How much money is needed to build your Buy-To-Let portfolio?
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- Äas pĆidĂĄn 9. 01. 2022
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Amazing transparent content didn't realise there was a faster way to get to the end goal by recycling cash. Definitely food for thought. Keep releasing great content đ much appreciated
Thanks Ricky, glad it was useful đ„
No mention of tax. And technically the monthly net yield/income (after costs and tax) isnât profit until you have made your deposit back. The amount of leverage in this strategy is quite alarming - property values can (and do) fall and with small deposits itâs easy to get into a negative equity situation. Interest rates will not be this low for long and mortgage costs can quickly eat into the yield. There are also stamp duty considerations for second properties and potential void periods during which you receive no income. Not a criticism but itâs important to consider the risksâŠ
Thanks for watching Alex.
No mention of tax, it was a basic example with ÂŁ24k as the goal income. Much like when someone says âI earn a ÂŁ24k salary in their jobâ which a is before tax amount. People donât go to their mates, I earn âÂŁ20k after taxâ, they talk pre tax figures.
If ÂŁ24k isnât enough for your living in this example, then best to increase it đđ»
Agreed that over leveraging is definitely a riskier strategy - worth checking out some of my other videos where I state interest rates will rise, and that I stress test every properties rent đ
Hey just l really love your video.
That's really hard to get 25 % deposit to have a lot of properties
Congrats on your first sponsor!
Thanks Paul! đ€
Really well made video mate
Thank you Paddy! đđ
Great Video - I see a lot of people pointing out the risk factor here. Each property you would be at 75% LTV, I may be naive here but I can remember property ever dropping in value.
One thing I wanted to ask here, you mentioned about splitting your fund % for deposit % for refurb. What is the deposit for? I understand 25% for a buy to let mortgage but your not then going to be able to re finance that quick to pull Money out? Or is the 25% deposit for bridging?
video/editing levels stepped up!
đ„đđ
Where can I find a house for 60 grand
50k capital what advice would give
Hi Justin i have 2 year before i am mortgage free my question is a bungalow as come up were i can get it at a discounted if i go halfs with a family should i go for it and make that two propertys or build up funds after the 2 years what advice would you give kind regards lee
Good question Lee, and whilst I canât give financial advice ;) I believe in momentum. So if you like and work well with that family member, then it might be worth exploring that purchase together .. rather than waiting a couple of extra years! đ
@@JustinWilkins thats great i will deffo look into it justin and congratulations on your bungalow kind Regards Lee
Would it not be a 6% stamp duty as you have more than 1 property ?
No luckily not. Still 3% đđ»
How many BTL did you have? & have you ever brought from auction ?
Youâll have to watch my videos to find out đ haha Iâve not yet bought from auction, although itâs something Iâm heavily learning about at the moment.
In Todays market ÂŁ80K For a property is like finding a Unicorn, even if you go up north. 7/8 Years ago you couldâve bought a house in Birmingham for 90K-100K. Nowadays you canât find a Decent home here for less than 160K
This guy's portfolio must be in Scotland!
@@housinauthority5258 đđ deffo, in the past year house prices have gone up like crazy, 80K Deals donât exist anymore⊠unicorns
Great video as usual, I donât touch vanilla BTLs if they donât clear ÂŁ400 profit per property as a minimum, 2 bed terraced, two more BTLs and my target is achieved, Financial freedom is already achieved, but I wonât be stopping there, Just keep on buying đĄđĄđĄ
Nice work Jack! A goal for me is to definitely increase size of project that I am working on in order to find properties that cashflow ÂŁ350-ÂŁ400 pcm, so great work setting yourself that criteria!
And obviously incredible work achieving financial freedom! Keep going 100%
Errm I really donât want to be negative as do like the strategy⊠but just finding it abit concerning that 200-300 per property is slim when considering rates going up as well as future costs and the eventual void.
Was just an example đđđ»
Is this based on using bridging finance or are you talking about getting the money out in two years time?
Hi Sam - BRR could be bridging, cash, private investor funds ⊠lots of different options.
The purpose of this video was to illustrate the amount of capital you might need (in approximate terms) to build a portfolio of say 8 BTLs.
You would make better returns by just investing in the sp500 or REITS shares.
Returns yes, Cashflow possibly not đ
Where can you buy properties for ÂŁ60k in the UK?
Up norf
Wow its crazy that a buy to let only makes ÂŁ287 a month with all of that startup capital and work đ€
Yes itâs a fair point - the realities of property is that is a great asset class. It produces Cashflow and capital appreciation⊠but itâs not a get rich quick scheme. Takes time to build it up!
