How do I build a property portfolio?

rugby_fan_22

Hello All,

I am a long time reader of this site but never had the nerveto post/create a new thread so here goes.

I have a dream, (not an attempt to plagiarise) in which I cangenerate enough income from assets that can allow me to receive £3,000 a month.Yes its ambitious I appreciate, but that is my long term goal.

My heart is telling me that I should be investing inproperty, securing property’s and renting them out. I am fortunate enough to bein a position in which I have two houses, one that I rent out for £350 permonth, and one that myself and family live in.

I do not have anymortgages on these properties and am completely debt free (not bragging justhardworking and lucky) so there is still £2,650 per month to find

I became an accidental landlord as I was not prepared tolose out on selling our first house so I gave it a shot. This has worked out(thank the lord) and it has ignited a desire to grow a property portfolio.

I am not overly skilled in all financial matters so I washoping that there could be some of you good people that could guide me in theright direction. I have read numerous threads about similar subjects but still badlyneed some guidance.

I have £700 of my own money per month that I can use toinvest along with the £350 received from my second income (minus tax). £1050total. I am also in the lucky position thatI usually get (not always) receive an annual bonus of about £5,000.

I am 38 years old so time is not in abundance so what I needis a plan.

I have £30,000 savings that are held in an ISA that can beused to invest.

My first thought the way to go was to buy properties atauctions but I am not completely convinced. I know there is always risk withany venture you invest in, so I am just trying to source enough informationfrom people a lot more knowledgeable than myself for guidance.

Any help, or ifanyone has built a successful property portfolio before I would appreciate it very much.

Thanking you in advance.

Pixie5740

Is this £3,000 income that you want to receive a net income or a gross income?

The £350 you receive from the other property isn't just profit, you're paying tax on it but what about repairs and maintenance, rent arrears, void periods, troublesome tenants you need to take to court to evict?

AdrianC

rugby_fan_22 wrote: »

I have two houses, one that I rent out for £350 permonth
...still £2,650 per month to find

I think you might be forgetting all the various other expenses there...

OK, so you want to get a passive income of £36,000 per annum. Great.

Can we presume that's £3k/mo in your pocket? So £36k after tax. That's about £50k before tax. With all the other expenses, let's be really optimistic and call that £60k "raw" rental income, since that gives us a nice round number to work with.

What's your current rented place actually worth? 6% isn't a bad raw yield, so you'll need roughly a million quid's worth of property to provide it. And that's assuming no mortgage payments. Actually, that's also ignoring any agent fees, and I doubt you'll want to be looking after all those properties yourself. So add on 10% for that.

If there was a single golden rule that was infallible, low hassle and required such a small investment, you can BET that everybody and their dog would be doing it. Can I suggest lottery tickets as a good starting point...?

ACG

General rule of thumb would be to raise money against once to buy the next and then repeat.
Some people are suggesting there is tax on the rental income which is correct but do not forget that you can offset your tax bill with the interest plus various other expenses you are outlaying each month.

I have put together a sales aid for some of my clients but just waiting for my compliance people and accountant to confirm it is all correct, I will post a link once I get the green light.

AdrianC

ACG wrote: »

General rule of thumb would be to raise money against once to buy the next and then repeat.

But of course as soon as you start with the big outgoings like mortgages, you need a much bigger portfolio to clear £3k/mo income. <wet finger in air> £2-3m, probably...

Pixie5740

Fat Fergus, one of the largest landlords (in all senses of the word) in the UK gives his 5 top tips.

https://www.youtube.com/watch?v=CcgTo0d9zEg

bris

Sorry, you don't have the income or savings to generate 3k per month in the rental business.


You have enough savings for a deposit on 1 more property but the mortgage will be almost as much as the rent.


Sorry to be so blunt.

DAN1

It all depends on the location, i am slowly building up a long way from £3,000 a month net income but will get there in the end.

I bought a 77,000 1 bed flat with 20% deposit, rental is £550 mortgage is £306 so with £30,000 there is room to create a portfolio providing that each property needs work so you can gear up towards your eventual target.

rugby_fan_22

AdrianC wrote: »

I think you might be forgetting all the various other expenses there...

OK, so you want to get a passive income of £36,000 per annum. Great.

Can we presume that's £3k/mo in your pocket? So £36k after tax. That's about £50k before tax. With all the other expenses, let's be really optimistic and call that £60k "raw" rental income, since that gives us a nice round number to work with.

What's your current rented place actually worth? 6% isn't a bad raw yield, so you'll need roughly a million quid's worth of property to provide it. And that's assuming no mortgage payments. Actually, that's also ignoring any agent fees, and I doubt you'll want to be looking after all those properties yourself. So add on 10% for that.

If there was a single golden rule that was infallible, low hassle and required such a small investment, you can BET that everybody and their dog would be doing it. Can I suggest lottery tickets as a good starting point...?

I fully apprecite from all the posts and your one inparticular that I am being a little nieve, thank you for taking the time to post

rugby_fan_22

ACG wrote: »

General rule of thumb would be to raise money against once to buy the next and then repeat.
Some people are suggesting there is tax on the rental income which is correct but do not forget that you can offset your tax bill with the interest plus various other expenses you are outlaying each month.

I have put together a sales aid for some of my clients but just waiting for my compliance people and accountant to confirm it is all correct, I will post a link once I get the green light.

That would be extreamely helpful, thank you, and thank you for taking the time to post

rugby_fan_22

Pixie5740 wrote: »

Is this £3,000 income that you want to receive a net income or a gross income?

The £350 you receive from the other property isn't just profit, you're paying tax on it but what about repairs and maintenance, rent arrears, void periods, troublesome tenants you need to take to court to evict?

You make very valid points to consider, thank you for theyoutube link and thank you for taking the time to reply.