FIRE Girls Pension Diary - Aim High & Dream Big

PropertyGuru_Wannabe

I have to say this is a bold move and would like to emphasize to you that no business can survive for long if it cannot maintain a profit that is respectable of your time and effort put in. If your Return On Investment is less than 10% then you have to think why are you jumping into this. A lot of things chip away at your profit which I will recount below:

Repair Bills (never underestimate this and expect calls from your tenant 24/7).

Council Licence to let (if you council has this rule).

Void periods (must factor in at least 3 months).

Tax (22% in April 2027 for basic rate, 42% higher rate).

Mortgage Interest (you won't get anything under 5% with minimal fee).

Renovation costs (after purchase or tenant moving out).

Gas and Electricity Certificates (yearly for Gas if you must know).

Smoke and Carbon Monoxide Alarms installation costs.

Legal, mortgage, stamp duty, accountant fees, estate agent letting fees, and other costs.

Right to Rent bill and landlord obligations (get it wrong and you may not be able to evict).

Your business plan in expanding portfolio or getting money out from your company. (don't forget the lump sum allowance cap).

Have another think if it is definitely is worth it for you as I feel that you are being led by your heart rather than your head. Calculate your profit estimation and if you are satisfied with it, then go for it! If not then you still have time to step back from jumping in. Good Luck!

Mrs_Z

I've followed your journey with interest. And wow, what a surprise turn of direction with the BTL!

You might find down the line that the 'small profit' that it'll bring is not worth the hassle, but you won't know unless you try!

Some thoughts about your your 'social enterprise' angle which I admire in principle, but I think it's fraught with potential issues. Taking in the example you're given about the young mum studying for her chosen degree and you potentially letting her one of your properties on a low rent so that she can one day buy her own. Well, she might decide not to buy at all if her rent is low - after all, buying a property is expensive. Why buy if you have a low and secure rental flat in the area you like. What would you do then? It's unlikely you could evict her on the basis that she's not choosing to buy (or her circumstances no longer fit with your social enterprise criteria).

We had a BTL for about 10 years - and we eventually sold it. We were lucky with minimal voids, good tenants and it made a (small) profit too. We (well, I, did as it was 'my project) managed it ourselves to save on costs, but then my job moved abroad, life got much more stressful with commuting and I no longer had the headspace and the will and the energy to manage it. As it turned out, it was very lucky timing, just before the covid hit. The tenant at the time worked in a theatre and I'm pretty sure that they would have been unable to keep up with the rent payments for goodness knows how long.

You will not get very many fans of BTL on this forum, for a variety of reasons but don't let that to put you off if property is your passion! Do pop in from time to time to let us know how is going though!! Sincerely wishing you the best of luck!

Shimrod

https://forums.moneysavingexpert.com/discussion/comment/82074476#Comment_82074476

I admire the thought behind it, but not so sure about the practicalities. You seem very confident that 'it will' make a profit, but that comes with a lot of assumptions. We were accidently landlords for a while some 20 years ago, and the last tenant caused quite a bit of damage - a dog that chewed up the kitchen units along with some holes in the walls and a broken alarm system.

A friend had three properties until recently and all was well until one of the tenants stopped paying rent. It took two years to get the tenant out of the house and the lost rent plus repairs to the house wiped out the profit (including capital gains) of the last couple of years.

Final horror story - the house next door to my mother was rented out and the tenants stopped paying rent and deliberately damaged the house by the time they were evicted. The landlords eventually sold the house for over £20K less than they had paid.

Things can go quite well with a BTL until quite suddenly they don't. I would have waited for the lottery win when it is much easier to afford the losses!

SarahB16

I agree with the above. It really would appear that you are in a no-win situation.

You either face the challenges as detailed by PropertyGuru_Wannabe or you do in fact make a profit and are then viewed as just another greedy landlord taking a home for your buy to let portfolio and stopping somebody from buying that home and getting on the property ladder.

I only view the government's view of private landlords like yourself continuing to go one way. I know you think what you are doing is morally good but this is only after you have got a few profitable properties.

Regarding the example you gave of a single woman with a child they should be relatively high up the waiting list to qualify for social housing and the government is funding a huge social housing programme too.