Are you buying properties local to where you live? The cheapest 1 bed flat within 5 miles of me is ÂŁ140k
Hi Paul,
Sadly not, I do have to travel for my investments, as I live on the south coast and like you property prices are crazy high! So I travel up to northern cities and areas đđ»
how many years of proof of income did the bank require from you in order to approve a mortgage?
If you are employed on PAYE then probably 3 months, or 3-6 months. From my experience anyway đđđ»
@@JustinWilkins If i bought a house outright and earned income from it, how many months/years do you think I would need for proof of income? Appreciate you taking the time out of your day to reply mate
There are some providers who accept minimal income and only calculate based off the economics of the b2l
Great video mate, not seen anyone show the difference: vanilla btl vs brr
Thanks! đ glad it was helpful mate !!
Justin's personality really coming out now đ€ŁđđŸ
đ hope thatâs a good thing!
@@JustinWilkins Of course it is! Makes you human and relatable, keep up the great workđ
@@ameenr9129 haha thanks mate! đ glad to hear thatâs coming through, slowly getting more familiar with being on camera đ
In Scotland, I need ten hoooses for passive income or one castle.
Hahaha one castle đ° đ
24k gose no were these days personally change my plan to just flipping to get my cash up first , until i could safely get 5k passive
Flips are great for building capital! Although could be a harder strategy over the upcoming couple of years
Are you far up north to be finding properties at 60-80,000?
Fairly yes. Liverpool area.
Lots of areas around the North West, Yorkshire area and North East contain properties in that value đđđ»
Thank you! I have been thinking about BTL for a while and trying to find out more, properties around me are way out of my budget. I going think further afield may help me out. Iâll check out Liverpool and around Yorkshire đđœ
This guy knows how it works. I'm just starting on property 4.
Great work Matthew! đđ
Where do you find anything to buy for 60k!?
North East or West đ
@@JustinWilkins thanks for the reply, cant even get a 1 bed flat near me for that đ
Nice
đđ»đđ»
My answer: ÂŁ30k! This is the year to get my 1st BTL! Thanks as always Justin, weird Iâm on this journey with you and you donât even know it haha!
Yes Lewis! 2022 is the year đđ
Haha well Iâm aware now - so make sure you comment and keep me posted on how you get on!
In the current climate property prices have exploded. Certainly in our area of the country there are fewer and fewer properties on the market pushing prices up which in turn the return is getting small and the maths simply dont work when you calculate rent that can be charged per month. What was ÂŁ85,000 two years ago is now ÂŁ130,000 plus.
Also your refinance figures only add up if the properties value has gone up. Houses do go up but they also go down. You cant automatically assume again in current covid climate that your property is going to be worth any more. I have seen properties where you spend ÂŁ15k refurbishment but in 2 years the property has only gone up by ÂŁ15k. Had you done nothing it would have still risen in value refurb or no refurb and you could have saved yourself 15k.
Interesting to hear your thoughts, thanks! Although Iâve done the math, and these refinance figures do work - itâs not reliant on the value going up with the market, but that is an added bonus if that happens.
I havenât assumed any markets going up, as I agree thatâs a dangerous game to plan. Markets done continually rise.
This was purely a video to show the capital thatâs maybe needed to build a portfolio, not to confused people with BRR calculations - well that was the intention anyway! đđ€
@@JustinWilkins thanks for the response. So would you advise to always renovate the property as I have found that by simply fitting new bathroom and or kitchen new carpets etc when comes to remortgaging the property the valuer doesnt really take this into account as much as was invested in doing the refurbishments. They often just look at bricks and mortar
Really helpful video Justin , thanks for all your great tip. Congratulations on a fantastic sponsor đ
Thanks very much! Glad it was helpful đ
I am actually bored of commenting on your videos now because it's always the same - great content and insight! :)
đđ I never get bored of you commenting! I wait for it every week :)
Howâs working with JVâs going?
Good so far thanks, still early days but everything is in place to make 2022 a big one đđ€
Are these internet only or repayment mortgages when they are rented out?
Just bought number 7, now onto number 8. I wonât stop until I can live off all the rentals without having to work, Iâve got 12 in mind, but knowing me I wonât stop at 12
Congrats! Thatâs an incredible achievement đ keep pushing, no doubt youâll hit number 12 in the near future!
Hi Justin. I am wondering you experience with criteria on getting a BTL offer. Getting your first few without experience, is this possible? And have you had experience with a refinance to pull cash out? Cheers!
