin to be made.

The BTL element, which we are considering, will be leveraged as I don't really want to tie up good cash reserves in 1 or 2 properties, when we could leverage out with BTL morts. for far more for a better investment and return.

Personally I have a long track record of running a successful profitable business (different sector) since graduating and the fruits of this business will be ploughed into our new family one - *if* we decide to go ahead - hence getting some advice and sounding boards!

What sorts of net income do you have/hope to have each (so per person) from this venture, and from other ventures, as this is the key to which is better (the higher the income the better the Ltd route becomes)

Fire_Fox

Have you considered getting advice from a tax accountant/ small business advisor? Most here are totally unqualified, we tend to deal primarily with resdiential issues and small scale landlords, it's not a business board.

isofa

martinsurrey wrote: »

What sorts of net income do you have/hope to have each (so per person) from this venture, and from other ventures, as this is the key to which is better (the higher the income the better the Ltd route becomes)

Ideally within 5 years it'd be our main living so we'd want to be turning a decent salary from this for both myself and my wife, obviously the advantage with Ltd would be to draw down a lower salary and pay dividends as and when.

Fire_Fox wrote: »

Have you considered getting advice from a tax accountant/ small business advisor? Most here are totally unqualified, we tend to deal primarily with resdiential issues and small scale landlords, it's not a business board.

Yes of course and if we decide to go ahead, my account will be setting it all up with my instructions (I have a corporate accountant for my other business but just wanted to see how others have approached this to see the avenues from people running BTLs on a larger scale).

I would have posted on the investment board, but assumed this forum would be more appropriate.

Thanks for all the tips anyway!

Fire_Fox

isofa wrote: »

I would have posted on the investment board, but assumed this forum would be more appropriate.

Thanks for all the tips anyway!

There is the Small Business board and the Cutting Tax board, those are probably the closest. AFAIK the investment board is more stocks and shares and savings accounts. MSE is funny: it covers a lot of topics but is essentially for the consumer/ general public not businesses unfortunately.

dimbo61

It is not worth setting up a limited company for just one property but as you hope to buy several then it may be possible BUT the lenders usually ask for bigger deposits as you need more equity in the properties.
We have refurbished a number of BTL properties which were little more than a shell with a roof.
New kitchens, bathrooms, electrics, windows, replastering etc
With all the regulations now involved in HMO and student lets it is not a way to make easy money and you need a good business plan.

JQ.

To provide some background to my last post you really do need to investigate if you can actually borrow money. Most BTL products are designed for small part time landlords and will not provide facilities to Ltd Co's. Once you get into large portfolios and Ltd Companies you're into commercial lending - a completely different ball game.

Banks are totally risk averse on commercial property lending at present and the costs and LTV's are different to BTL products with very high entry and exit fees and low LTV's. That's assuming you can find a bank prepared to lend.

geoffky

There are easier ways to use your cash and housing at the moment is too volatile..You need to tread carefully and i would say you are ten years too late.