As PropertyGuru_Wannabe has said please do consider what you are doing and if you stop at buying up to three properties many people will just view you as a greedy landlord depriving other people from buying a home.

If you genuinely want to help people then perhaps volunteer your time and skills to help people.

Smudgeismydog

Unfortunately I’m another one with a note of caution.

My partner and I had two BTL properties each for approx 10 years, and whilst we were very fortunate that for a lot of the time, it worked fairly well, over time the rules and regulations became more onerous, the tax/finances became less advantageous, and the tenants became more demanding. We felt the pendulum was very much swinging in favour of the tenant, and I don’t think this will stop.

I applaud your drive to do something for a social benefit, there are plenty of opportunities out there to do this, without potentially adding a huge amount of stress, and financial compromise you don’t need.

Firegirl

Oh dear, feeling deflated but I honestly I know that’s because I value your opinions and I 100% know you’re all right! 😆 I have considered all the info you have given me as I have read so much information and done so many calculations. I do have a full business plan which includes all costings, buffers for repairs, rental voids as well as disaster scenarios mentioned (which I know are not rare from my time working in CAB.)

I know outing myself as a BTL landlord won’t please people but honestly can you say that seeing my ISA and Pensions grow and grow would have pleased people either? I want to use the wealth to generate something good. If I was doing this purely for profit I would stay invested in stocks and shares, but it’s more than that. I work full time and save about £30,000 a year. We live a lovely life and it is £30k a year that my family and I don’t need. Even typing that is insane! Imagine if the 156 billionaires in the UK (Sunday times rich list 2025) used more of those billions for good.

All I can say is if your interested in my hare brained idea and you follow my journey I will give you an honest account of the ups and downs. For those who have followed me over from MFW thread how have I gone from doing car boot sales to get by to buying a BTL flat, it’s insane!!! AlI I know is I’ll have no regrets whatever happens. Nothing ventured, nothing gained😆

michaels

I think there is generic advice on BTL - currently not a good idea for private landlords with 1 or 2 properties - and what you are looking to do, going in with your eyes open and looking to scale to a point where it becomes a numbers business rather than a high risk good tenant/bad tenant scenario. I applaud you for putting your time and money into something you believe in - I think the doubters are just suggesting you 'kick the tyres' again to make sure there are not unknown unknowns.

[One thing I know HMCTS were worrying about was that the Renters Rights bill allowed all rent increases to be sent to tribunal with no increase until approved and that this would mean all tenants would apply for tribunal each time a rent increase was proposed and this would create such a backlog in the courts that it would be months or even years before an increase could go through - assuming the govt was not leaning on the courts to hold rents down, potentially well below inflation. Something else for your business plan]!

mrklaw

alternatively you could invest that money potentially for a higher return (BtL hasn’t had great reutnes and the environment is tightening) and use excess returns in the future to help with social issues.

buying a portfolio of properties rented out at market rates in the hope you are making so much you can afford to have a couple a bit lower l rent? Just seems a more complicated and risky way to achieve the same end goal

Cobbler_tone

You just have to hope you get good tenants. I was in a 3 bed rental for 4 years and took the advantage of a very generous landlady. The rent was £850 a month whilst the going rate was closer to £1100+. She had the outlook of helping people and can only assume she wasn't mortgaged on it, or had a small outlay. I treated it like my own and kept it like a showhouse, including carrying out some minor improvements, with permission. I am now married and in our own home a stones throw away. I said to the agent when I moved that I assumed she'd be hiking the rent but they said she was disappointed to lose me but was only putting it up £25 a month as she liked to help folk out. It looks terrible now, the gardens are overgrown, the curtains never drawn, so can only imagine the condition inside.

My wife sold her own BTL last year after we crunched some numbers and worked out how long it would take to bring in the rent verses the capital that could be released. It does feel like the time for BTL has passed but if it is a personal mission and at the right time, it's totally understandable and YOLO.

SarahB16

I know outing myself as a BTL landlord won’t please people but honestly can you say that seeing my ISA and Pensions grow and grow would have pleased people either? 

Yes, people would have been pleased if you had instead invested in your ISA and pensions and they had grown in value.

The difference is that we have a housing crisis in England (not enough homes) and you are purchasing a home for your BTL portfolio which is then depriving somebody from purchasing that home and getting on to the housing ladder.