Hi Charley, thanks for watching. Yes itâs possible to your first buy-to-let without experience or knowledge, but can be a bit more risky. Spending time researching and doing viewing trips can really help increase your knowledge and confidence. Then itâs just a case of being strict on your numbers when making offers đ
Iâve just had a refinance come back - ÂŁ20k pulled out. And Iâm waiting on another one right now too đ
@@JustinWilkins Hey Justin, I guess it helps with a local network who can help connect with the right brokers etc too.
I did a course last year to establish a network of local investors who are active in the market so that will help when pursuing a BTL.
I know I want to do it its just a question of WHEN. Do you think the sooner the better for doing a refi?
Cheers!
It's an interesting approach you shared, but I didn't see any insight into the impact of the additional mortgage payments this would add and the impact this would have on profits across the same 8 properties. Without doing the math your profit would drop significantly based on increased payments.
Hey James, thanks for watching and sharing your thoughts on the video. This video was an overview of capital required to get started.
I said at the beginning assume all properties earn ÂŁ250 profit per month when you rent them out đ€·đ»ââïžâŠ the math is on that âŠ
I wasnât going in depth on interest payments, insurance, managing agents and other costs.
Hope you enjoyed the video anyway, and maybe some of my other videos will cover your concerns regarding how much properties profit đđ»
Brother, Sister and I have around ÂŁ400,000 from our Mum to start a property portfolio, do you have a video on how we could structure it as a ltd company?
Nice one Joshua! I donât have an exact video about this, but a Ltd company structure is probably the best way to go - Iâd recommend speaking to an accountant for advice on how to structure and set it up!
Be very careful before deciding upon using a ltd company. Double taxation from Corp tax and divis is expensive. Corp tax rates are going up as well (admittedly you'll be below that threshold for now).
Mortgage rates are quite a bit higher than in personal name and suck out most of the benefit.
The only real positive of ltd co comes if you don't need to take any money out of the company and want to reinvest it all. Then you're only paying Corp tax.
@@ChrisLee-yr7tz il somewhat agree with Chris here. Really important that you get this correct. However, there are a lot of benefits to positioning your business as a Ltd company. Itâs best when you continue to reinvest the profits, but Iâve found it tax efficient to take payments. The difficult comes if you try to pay yourself a wage, alongside earning another salary.
Best advice is to not listen to either of us and speak with an accountant đ
@@JustinWilkins lol. Speak for yourself...I am one..đ€Șđ€Ș...although I haven't worked as one for a long time...
I have property in my personal name and in my ltd company and still...the jury is out on the best structure.
@@ChrisLee-yr7tz hahaha my bad! Big assumption on my behalf lol. Interesting to hear you have some in your personal name - but goes to show its individual to peoples situations :)
This strategy will work in normal times but as the last properly crash proved in recession it will bankrupt many a property developer with multi million dollar portfolio. Far better to be slow and steady and having for more capital on each property
Agreed, being safe and playing the long game is never a bad idea ⊠however, providing you donât overleverage your properties after this initial refinance, and you keep cash reserves from your rent, then you should be able to weather the storm!
The last crash was particularly bad due to the fact that a lot of landlords bought properties with 0% deposits - now the standard is 25% in order to hedge against market adjustments đ
I do like to look at both sides of this, and I partially agree with both.
@@JustinWilkins the next financial and property crash will make 2008 one look like a baby , the economy is screwed with MMT , mass money printing and covid .... If you analyse the data( most or all of )the EU hasn't recovered from the last recession yet. With unemployment high and both private and government debt at ridiculous levels
I don't get how you can only leave in ÂŁ7,500 when a typical BTL mortgage requires 25% equity?
Hi Lee, 25% of the new deposit is still being left in, but enough profit has been created to pull out a large percentage of the funds used. There is a link in the video to, another video Iâve created where I share how to do these calculations đ
If you had ÂŁ200k it would be more wise investing into BRRR or development deals to Maximise your Money instead of 8 buy to lets
To maximise profits, probably development deals. However, they have a higher barrier to entry and knowledge requirement, they also are likely to have a higher level of risk. So hard to compare these strategies like for like :)
@@JustinWilkins Absolutely đđ
Are you setup as a limited company to avoid the heavy taxation?
Correct(ish). Not avoiding it, but itâs a more efficient way to structure paying tax for my business đđ»
@@JustinWilkins Thank you mate
Unless youâre earning in the higher tax bracket and not planning on owning more than 6 properties itâs not worth it. Interest rates are higher and only saving 2% tax which wonât be much with a few properties. I have to interject as a long term landlord that many people donât realise itâs not good just for the tax efficiency.
