Hi all, Just looking to bounce something off some experienced landlords and investers to make sure Im not missing anything obvious...
My experience as a landlord is pretty minimal. So far I have owned and rented out a 3 bed semi for 2 years. This one was easy though as it was purchased as a residential mortgage to live in and then I got consent to let for the 2 years. Mortgage was interest only at £550/month and rental income was £995/month. This was based on having £55k equity in a £220k house (this equity was built up as I purchased the house at a good price, renovated it totally throughout and remortgaged at the new value). This house is now sold and as a result after tax returns etc netted me around £28k profit for 2.5years of ownership/investment.
I totally realize that I was very lucky with this one though, was in the right place in the right time, was first to view and offered on it immediately. I had pre-approved my mortgage already, had no chain and the seller was in a hurry so it all worked out well. Also the mortgage company was very helpful offering consent to let which I understand is much harder to get now and also rare for a mortgage company to offer this after only having the house for 3 months.
I have subsequently gone on to buy another house but as a keeper for me and the better half to live in, so I have used up me allowance for a residential mortgage and would now have to go buy to let.
I am 26 and my ideal goal is to build up a property portfolio over the nest 34 years to the point that I can retire at 60 and survive from the income. My investment capital initially is the £28k profit I made + I can comfortably afford to throw £500/month as a maximum into it.
I've no illusions that this is a very small investment to begin with so looking around it seems the sweet spot for me would be to look at starting with a studio flat.
Quick bit of maths.. I can buy a studio flat in a local area I know well and to be easy to let out in for £60k.. with £18k down (30%) this makes the repayment mortgage over 35 years (at 4% worst case scenario) £185/month (£140 of which is interest). I can then rent this out for £400/month comfortably. If I take into account £50/month for upkeep and insurance and assume it is empty 2 months a year during tenant changeovers or tenants not paying then this works out as:
total income per year: £4,000
total outgoings per year: £2,280
total income £1,720
there is an extra £540 a year also going out but that is paying off the capital so in effect I look at this as income. Also I realize that with product fees etc for the mortgage its going to be year 2 until I am profitable. I will self manage rather than use an agent.
Any profits + the £500/month additional investment would go into an account and in theory in 3 years time I could buy another one under the same model (assuming the market etc is similar).
I of course realize a change in mortgage rates could be painful with 70% LTV on the properties but I would have circa £10k left form my initial investment which would be my safety net and in my mind this is money I can separate from my day to day money and afford to risk
Is my logic sound and is this a good start or do I not have enough startup capital to make this work?
My experience as a landlord is pretty minimal. So far I have owned and rented out a 3 bed semi for 2 years. This one was easy though as it was purchased as a residential mortgage to live in and then I got consent to let for the 2 years. Mortgage was interest only at £550/month and rental income was £995/month. This was based on having £55k equity in a £220k house (this equity was built up as I purchased the house at a good price, renovated it totally throughout and remortgaged at the new value). This house is now sold and as a result after tax returns etc netted me around £28k profit for 2.5years of ownership/investment.
I totally realize that I was very lucky with this one though, was in the right place in the right time, was first to view and offered on it immediately. I had pre-approved my mortgage already, had no chain and the seller was in a hurry so it all worked out well. Also the mortgage company was very helpful offering consent to let which I understand is much harder to get now and also rare for a mortgage company to offer this after only having the house for 3 months.
I have subsequently gone on to buy another house but as a keeper for me and the better half to live in, so I have used up me allowance for a residential mortgage and would now have to go buy to let.
I am 26 and my ideal goal is to build up a property portfolio over the nest 34 years to the point that I can retire at 60 and survive from the income. My investment capital initially is the £28k profit I made + I can comfortably afford to throw £500/month as a maximum into it.
I've no illusions that this is a very small investment to begin with so looking around it seems the sweet spot for me would be to look at starting with a studio flat.
Quick bit of maths.. I can buy a studio flat in a local area I know well and to be easy to let out in for £60k.. with £18k down (30%) this makes the repayment mortgage over 35 years (at 4% worst case scenario) £185/month (£140 of which is interest). I can then rent this out for £400/month comfortably. If I take into account £50/month for upkeep and insurance and assume it is empty 2 months a year during tenant changeovers or tenants not paying then this works out as:
total income per year: £4,000
total outgoings per year: £2,280
total income £1,720
there is an extra £540 a year also going out but that is paying off the capital so in effect I look at this as income. Also I realize that with product fees etc for the mortgage its going to be year 2 until I am profitable. I will self manage rather than use an agent.
Any profits + the £500/month additional investment would go into an account and in theory in 3 years time I could buy another one under the same model (assuming the market etc is similar).
I of course realize a change in mortgage rates could be painful with 70% LTV on the properties but I would have circa £10k left form my initial investment which would be my safety net and in my mind this is money I can separate from my day to day money and afford to risk
Is my logic sound and is this a good start or do I not have enough startup capital to make this work?