4:00 Put that money into stock ISA S&P 500 (VUSA) which has a track record of minimum 10% yield annually, so don’t compare with Cash ISA which is worse
Congrats matt! Really liked the breakdown. Not really something I could do in my area/market. Prices and taxes are through the roof atm. I'll keep an eye out anyway, since there are always good deals waiting to happen, I guess. Keep 'em coming!
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce."
Very good but on the £5,738 you will have 25% corp tax right? as you are in ltd company. I assume you will keep the cash in the company to avoid dividends tax. I guess you could use it to reduce the mortgage when you refinance.
Where did you find a property for £110k? Was it auction? Which areas do you look in and how do you know if it’s a good area / good deal? I like your breakdown down but it’s hard to read on that clear background
1. unless you have a hard cash figure offer for that value it means nothing, market has cooled massively 2. you have failed to account for a single penny of tax 3. when you refinance and your rate has DOUBLED, margins will be drastically cut 4. stringent EPC ratings could cause massive costs to get your rental up to speed 5. with the cost of living crisis you are assuming 100% occupancy and rent on time which is becoming alarming difficult. there is money to be made in BTL but you have massively over simplified it.
1. Data is your friend - some areas have gone down from 12% YoY to about 10% YoY, headlines going wild for it but still 10% YoY growth in good areas - also shows that buying in the right area matters. If you buy in desirable areas and focus on a high quality product, you'll lower that risk. 2. Figures are pre-tax company profits, based on company expenses I should be able to wipe off most profits to pay £0 tax this year. 3. Rents are also going up astronomically YoY to offset interest rates, it's a horizon risk for sure next year that's on my mind. 4. The house is EPC C. Government are still only talking about this... no papers, consultations or anything material yet, wise business planning, if you have a house below recommended EPC - start putting money aside now to fund improvements or work on a refinancing strategy to fund it and pull some capital out at the same time. 5. This risk is mitigated by heavily vetting tenants, credit checking and full referencing to look at proof of income, credit history and affordability. I anticipated bills rising when selecting tenants so factored higher costs into affordability checks. I created the best product in the area so had over 75 enquiries for this property in 2 weeks, lots didn't meet the requirements so not all good quality enquiries but definitely no shortage of tenants to even worry about large voids. Provide a strong service, give tenants an awesome product and they'll stick around. Simplified for a 6 minute video yes, running a business efficiently, managing projects and taking on good deals, understanding your risks and mitigating them while thinking about your strategy and direction - takes experience for sure.
Will pop it on my list. In a nutshell if you’re transferring it - you are basically selling the property to your limited company so subject to legals, conveyancing, stamp duty, new mortgage etc
Hello, thank you for the very detailed video. I am looking at buy to let videos and all of them mention a 2% interest rate but when I look at the mortgages offered today in 2024, it’s min 5%, if not more. Can you please make an updated video on how would that work today? Thanks
Total fluke! In the market at the moment, I'd happily take a break-even project (I had a similar mindset when taking this deal on) and realising the returns in 2 years time with a bit of capital growth. But also shows the importance of buying in a good area and creating an excellent end product that's desirable rather than buying a random terraced house in the arse end of a city.
@@MattBrighton firstly, cheers for the reply. I’m use to getting responses from bots and spam. Which area did you purchase in? You mentioned you weren’t looking to do it again because of the heavy lift in work? Would you consider a hands off approach and spend more on the refurb cost to free up your time?
@@daddo1600 Bought in South Yorkshire, a nice family area near a 'Good' school and being a 3 bed semi with lots of garden space it's leagues above terraced housing in rougher areas. It's more the strategy going forward - the figures have been pretty awesome so I'd definitely flip a property in the future, in terms of strategy I'd rather do a refurb and flip on a property which I can then turn into an HMO. The plan is to start creating luxury student HMO's so next project will definitely be an HMO.
interesting to see where this is now. Property prices have dropped. Interest rates increased. Has this now or it is it going to be a dept with a hefty price tag?