Hi Justin, thanks for your great videos. They have helped me a lot so far. One question: Would you know any area in the NW where properties sell for ÂŁ60,000?. In Liverpool, every property seems to be going for ÂŁ80,000 (even the ones in need of redecoration or refurb) and higher.
Hey Sebastian, thanks for watching. Glad theyâve been helpful! These figures were more for example purposes, but Iâve recently been to view several houses in the ÂŁ60-70k region. Iâm trying to switch focus to slightly higher priced properties myself. And the idea is just do the same method but with a higher value property - you just have to make sure thereâs more profit in the deal to pull out as much money as poss at the end! đ
@@JustinWilkins What do you think that sweet spot of BTL is price wise? Obviously you can buy lower value homes, but more often than not they are in more dilapidated areas where capital appreciation wont be anywhere near as strong as other locations. Whats the price range/value of houses you see as a good balance between appreciation and cashflow?
@@teawrecks5070 Middlesbrough or Burnley
@@ameenr9129 man said Burnley đ€Łđ€Łđ€Ł its a shithole
@@jahanghir528 yeah and sadly their are places like Liverpool where you canât even get a cheap house anymore .. Burnley is shit so is Liverpool. All northern towns are like this
What happens if you havea poor credit rating and have been bankrupt? Is there still a chance to go onto the property market?
Yes I believe so, but it can be quite difficult and take a long amount of time after. And also a decent few years or rebuilding your credit history. Worth checking with a mortgage broker!
80k ? What you getting garages
đđ haha not quite.
Small 2 bed terraced properties in northern cities. Itâs very achievable - I own a few and have sourced a few to other investors.
Nice video! Loved the simplistic white board format! Really easy to follow. Cheers Justin!
Cheers Sean! I do love to bring out the whiteboard :D
Love the channel Justin đđ»
Just watched a couple of videos, some great content. Thank you!
Cheers Christopher đ€
if you would put more info about time aspect/expectancy of reaching ÂŁ2k at each budget scenario this vid would be 10/10. so sorry but only 9.5 from me ;) (ie 200k and i can buy you 8 btls at the same time and let them out quickly (time ~3-4 months and you have 2k pcm)... 60k and i can find buy and manage you 8 hard renovation projects at the same time ( you will get 2k pm after about 8-12 months knowing life but it will cost you much more as it is sooo much more work ;);) ...... etc.... you would be shocked on how many ppl will not notice this tiny aspect.
Haha đ il be aiming for that 10/10 next time! đ but yes great points and whilst perhaps obvious for some, itâs not for everyone!
Hi Justin. Do you know if any mortgage lenders will lend 5x your salary? Iâve heard most lend can lend a maximum of 4 / 4.5 x your salary.
For a personal property purchase, I believe there probably is. Most recently in the news thereâs a lender that does 7x salary!!! But they do tie you into a long fixed mortgage.
The majority of lenders sit between 4-4.75 x I believe đđ»
Obviously for buy-to-let is doesnât relate so much to salary and how many times x they offer
Ok great cheers đ
The problem is:
a) the capital appreciation is low on these low cost property areas often
b) ÂŁ250 clear per month leaves you quite exposed if there's a significant unexpected maintenence expense
Hey Ryan,
Thanks for watching mate!
Here are my personal opinions on these two points:
1) capital appreciation on these areas have out performed the rest of the UK for the last 2 years. My concern is more if it will last, or if it will drop down at all in the future.
B) I agree the profit per month is low, which in my opinion is why there is safety in numbers. A portfolio of 10 is better than 1 in my opinion (obvious I guess).
Would you agree?
Playing devils advocate, the higher value properties don't provide proportionally the same level of rent and therefore cashflow ROI is lower. If something goes wrong e.g. new roof then you're even more exposed as that will cost more than a standard 2 up 2 down property. Appreciate that captial appreciation is where the win is here potentially so both have their advantages and disadvantages.
Also (I know Justin does this) when doing a BRR then the place is in a good state meaning that maintenance issues should be few and far inbetween :)
@@pepeyogan1 really solid points, missed these in my comment above. Particularly the post refurb maintenance - which if done right, should in theory mean thereâs less maintenance for the first few years! đ
@@pepeyogan1 the cost of a roof and boiler etc will be roughly the same. The expensive property is not necessarily a larger property. Itâs more the area itâs in.
@@joey-pn3xe Ok in that case you're probably looking at less monthly cashflow with (at best case) the same level of expenses.
what about tax?
Hey Jeff - tax on what? I didnât cover anything relating to tax đ and you donât get taxed on a refinance
@@JustinWilkins tax on income from the rental ?
