Do landlords not get to keep their properties after the mortgage is paid off by tenants?

theoldmiser

I've started a new thread as I don't want to derail my previous one - many of the replies I received seemed to be from people who think that landlords are somehow not receiving money every month in the form of rent, large sums of money compared to the amount of work required, and use this to pay off the mortgage (if they have one), and hence after twenty five years they own an entire house which other people have paid for. The yearly yield is of little consequence compared to that, is it not?

If I were to buy a Buy to Let property today for £200,000 and rent it out for slightly more than the cost of the mortgage each month, am I not, after twenty five years, regardelss of the yield each year, going to own a £200,000 property that other people have paid for, without having to do £200,000 worth of labour myself? Or am I missing something?

sammyjammy

I'm not sure of the point of your question but most landlords tend to have interest only mortgages.

Voyager2002

Yes, you are missing plenty. There are costs in being a landlord, and the mortgage interest is only a relatively small percentage of the total annual cost.

Browntoa

No tenants so no income

Expensive essential repairs 

Non essential ongoing repairs 

Letting fees  , yearly certificate fees

Tenant refuses to pay rent , try getting them out quickly.

Changes to the laws during the 25 years 

List can go on 

You obviously don't understand the basics

AdrianC

You're conflating two completely different things.

1. Charging for a service. In this case, that service is provision of maintained accommodation to the tenant by the landlord.

2. How the owner of a business asset finances and gears their business.

And perhaps that BtL mortgage is interest-only, not repayment. After all, mortgage capital repayment is not an allowable expense when it comes to the landlord's income tax return. Yes, paying down the capital borrowed will result in the debt being cleared... but that makes no difference to the viability of the letting business. Perhaps the plan has been all along to let the property for a period, then repay the capital on sale?

The yield is simply the return on investment, dividing the value of the asset by the revenue received. It may very easily be negative for a year, if maintenance costs are high in that one year - and quite feasibly over a longer period, if the business plan is poorly thought out. Many "accidental landlords" certainly fall into that latter category, but don't realise it.

maisie_cat

Rent paid to a landlord is in exchange for the roof over your head. This is a separate transaction to that of the landlord repaying any loan to a lender.  When you pay for your electricity, you are not buying shares in the company, simply exchanging money for electricity.

GDB2222

Owning property to let out has been very lucrative in the past, as the financing costs have been low in relation to the combined return from rent and house price growth. There are other costs apart from finance, and it can be time-consuming, but there's no denying that people have made money out of it. I have no idea why any of this is being argued about?  

How things will work out in future is anyone's guess.

caprikid1

You have stated you wish to be a landlord in your other thread but seem clueless on even the most basic of what it takes to be a landlord / how the process works.
Probably best to sell....

SpiderLegs

theoldmiser said:

...Or am I missing something?

Not really.

if I invest 200k in equities, each year I will receive some ‘rent’ from the companies in return for their use of my money, and in 25 years one would also hope that my investment has appreciated by a substantial amount .
all without me having to do 200k of labour.

What is your actual point?

Thrugelmir

theoldmiser said:

Or am I missing something?

The little matter of income tax. Factor that in and you'll find paying down the capital balance owed a sizable challenge. 

moneysavinghero

SpiderLegs said:

theoldmiser said:

...Or am I missing something?

Not really.

if I invest 200k in equities, each year I will receive some ‘rent’ from the companies in return for their use of my money, and in 25 years one would also hope that my investment has appreciated by a substantial amount .
all without me having to do 200k of labour.

What is your actual point?

But to invest 200k in equities you would need 200k to start with. No one is going to lend you 200k to dabble in the stock market with. I think the point the OP is making is that with buy to lets you only need the deposit not the full 200k.