Great breakdown very nice and clear. BUT I cant help but feel you got super lucky here! If the market hadn't had a massive up you were planning on a 8k profit? Personally for me i wouldn't of bought this and I 100% would be selling now. Why keep 95k tied up for 2 years? Unless you have another couple hundred thousand sitting around sell and go again on 2 or 3 more btls. At the very least refinance, now the market is at 180k you can pull all your money out and still make 300+ a month. guessing you will pay early charges but will still be positive by my maths.
I’d say so. Tonnes of luck in this. But also creating the best product with highest quality kitchen and bathroom definitely helped with tenant enquiries etc. Because of the original low profit margin the idea was to tie the funds in and take it out after 2 years of capital growth to boost the numbers a bit as I have other capital to work with. It’s defo an option to refinance now - although I have capital for 2 more projects still (next one is a large renovation £1m GDV) and with the original mortgage on 2% interest may as well enjoy higher cash flow on the BTL rather than refinance now onto a higher rate for the sake of pulling £40k out.
Hey Matt, i know i'm late to the party on watching this video. Would love to hear how you went about setting up your limited company. In a similar situation with a good amount of cash saved and wanting to get into investing in the next 2 years when prices (hopefully) are on the decline. Would be great to hear back from you cheers!
Hello Matt your videos are very helpful, I’m looking to get in to the property market I’m just doing my research at the moment, any pointers for a newbie?
No personal income from the company taken. Able to declare a loss in the first year due to milage, renovation costs etc and because asset isn't sold the 'profit' isn't realised and therefor not taxable yet.
Hi Matt. Really love this channel! Who got you into investing? I didn’t discover index fund investing until my late twenties/early thirties. Wish someone had explained it all to me when I was 19! I’d be so much so much further along in my financial independence journey.
Just became something I was naturally curious about. Started off with wanting to boost my savings so started researching what stocks and shares ISAs are
Congrats and great vid! For the mortgage cost how did you manage to make it £203 per month? I’m interested in buy-to-let but every time I do the calculations I realise I could be in a loss due to the mortgage.
I got the mortgage in October 2021 so before interest rates started surging. If I remember right it was 2.01% or something very close to that interest only. There were a few at 1.9% but because I have a holding company structure I couldn’t use that bank. I haven’t looked recently at BTL mortgage rates but can only assume 2% is a distant memory!
Hi, I have 60k to pay off on my mortgage for a 1 bed flat but I am planning to buy a house with my partner going halves. Shall I just try to pay off my one first mortgage so it will truly be an asset?
Also - with it being in a company, with the director's loan, milage and other costs I'm hoping to wipe out most of the taxable profit due to expenses in the company. Won't quite know this until I sit down with my accountants in 2023 to go through it
Tax is not the biggest problem here. The problem with these youtubers is when they walk you through a deal they ALWAYS show you that one deal they did where they got lucky and everything went right. They don't show you their typical deal where the returns are much more mediocre
He said he bought it through a company, so it’s not taxable until corporation tax is paid which can be 19-25%. But there’s a lot of things you can do with a half decent accountant
Hi Matt, come across this video today- Just wanted to sense check something. Based on the net profit after deductions- you mentioned maintenance and mortgage costs etc- But did not hear you talk about tax which is the big drain. So was your example in the video including tax as a deduction? Or would you then pay tax on top of that net cost... Reducing it further?
Haven't covered tax in this as it's different for everyone. All figures are before tax, on my latest accounts I'm working on at the moment I can technically declare a non-taxable loss in the company due to the renovation costs, milage etc and carry it across multiple years to minimize tax in future years.
Buy to lets are not worth it!!! Seriously, whack the figures into chatgpt, it says all you need to know. I'm sick to death of BTL videos saying how profitable it is. It is so much work to make SO LITTLE MONEY. Honestly, better off doing a part time job. BTL only works for people who are already millionaires. If you're asset poor but income rich, seriously, wouldn't even bother with BTL. Stocks would pay more.
@@jdeusl its not the case mate. Landlords offer a service as there is always a demand for rental houses. Some people need to rent for flexibility or to have whilst saving for a deposit. If you look at other countries that have targeted landlords to the extent they leave the market it always causes a housing crisis
"To obtain financial freedom, one must be either a business owner, an investor, or both, generating passive income, particularly on a monthly basis." - Robert Kiyosaki. I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already,earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made..