@@cccggg2600 depends on your structure
@@cccggg2600 20% of your profit if you're a lower rate taxpayer.
Great video!
I'd love to see one made about the costs taxes moving forward, post purchase
Great suggestion, thanks Matthew! đ€
Great content love the knowledge youâre passing on. Thank you very much.
Cheers really appreciate it đ„
Love your content mate! Keep up the good work!!
Cheers Joel đ€
đđđđ
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What happens when thereâs a dip and you have negative equity in all your buy to letâs ?
You have 25% deposit in each at least, plus the monthly Cashflow to keep you going through the hard times đđ»
When there are hard times you have negative equity, higher interest rates, and may have to lower rents to fight for tenants. Reminds me of 2006/7 before the crash. I held onto my properties in Leicester and Northampton, but made losses for many years and have only now come back to profit overall. Capital appreciation is mediocre, and inflation / maint costs are high. Property is long term investments, but I would invest my money with Vanguard, AJ Bell or similar, or a venture capital trust with higher yields. The maths here just does not work out. One call out for maint is around ÂŁ80, and thats before any work is done. ÂŁ250 per month profit is a dream assuming u buy the property in good order with no major maint issues. High risk, low yield at the moment with inflation heading one way. Donât risk the negative equity and risk of owning multiple properties.It will be a heavy and stressful burden for you and your families.
Mate Iâd be happy with 300-500 extra a month passive
Same here! Everyone is different and has different goals... but starting with the goal to add ÂŁ300-ÂŁ500 to your income per month is a great achievement, then you can add from there!
@@JustinWilkins just needing to somehow find 20-30 grand đ€Ł currently doing myself an adult apprenticeship at 24 is a bit rough
Problems with this. You are not buying outright for cash, since you said 20K investment cost at one point. If you have 3% rate mortgage on an 80K property with no deposit, such that you are taking 250/month profit out, you must be charging rent around 800 quid/month (repayment will be about 550 on that size loan on normal terms). 800 quid on 80000 is a 12% yield. Where are you getting this? Which part of the country? Anyway, never mind that. At 02:14 hair is combed right-to-left, but by 02:20 its gone left-to-right, but same clothes. Dodgy.
Hahaha the hair part made me laugh! đđ ⊠can confirm Iâm not dodgy lol.
In answers to the other part - buy-to-let investors most frequently use interest only mortgages, meaning monthly payments are usual in the region of ÂŁ140-ÂŁ170 for an ÂŁ80k house. Rents are usually ÂŁ550-ÂŁ600 in the area I invest in. Itâs very achievable, I have done this and also sourced these types of property for other investors đ
@@JustinWilkins So you are getting a 100% interest only mortgage? Your risk with a large portfolio is if several properties are empty. But i guess this is unlikely. So you are getting 600/month on an 80K house? Thats a 9% yield, where is this? Which part of the UK? I am not aware of such high yields. Or are you saying you bought this house for 80K..but now maybe its worth 200K and you are getting 600/month rent?
@@paulbrown5839 no 100% interest only mortgages are very dangerous. They havenât existed since the crash in 2008, so itâs a is a good thing that they donât exist any longer. The properties Iâve bought so far are worth around ÂŁ85k and in Liverpool - the yields are around 9-10%. But as you can imagine, they come with slightly more risk than your average ÂŁ200k house đ
@@JustinWilkins I see. I was told some parts of Stoke also pay good yields for 1/2 bed flats, but as you said- you have increased risk. Are you managing the properties yourself or someone does it for you? If you get a bad tenant, are you planning to go there and evict them yourself?
@@paulbrown5839 hi Paul, yes Iâve heard Stoke is a good investment area too, but no experience there myself.
Re management, I have a managing agent that helps me collect rent, arrange any maintenance and in the event someone doesnât leave, help with evictions. Iâve been lucky and has great tenants so far, but Iâm fully aware that I could have a bad experience at some point đ
The amount of people that will come unstuck with this strategy once we hit a dip in the market is going to be staggering. Refinancing to 90k in a strong market is fine but then you come off your fix mortgage as a dip hits then what when your valuation comes back at 75k? You have 8 houses mortgaged to the max then you will need to find 120k to stop you loosing your properties when you cant refinance them or stay with current lender and pay a standard variable rate and thus make ÂŁ0 a month on your rentals. Caution is needed guys there is no get rich quick when it comes to property.
Very valid points Andrew! Stress testing the Cashflow from properties at higher interest rates is really important too!
BRR is a fantastic strategy to grow a portfolio and efficiently used money. But knowledge and experience is crucial.
