Some quick figures and there's about £3400 per year in profit for that deal, less voids, maintenance and tax. If you had 10 of them then it's pretty decent in terms of cash flow. Obviously most of the money is earned in capital appreciation but that's a medium to long term goal. I guess this isn't a bad start as long as you're in a position to save for another deposit to get the next one, if not it will take 5/10 years to generate that from the 1 house.
Thanks for dropping a comment Mark, Daniel is interested in holding the property for the long term and benefiting from the capital appreciation. He wants some cashflow but doesn't need it, Daniel has funds ready and is already looking for his next investment property.
Hi Stuart, it depends if you are investing in a LTD company or personally. I`ve just moved my LTD company accounts from Lloyds to Tide and so far so good.
Congrats, I would be very interested to know how much it costs to manage the property, how much you put away for repairs and also what the tax man takes. From that £850-£900 what are you actually left with at the end of the month.
From the £850/month rent, the letting agent will take around 12% (consisting of 10% + VAT), so about £100/month. Repairs on average £50-100 per month too since it relatively new property. Also you will need to pay for certificates every year for gas/electricity/legionairres/smoke alarms, that may be £100 each..... So could be clearing £7.5-8,000 per year after all that. The tax man will take his cut depending on what other income you have (or your company has). For a £145k house purchase price, there will be other costs on top of that too like legal/finance/etc fees associated with the purchase....
The biggest ongoing cost is the mortgage, he's probably paying 450 to 500 per month on mortgage interest, then there's all of the extras that Alan mentioned on top of that.
Its 9% management fee, Danial is putting 10% of the monthly rent away for maintenance and voids, with this being a new property there will be very little maintenance, certainly not £50-£100 a month as suggested below. Tax is the current corporation tax amount.
has this lad never heard of HMOs ? would've been way better off on the return side of things instead of dumping £36250 into this 145k property on a single let of 850 a month could easily gotten a 3bed converted into a 4 bed HMO elsewhere returning at least £400 per room pcm returning £1600 almost doubling the £850 on a single let. BTL isn't for me personally ...
Hi Kaine, yes Daniel has heard of HMO`s. Not all investors have the time or interest in converting properties, HMO`s require additional time and effort and you will have heard in the video that Danial is looking for a hands off investment. BTL might not be for you Kane but investors have different goals, strategies and situations, what`s right for one is not always right for another. Thanks for watching and for taking the time to drop a comment.
Your calculation of 1600 isn't quite that simple. An HMO will usually have huge energy bills which need to be covered, plus broadband plus higher interest rates for an HMO Mortgage, plus higher management fees if you're using a manager, even with a manager there will be a lot more time involved for HMOs compared to BTL. There is also the issue of many council areas not allowing new HMOs.
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Some quick figures and there's about £3400 per year in profit for that deal, less voids, maintenance and tax. If you had 10 of them then it's pretty decent in terms of cash flow. Obviously most of the money is earned in capital appreciation but that's a medium to long term goal. I guess this isn't a bad start as long as you're in a position to save for another deposit to get the next one, if not it will take 5/10 years to generate that from the 1 house.
Thanks for dropping a comment Mark, Daniel is interested in holding the property for the long term and benefiting from the capital appreciation. He wants some cashflow but doesn't need it, Daniel has funds ready and is already looking for his next investment property.
Hi Dan.. may i ask which bank is best for landlords starting off in the game thanks .
Hi Stuart, it depends if you are investing in a LTD company or personally. I`ve just moved my LTD company accounts from Lloyds to Tide and so far so good.
Congrats, I would be very interested to know how much it costs to manage the property, how much you put away for repairs and also what the tax man takes. From that £850-£900 what are you actually left with at the end of the month.
From the £850/month rent, the letting agent will take around 12% (consisting of 10% + VAT), so about £100/month. Repairs on average £50-100 per month too since it relatively new property. Also you will need to pay for certificates every year for gas/electricity/legionairres/smoke alarms, that may be £100 each..... So could be clearing £7.5-8,000 per year after all that. The tax man will take his cut depending on what other income you have (or your company has). For a £145k house purchase price, there will be other costs on top of that too like legal/finance/etc fees associated with the purchase....
The biggest ongoing cost is the mortgage, he's probably paying 450 to 500 per month on mortgage interest, then there's all of the extras that Alan mentioned on top of that.
Its 9% management fee, Danial is putting 10% of the monthly rent away for maintenance and voids, with this being a new property there will be very little maintenance, certainly not £50-£100 a month as suggested below. Tax is the current corporation tax amount.
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Thanks for watching Nabaz
has this lad never heard of HMOs ? would've been way better off on the return side of things instead of dumping £36250 into this 145k property on a single let of 850 a month could easily gotten a 3bed converted into a 4 bed HMO elsewhere returning at least £400 per room pcm returning £1600 almost doubling the £850 on a single let. BTL isn't for me personally ...
Hi Kaine, yes Daniel has heard of HMO`s. Not all investors have the time or interest in converting properties, HMO`s require additional time and effort and you will have heard in the video that Danial is looking for a hands off investment. BTL might not be for you Kane but investors have different goals, strategies and situations, what`s right for one is not always right for another.
Thanks for watching and for taking the time to drop a comment.
Your calculation of 1600 isn't quite that simple. An HMO will usually have huge energy bills which need to be covered, plus broadband plus higher interest rates for an HMO Mortgage, plus higher management fees if you're using a manager, even with a manager there will be a lot more time involved for HMOs compared to BTL. There is also the issue of many council areas not allowing new HMOs.