The tide will change after your 2 years fix come to the end, house prices falling fast and sharply, intrest rates has gone up triple %, that means your mortgage monthly payments will be triple also, but your rent income will not be triple... U will feel that when u have to remotgage after that 2 years fix term...
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where did you buy matt or where do u reccomend..
Ia8
4:00 Put that money into stock ISA S&P 500 (VUSA) which has a track record of minimum 10% yield annually, so don’t compare with Cash ISA which is worse
Also, ISA is tax free, interest on mortgage is counted as income and taxed as such, further reducing rental income - most small landlords are not Ltd.
Congrats matt! Really liked the breakdown. Not really something I could do in my area/market. Prices and taxes are through the roof atm. I'll keep an eye out anyway, since there are always good deals waiting to happen, I guess. Keep 'em coming!
This is a brilliant video. The kind of video I've Been looking for. Simple and honest
Congrats bro, amazing first project!
Thanks a ton! Conveyancing on the next project at the moment, more to come soon!
Do I have to pay Stamp Duty if I am buying on my name rather than a Limited Company for Buy to Let? Thanks
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce."
Ah shaddap
Been looking forward to this, great video Matt, Justin Wilkins is looking at this video with an approving nod i'm sure haha
Very good but on the £5,738 you will have 25% corp tax right? as you are in ltd company. I assume you will keep the cash in the company to avoid dividends tax. I guess you could use it to reduce the mortgage when you refinance.
Where did you find a property for £110k? Was it auction? Which areas do you look in and how do you know if it’s a good area / good deal? I like your breakdown down but it’s hard to read on that clear background
1. unless you have a hard cash figure offer for that value it means nothing, market has cooled massively
2. you have failed to account for a single penny of tax
3. when you refinance and your rate has DOUBLED, margins will be drastically cut
4. stringent EPC ratings could cause massive costs to get your rental up to speed
5. with the cost of living crisis you are assuming 100% occupancy and rent on time which is becoming alarming difficult.
there is money to be made in BTL but you have massively over simplified it.
1. Data is your friend - some areas have gone down from 12% YoY to about 10% YoY, headlines going wild for it but still 10% YoY growth in good areas - also shows that buying in the right area matters. If you buy in desirable areas and focus on a high quality product, you'll lower that risk.
2. Figures are pre-tax company profits, based on company expenses I should be able to wipe off most profits to pay £0 tax this year.
3. Rents are also going up astronomically YoY to offset interest rates, it's a horizon risk for sure next year that's on my mind.
4. The house is EPC C. Government are still only talking about this... no papers, consultations or anything material yet, wise business planning, if you have a house below recommended EPC - start putting money aside now to fund improvements or work on a refinancing strategy to fund it and pull some capital out at the same time.
5. This risk is mitigated by heavily vetting tenants, credit checking and full referencing to look at proof of income, credit history and affordability. I anticipated bills rising when selecting tenants so factored higher costs into affordability checks. I created the best product in the area so had over 75 enquiries for this property in 2 weeks, lots didn't meet the requirements so not all good quality enquiries but definitely no shortage of tenants to even worry about large voids. Provide a strong service, give tenants an awesome product and they'll stick around.
Simplified for a 6 minute video yes, running a business efficiently, managing projects and taking on good deals, understanding your risks and mitigating them while thinking about your strategy and direction - takes experience for sure.
This was my thought process aswell, of course things are even worse now
Can you do a video on opening a ltd company if someone is looking to transfer their BTL property into a ltd company
Will pop it on my list. In a nutshell if you’re transferring it - you are basically selling the property to your limited company so subject to legals, conveyancing, stamp duty, new mortgage etc
Seeing other vids- sorry about the below I did not know you actually do the work renovating.
Very interesting and insightful. Where is the property?
Fascinating - thanks for sharing this!
Hello, thank you for the very detailed video. I am looking at buy to let videos and all of them mention a 2% interest rate but when I look at the mortgages offered today in 2024, it’s min 5%, if not more. Can you please make an updated video on how would that work today? Thanks
taxes?
Great video, thank you!!
Def landed a good deal in such a crazy market. Hope you haven't set that as the 'norm' or 'benchmark' noting 30% is more realistic.