Markets always cycle, and in the good times we forget the bad times!
This video is by no means made to promote get rich quick, itâs to show how much capital youâd need to potentially build a portfolio. Turnkey vs BRR.
ÂŁ250 a month doesn't reflect the tax you have to pay and not able to take off mortgage so this whole thing doesn't work
đŽ this model has nothing to do with tax. If the amount of salary I showed isnât enough for you - then increase the amount of houses you need to buy.
People overcomplicate tax, and itâs really not that difficult. Just like when you work a job and pay tax at the end of the month đđ»
Thanks for watching anyway, hope you managed to find some value apart from thst
Low valued properties, come with greater tenancy risk. The lack of capital appreciation is a real killer though.
I think people can get over excited with yields and ROI, which will obviously be very high in low valued properties. But maintenance, repairs, refurbs cost similar wherever you are so you'll get hit hard with this. The workload is also greater as you have more properties to manage.
Great points! Definitely some takeaways for people to think about from what youâve said.
Personally whether Iâm looking at deals at ÂŁ50k or ÂŁ150k - if itâs a BRR that I can refinance most the money out of, then Iâm just going to buy it đđđ»
Thanks for doing this video - How long after getting a B2L mortgage can you refinance?
Usually 6 months plus, but it can be done prior to 6 months with certain lenders.
Hey Justin, what do to mean by âleaving in X amountâ of your own money when you refinance?
Correct! Sorry if that wasnât explained enough. So thatâs the amount of money youâll be leaving that property after your refinance!
Well done Justin. I started out 30 years ago exactly like this and on paper predicted I would own 100,000 properties! It didn't quite turn out that way. However by taking massive action and setting goals that scared me did lead me to financial freedom. Keep going buddy. Jim Parker
Cheers Jim!
100,000 properties might be a bit to manage đ but absolutely agree, taking big action and having clear goals is so important! Thanks for watching đđ€
đđ Your math were a bit off. How many properties did you manage to acquire at the end? 99990?
@@tetiraelian Enough to retire financially free (Top 1% in the UK) so did alright in the end.
@@FifePropertiesTV Well done.
I've bought four modestly-priced properties in the M62 corridor with my own money, and I've found myself preferring to move further upmarket with each purchase. I'm probably ridiculously risk-averse but I don't want my financial security dependent on interest rates remaining low. There's very little scope now for adding value - the stock simply doesn't exist anymore in half-decent areas and if you go downmarket and buy in (what used to be unashamedly called) slum areas you're not going to be able to attract the sort of tenant you want (i.e. one that treats you and your house with respect) and your capital appreciation will be much less too. If I was Justin's age again I'd be doing (broadly) the same thing - but playing it as a very long game. It's not a sprint to a passive income goal but a lifelong side-hustle.
Couldn't agree more. For someone starting out with very little capital better to jump on the low margin band wagon that not, and at least get some experience, but do so with your eyes open. The buy to let market become more rewarding and less stress free I find the higher up the value chain you can work yourself towards. If your saving plans allow you to maybe to buy in a better area by delaying for a few months then that might be a better deployment for your capital than buying the cheapest property you can find in the cheapest area.
Most mortgage companies limit indictable to 6 BTLs to manage their risk
Some do yes. Thereâs plenty of lenders that are happy over 6, but they start to review your Cashflow in more detail đđ»
End of the day, banks want to lend money to make money. Aslong as itâs safe and low risk
Problem I find with northern properties is that ÂŁ250 to ÂŁ300 is just too small amount to be clearing per month. My experience has been that there is always something that needs doing on a property (especially houses versus flats) at least 2 or 3 times a year. With a 250 profit per month that really doesn't leave you much room for covering those unexpected costs. In my mind you are better off taking things slower and buying more expensive properties that give you at least 500 to 600 per month. In London i target 800.
Interesting and great point of view! I believe with these types of property it is better to aim to buy a few properties quite quickly, as having 1 or 2 can be inefficient if a expense comes up (like you mentioned).
