The average BTLer has a 21% mortgage and 500% rental cover at 5%

Thrugelmir

Conrad wrote: »

The really big Landlords I've known got there by constant expansion, never just gradually paying down capital. I've never known any go bust - they are far too money centric to let that happen. If they need to they can always sell a few places to pay down debt but it rarely happens

What's the end game? Cannot rollover debt indefinately. Sizable tax bills as well if capital gain is realised.

chucknorris

Thrugelmir wrote: »

What's the end game? Cannot rollover debt indefinately. Sizable tax bills as well if capital gain is realised.

I agree it is always best to have at least an outline plan/exit strategy. I'm starting to get out now, my wife is currently selling one property and I have just been given notice by my tenants in another property, which I intend to put on the market. I decided to not re-rent any properties, just sell them when my tenants give me notice. I will have been a landlord for approx 30 years by the time I sell my last property, although I will still have a half share in one that my wife and I jointly own.

wotsthat

Thrugelmir wrote: »

What's the end game? Cannot rollover debt indefinately. Sizable tax bills as well if capital gain is realised.

Keep a BTL long enough and the grim reaper pays the capital gains tax.

It's very expensive to buy and sell houses so selling to clear the debt is an inefficient way to clear the debt - money from elsewhere is required. Obviously, if the end game involves getting out of BTL then selling makes more sense.

To be honest owning an asset that has increased in value to the extent capital gains tax needs to be paid doesn't sound the worst problem I've ever heard of.

chucknorris

wotsthat wrote: »

Keep a BTL long enough and the grim reaper pays the capital gains tax.

It's very expensive to buy and sell houses so selling to clear the debt is an inefficient way to clear the debt - money from elsewhere is required. Obviously, if the end game involves getting out of BTL then selling makes more sense.

To be honest owning an asset that has increased in value to the extent capital gains tax needs to be paid doesn't sound the worst problem I've ever heard of.

My wife sometimes complains that we are going to have to (eventually) pay about £1m (collectively) in CGT, but my response is that I wish it was over £2m, as you imply, it is a nice problem to have.

cells

Conrad wrote: »

Well I have found the B2L's increasing in value so fast that there was never a need to input more capital to access a better deal.

Constantly redeploying capital allows more acquisitions, more income, more capital growth, but always keeping to a comfortable LTV

The really big Landlords I've known got there by constant expansion, never just gradually paying down capital. I've never known any go bust - they are far too money centric to let that happen. If they need to they can always sell a few places to pay down debt but it rarely happens

Also rents can rise over time relative to mortgage payments - after 20 years it might be worth having 10 properties with mortgage debt topped out around 15 years in, then the rents just keep on rising...........

sure in a rising market its better to buy more property than pay down debt. The debt I pay down is not lost forever I can always withdraw it at a later date if I need access to capital

My current gut feeling is that the next 5 years are not going to be anywhere near as good as the last 5 years with respect to rent increases and HPI. My guess is 0% HPI over the next 3 years in which case I am better off paying down debt at this part of the cycle than buying additional properties

cells

Thrugelmir wrote: »

What's the end game? Cannot rollover debt indefinately. Sizable tax bills as well if capital gain is realised.

more importantly there is the chucknorris rule

why bet on black if you already have enough money so that you cant spend it in your lifetime. If it hits black you for all intents gain nothing but if it hits red you are wiped out.

many large landlords have forgotten or simply dont consider this

chucknorris

cells wrote: »

more importantly there is the chucknorris rule

why bet on black if you already have enough money so that you cant spend it in your lifetime. If it hits black you for all intents gain nothing but if it hits red you are wiped out.

many large landlords have forgotten or simply dont consider this

I actually found it surprisingly (at least to me) difficult to accept that I had arrived at my financial destination, and that I had to change my attitude, and adjust my motives accordingly. But I think that I am there now, but it wasn't easy. I think part of the 'problem' was that I enjoyed the journey/game, and part of me didn't want it to end.

cells

chucknorris wrote: »

I agree it is always best to have at least an outline plan/exit strategy. I'm starting to get out now, my wife is currently selling one property and I have just been given notice by my tenants in another property, which I intend to put on the market. I decided to not re-rent any properties, just sell them when my tenants give me notice. I will have been a landlord for approx 30 years by the time I sell my last property, although I will still have a half share in one that my wife and I jointly own.

well done chuck

I know one landlord who has over 30 and is in his mid 70s his wife keeps telling him to sell but he never gets around to it. I think his wife has a fear of him dying first and then she having no clue what to do as they have a very old fashioned relationship where he manages all the finances and money and properties. The poor guy has even started walking with a limp and his memory is definitly starting to go. what more does he need to understand its more than time to get your affairs in order. More money than he can ever spend with maybe just a handful of years left with his exit strategy being death and possibly leaving his wife/children to clear up what will be a mess and possibly infighting over inheritances

definitely have an exit plan

cells

wotsthat wrote: »

Keep a BTL long enough and the grim reaper pays the capital gains tax.

It's very expensive to buy and sell houses so selling to clear the debt is an inefficient way to clear the debt - money from elsewhere is required. Obviously, if the end game involves getting out of BTL then selling makes more sense.

To be honest owning an asset that has increased in value to the extent capital gains tax needs to be paid doesn't sound the worst problem I've ever heard of.

only upto the inheritance tax threshold which at £650k minus your own home minus another other bits of savings/assets does not leave a lot (if anything) for mr grim reaper paying CGT

For most landlords its going to be 40% IHT or 28% CGT

chucknorris

cells wrote: »

well done chuck

I know one landlord who has over 30 and is in his mid 70s his wife keeps telling him to sell but he never gets around to it. I think his wife has a fear of him dying first and then she having no clue what to do as they have a very old fashioned relationship where he manages all the finances and money and properties. The poor guy has even started walking with a limp and his memory is definitly starting to go. what more does he need to understand its more than time to get your affairs in order. More money than he can ever spend with maybe just a handful of years left with his exit strategy being death and possibly leaving his wife/children to clear up what will be a mess and possibly infighting over inheritances

definitely have an exit plan

Thanks. When my last (not current) dog (we don't have children) Mills passed away over 3 years ago, I was heart broken. He died in my arms, and I realised the fragility of life, and that we are all going to go the same way, so you have to enjoy what you can, when you can. Mills showed me the way, and that I had to accept my inevitable demise (I'm working on 28 more years, I know that is an approximation), and it is very important to maximise the enjoyment of your life. I'm not saying money equates to happiness, it definitely doesn't. But it can facilitate better times, and you can't take it with you, so you need to plan out your final years, and accept your inevitable death, I see that as a good (rather than sad) thing to do.