Total fluke! In the market at the moment, I'd happily take a break-even project (I had a similar mindset when taking this deal on) and realising the returns in 2 years time with a bit of capital growth. But also shows the importance of buying in a good area and creating an excellent end product that's desirable rather than buying a random terraced house in the arse end of a city.
@@MattBrighton firstly, cheers for the reply. I’m use to getting responses from bots and spam.
Which area did you purchase in? You mentioned you weren’t looking to do it again because of the heavy lift in work? Would you consider a hands off approach and spend more on the refurb cost to free up your time?
@@daddo1600 Bought in South Yorkshire, a nice family area near a 'Good' school and being a 3 bed semi with lots of garden space it's leagues above terraced housing in rougher areas.
It's more the strategy going forward - the figures have been pretty awesome so I'd definitely flip a property in the future, in terms of strategy I'd rather do a refurb and flip on a property which I can then turn into an HMO. The plan is to start creating luxury student HMO's so next project will definitely be an HMO.
interesting to see where this is now. Property prices have dropped. Interest rates increased. Has this now or it is it going to be a dept with a hefty price tag?
Yeah I'd be interested to see an update now
Great breakdown very nice and clear. BUT I cant help but feel you got super lucky here! If the market hadn't had a massive up you were planning on a 8k profit? Personally for me i wouldn't of bought this and I 100% would be selling now. Why keep 95k tied up for 2 years? Unless you have another couple hundred thousand sitting around sell and go again on 2 or 3 more btls. At the very least refinance, now the market is at 180k you can pull all your money out and still make 300+ a month. guessing you will pay early charges but will still be positive by my maths.
I’d say so. Tonnes of luck in this. But also creating the best product with highest quality kitchen and bathroom definitely helped with tenant enquiries etc.
Because of the original low profit margin the idea was to tie the funds in and take it out after 2 years of capital growth to boost the numbers a bit as I have other capital to work with.
It’s defo an option to refinance now - although I have capital for 2 more projects still (next one is a large renovation £1m GDV) and with the original mortgage on 2% interest may as well enjoy higher cash flow on the BTL rather than refinance now onto a higher rate for the sake of pulling £40k out.
Hey Matt, thanks for the video. Is this property a leasehold? If so, how long I to the lease do you plan to keep it?
ISA is zero tax where as corporation tax will be 25% soon 😢
Really helpful video Matt! Question on the rent.. do you charge additional to the rent for water and gas?
On a BTL, the tenant pays for their own utility bills.
No mention of income tax?
Figures are pre-tax. Tax is different for everyone, accountancy costs etc.
Accounting fees?
Hey Matt, i know i'm late to the party on watching this video. Would love to hear how you went about setting up your limited company. In a similar situation with a good amount of cash saved and wanting to get into investing in the next 2 years when prices (hopefully) are on the decline. Would be great to hear back from you cheers!
Hello Matt your videos are very helpful, I’m looking to get in to the property market I’m just doing my research at the moment, any pointers for a newbie?
quick question: income tax?
No personal income from the company taken. Able to declare a loss in the first year due to milage, renovation costs etc and because asset isn't sold the 'profit' isn't realised and therefor not taxable yet.
@@MattBrighton Thank you, Matt.
Would you not be much better off just sticking the 50k in an index fund and getting compound interest 10%?
Possibly yes. Depends on rent & capital appreciation. Or do both
are you staying in the BTL market with the new regulations?
Hi Matt. Really love this channel! Who got you into investing? I didn’t discover index fund investing until my late twenties/early thirties. Wish someone had explained it all to me when I was 19! I’d be so much so much further along in my financial independence journey.
Just became something I was naturally curious about. Started off with wanting to boost my savings so started researching what stocks and shares ISAs are
how can i get mortgage on a property that my parents paying rent?
Great video, please next time don't use a random clear window with a reflection, cant read some of your notes. Please use a normal whiteboard
Just brought my first buy to let, thanks for tips and advice. Also making a series on my channel about the journey.
Best of luck!
Well done
Congrats and great vid!