However, I personally believe someone is better off trying to find a middle market. Maybe the ÂŁ100,000-ÂŁ150,000 market where a ÂŁ400 profit per month is achieveable in some areas ⊠for a lot of investors London is almost unachieveable đ
True there but it depends really on the area and how long it takes you on saving up that deposit for that property. As Justin said with mid priced properties it can take less time to save up. Sadly with me for example I started an apprenticeship and my first source of income. I'm earning near half that from the ÂŁ30k example in the video. If I save my income and try invest or buy and sell in the meantime I hope to save ÂŁ30k by the end of this year. Even then that might not be enough for most places in the south of England. Another thing I'd look at is building up equity on a cheaper house which you can draw out in future to later invest that on another property đ
@@JustinWilkins gr8 point! basically cheep areas are a game of scale.. expensive areas are a game of quality. it is still critical to find good tenants that will live in your btls as if it would be their own house
London is very high end mate and out of a lot of peoples reach
My comment was addressed more towards those that may have the option at looking at slightly higher value properties. I realise that for many starting out anything above 60K it outside of their reach. But you need to go into it with open eyes and expect that for any given year until you scale up, there is a good chance you will be much less than you expect. If you are lucky you end up with a good tenant but even with good tenants things do and will go wrong. Hopefully if your initial refurb addresses most issues you will have less unexpected issues. Properties at the very low end of the house price market are usually priced so because 1. It needs major refurb 2. It is an area that may not be the most appealing and therefore may not attract the model tenant that you are looking for. With low margins there is much less of a safety net for things to go wrong. However, despite all over that, given the likely hood of high inflation eating into savings and also increasing house prices and rents, I'd say for someone with little capital, it is probably better to give these low value projects a go. Even if its just to gain experience in the buy to let world. You'll have plenty of years ahead to move onto bigger and better property projects.
Great video Justin. I've been renting out my residential house for 5yrs and have now set up a LTD to by standard 2 bed BTL properties. At the moment I'm sticking to Brentwood, Essex which is my home town in the UK, although I do live aboard. I know this area well and have family there to help. Yield is not great at around 4% but demand for rent has always been high with easy access into London.
Question: What advise would you give to foreign investors such as myself that might want to invest in the north of the UK i.e. Leeds, Liverpool, but can't be there to deal with tenant issues, or, when it comes to maintenance/eventual refurbs etc?
Brentwood is very expensive, if you are abroad why not invest up north?
@@georgeb7641 itâs out of my area
@@smartfrogeducation4134 you're not even in the country lmao the whole of the UK is out of your area
@@georgeb7641 LOOL
Sound like forever headache for little reward
True, but thatâs why those they do it are eventually successful. Nothing worth having comes easy đ
Stamp duty is quite a bit more than that. If you own more than one property the stamp duty goes up it would be closer to ÂŁ8000 on a property of that price EACH! 8 properties additional to the one you live in would be about ÂŁ64000 in stamp duty.
đđ you might want to recheck your figures on this! Itâs 3% per additional purchase - so like ÂŁ1-2k for these value purchases, not ÂŁ8k each. Thanks for watching anyway!
@@JustinWilkins Iâm pretty sure itâs 3% for the first ÂŁ125k then 5% of the remaining ÂŁ75k I know, I had to pay it last year when I added my 4th to my portfolio. Your vid was ok apart from that but the budget was a bit close for comfort. Iâm not making a living from mine they are instead of a pension.
Purchase price Rate
Up to ÂŁ125,000 3%
Over ÂŁ125,000 to ÂŁ250,000 5%
Over ÂŁ250,000 to ÂŁ925,000 8%
Over ÂŁ925,000 to ÂŁ1.5 million 13%
Over ÂŁ1.5 million 15%
Total ÂŁ200,000
ÂŁ125,000 at 3% = ÂŁ3750
ÂŁ75,000 at 5%=ÂŁ3750
Add them together ÂŁ7500 in stamp duty would be the exact amount on a ÂŁ200k property in the U.K.
My bad I didnât realise your purchase price was 80k thatâs cheap! The average price in the U.K. is around ÂŁ250k
NO.gonit.
??? đ€Ł
Be great to see this done with double the amount put down. Half the properties, double the deposit etc.
đđ less properties. Less potential maintenance or refurbs (in theory) đ
@@JustinWilkins Very interesting...versus 2 large student houses for example. I'd be very interested to see how it would work with..lets say, a four bedroom house in Liverpool. 4 students. Simple clean fit out. Laminate floors. Durable. 4 rooms rented...4-500 quid a month. Surely student houses are a good investment? I know they can get damaged but apparently its not as bad as you think. I'm from Brighton by the way and have a property on a student street. Great video's Justin.
ÂŁ80,000 per property? Where is that? 1980? LOL
Haha you should really spend some time looking before commenting đ
Somebody's been watching Jamie Yorks videos! I love his mantra of 'Plain vanilla B2Ls' Exactly what im doing! Almost on number 10!
How'd u get started? And how did u find the capital +when did u start?
Sorry to say that im just exceptionally lucky! I was given ÂŁ250,000 as an inheritance some years ago and ive just used that to slowly build to the portfolio i have today. Never done any BRR stuff as i never had the connections and tradesman i could trust to do the job for me. I've just bought basically ready to go properties and kept it plain and vanilla!
@@teawrecks5070 wow thats gr8 man good 4 u and 250k inheritance is a pretty big chunk. Ur family did well for u đđŒ. Any advice on a teen trying 2 get there first property? Saving for the initial down payment rn
Haha đ I do rate Jamieâs videos a lot. And Iâve always loved simple BTL, seems most hands off for my remote investing đ congrats on building up that portfolio
Regardless of whether it was lucky or not, great work investing it and not blowing it like some would have!
Some unrealistic figures being used as it will be difficult to purchase a 80k house that is requires minimum work and earn ÂŁ250 per month profit. If your property is worth 80k I doubt you are able to charge high rent in the first place. Plus in todays market you rarely can find a decent property worth 80k. Another point Justin forgot to mention is that your ÂŁ250 profit has to go through tax returns, so in the end its even a smaller profit margin. There is a much better model to make the same if not more profit than purchase 8 btl properties. You could purchase 1 property that has the potential of extensions and you can convert the house from a 3 bed let's say to a 8 bed student hmo property charging ÂŁ500 pcm per room, making ÂŁ4000 in total per month. Yes granted, the setup is not easy but if you see past the hardwork you will see a cheaper and more profit making per month and year over purchasing your 8 separate btl properties. Student hmo is the way forward over private residential rentals.
Thanks for watching (and changing your name after commenting) - got to hide that identity đ
Not unrealistic figures as Iâve both purchased and sourced these types of property.
Whilst I agree I didnât mention tax, and that should be accounted for⊠when you hear people talk about their jobs or salaries, you donât hear them say âI earn ÂŁ24k after taxâ. They say âI earn a ÂŁ30k salaryâ.
So if itâs not clear to anyone watching (which I think it clearly isâŠ) if ÂŁ24,000 isnât enough to meet your needs once tax is taken off - I would set your aims higher. Maybe ÂŁ30,000 or ÂŁ40,000 đđđ»
Also agree that student HMOs are a good strategy for cash flow, most experience and knowledgeable HMO investors that I speak with have several single let properties as these are a really good foundation to a portfolio.
I think being negative about other peoples strategies or views is a really interesting character trait. đ€
Anyway thanks for watching, and i genuinely do always read the comments and take on board feedback, so thanks đđ»
Or just do what the bad boys do bunk beds in a room change X amount and fuck them all haha
Those prices seem so surreal to me...I just signed a contract on a one bed apartment 62m2 here in the south of Germany and all together, closing fee etc. came to 355.000
This was the cheapest on the market! Built in 1969. Prices are absolutely horrendous here đą
Such high leverage is a recipe for disaster!
Agreed, always better to build in more equity if possible. However, do remember this method still leaves in 25% deposit.
Comparing that to the previous crash where people purchased properties with 0% and 5% deposits ⊠we are far better protected now that 25% deposits are required!
@@JustinWilkins it only leaves 25% deposit on the final property, the other 7 were refinanced to over 90% in your example
@@ianjackson88 no they all had 25% left after refinance đ
ĆȘ
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Fuck it Iâm just going to put all my money in bitcoin for the next 3 years
đđ
One of the most important determinants of profit here which wasn't discussed in the video is the tax treatment of rental income. Since the tax is levied on gross rather than net income, it would be good to take a look at how returns are affected in the 0% vs 20% vs 40% (vs 45%) income tax scenarios, as well as whether it makes more sense to buy your property portfolio inside an LLC. Each of those scenarios will have a potentially large effect on profitability so should be a major consideration for anyone considering BTL
đŽ same comment, different day. Thanks for watching Kyle but at no point did I mention i was going to discuss tax.
People massively overthink tax in property - speak with an accountant, get advice on whether should buy in your personal name or Ltd company ⊠and then do you own math.
If the income amount I was giving in this video isnât enough for you - definitely worth aiming for a higher amount đđ»
Me an my fella been in the game 22yrs an have a 12 property portfolio =financial freedom . Hard slog lots of sacrifices ,but retired at 43 .you need to tweek your advice and go for 80k-100k properties instead cos they rent for more plus accelerate in equity much much faster .remember 100k plus 20% equity growth =120k but your 60k only gets to 72k ,and the gap gets bigger every year of house price growth
Thanks Nancy, I don't disagree. I don't suggest buying low for the sake of it - I recommend buying below ÂŁ80k and then driving the above ÂŁ80k by refurbishing and adding value. Thanks for sharing your advice, good to hear from someone with a portfolio!