For the mortgage cost how did you manage to make it £203 per month? I’m interested in buy-to-let but every time I do the calculations I realise I could be in a loss due to the mortgage.
Are you looking at interest only mortgages?
@@BiscuitOath thanks, didn’t realise lol
I got the mortgage in October 2021 so before interest rates started surging. If I remember right it was 2.01% or something very close to that interest only. There were a few at 1.9% but because I have a holding company structure I couldn’t use that bank.
I haven’t looked recently at BTL mortgage rates but can only assume 2% is a distant memory!
Yep - interest only
@@MattBrighton thanks 🙏😁
Taxes?
Hi, I have 60k to pay off on my mortgage for a 1 bed flat but I am planning to buy a house with my partner going halves. Shall I just try to pay off my one first mortgage so it will truly be an asset?
That must be a low interest rate?
Strosin Row
You haven't taken off the tax on profit?
Pre-tax profits as it hasn't been crystallised yet. The house is on a 2 year fix so will refinance it at the end of 2023 to pull the profit out.
Also - with it being in a company, with the director's loan, milage and other costs I'm hoping to wipe out most of the taxable profit due to expenses in the company. Won't quite know this until I sit down with my accountants in 2023 to go through it
Nice video very well explained you got me ready to have a go how’s things been in 2024 ? Interest to know if you would do it in today climate?
If you don’t work then it’s pure profit but if you have other income, you would definitely be paying tax on it.
You haven’t accounted for a single penny of tax on your profit, so that is not the figure you will walk away with. All rental income is now taxable
Tax is not the biggest problem here. The problem with these youtubers is when they walk you through a deal they ALWAYS show you that one deal they did where they got lucky and everything went right.
They don't show you their typical deal where the returns are much more mediocre
He said he bought it through a company, so it’s not taxable until corporation tax is paid which can be 19-25%. But there’s a lot of things you can do with a half decent accountant
Izaiah Common
Hi Matt, come across this video today- Just wanted to sense check something. Based on the net profit after deductions- you mentioned maintenance and mortgage costs etc- But did not hear you talk about tax which is the big drain. So was your example in the video including tax as a deduction? Or would you then pay tax on top of that net cost... Reducing it further?
Haven't covered tax in this as it's different for everyone. All figures are before tax, on my latest accounts I'm working on at the moment I can technically declare a non-taxable loss in the company due to the renovation costs, milage etc and carry it across multiple years to minimize tax in future years.
Did you get permission off the mortgage lender to rent out the property? They usually won’t let you rent it out and force you onto a buy to let.
Tax on the £5k income?
For 1 - 2 years I'll pay no tax as I can declare a company loss from the renovation + milage done in the car between home and BTL.
You need a white or black background for your presentation. Can't see any of the figures
Huge mistake locking in at 2 years
Get a white board not a window mate ha ha
Buy to lets are not worth it!!! Seriously, whack the figures into chatgpt, it says all you need to know. I'm sick to death of BTL videos saying how profitable it is. It is so much work to make SO LITTLE MONEY. Honestly, better off doing a part time job. BTL only works for people who are already millionaires. If you're asset poor but income rich, seriously, wouldn't even bother with BTL. Stocks would pay more.
Buy to let is scummy
There's a lot of bad landlords out there.
@@MattBrighton How do you sleep at night going you are stopping someone from probably owning their own home so you can make profit?
Haha 😂😂 People who can't manage their finances are so Salty 🤣🤣
@@bobbybrown4652 the level of arrogance in that comment is disgusting
@@jdeusl its not the case mate. Landlords offer a service as there is always a demand for rental houses. Some people need to rent for flexibility or to have whilst saving for a deposit. If you look at other countries that have targeted landlords to the extent they leave the market it always causes a housing crisis
"To obtain financial freedom, one must be either a business owner, an investor, or both, generating passive income, particularly on a monthly basis." - Robert Kiyosaki. I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already,earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made..
Great advice ! Are you financially free purely through real estate?
The tide will change after your 2 years fix come to the end, house prices falling fast and sharply, intrest rates has gone up triple %, that means your mortgage monthly payments will be triple also, but your rent income will not be triple...
U will feel that when u have to remotgage after that 2 years fix term...
1 yr on and I think you're right