Few points to note: 1) I missed my gas safety cert cost and service (my bad). 2) the managing agent fee seems high, but I have a set lower fee arrangement with the agent on another property I own. 3) I calculate my tax end of year once Ive factored in all my expenses and know my tax liability for the year! Everyone does it different, please respect that. This video is to show the realities of investing 😅👊
Also you should be putting aside 1% of the value of the property a year to cover maintenance. I know you are showing the things you fix as they come but there is a bigger picture to look at. The purchase price seems very reasonable.
What is the EPC rate at the moment? Is this something you take into account when buying new properties? As you know, this can potentially be very costly to resolve for landlords from 2025.
Well done mate. I really likenfrom day one you have kept your information and delivery plain and simple and relatable to a true beginner or an advanced property guru. Love this channel and will help me massively to my property journey
A refreshingly honest review compared to the likes of Scamuel Leeds. However, these videos never factor in contingency costs for some of the most expensive - and almost inevitable - repairs that you will undertake during your tenure as a landlord. For example, a boiler tends to only last 10-15 years, so there's a couple of grand there to apportion across its lifetime. Roofs need regular maintenance; fencing doesn't last particularly long; uPVC windows and doors have a recommended lifespan of ~20 years; kitchen and bathrooms need updating, too. And did you have your cabling checked? Many old properties still have rubber cabling which is likely to be badly perished and a potential safety hazard. A full rewire costs thousands. And what about council tax and utilities standing charges for void periods (including the period between you purchasing the house and then renting it out).
Thanks for watching and for the review 😂👍🏻 glad I haven’t been given a nickname yet haha. Some really good points raised. I have bad electrics cabling and plumbing checked so the fundamentals of the house are in good working order! But I obviously haven’t factored in any of the larger costs that could arise such as roof, windows, kitchen or bathroom! For now I am keeping hold of all Cashflow that this property produces in order to reinvest into my portfolio when issues like that arise 😃
@@JustinWilkins just to clarify, are you saying that you aim to have a large portfolio so that the cash flow from it can cover issues as expensive as a new roof?
Thank you mate 😃 glad you like seeing the realistic side of property, makes it worth while sharing. It would be much easier just to talk about the good points, like some do 😂😂 cheers for watching as always!
Hey Justin: I remember watching you when you explained the financial side of your BTL in Liverpool (2 years ago!! How time flies). I was busy saving up for a deposit for my BTL at the time. You really inspired me, felt motivated. Now I am in process buying my own BTL now, thanks to you. Hopefully it will be ready in March 2022 (my first BTL and a new built). Again thanks for your simplicity and honesty.
Looking back would you buy this property again or would you wait for a more expensive house? Also would you be looking to buy another property on the 50-60k range?
Great video, and thanks for being honest with the figures. Too often I see people claiming to be earning all the rent over a period of the year, without mentioning voids, maintenance etc which reduce their amount of income.
Or the nightmare tents many run into. Never thought being a landlord would be something I'd want to get into, but clearly doing it right and scaling up to can make decent money for the work and effort you put in.
Great video. It would be good to know the tax implications vs a stocks and shares ISA at a steady growth rate. 19.1% ROI is good but what is it after tax?
Yes that would be interesting to compare!! The ROI will definitely sink a bit after tax, but I didn’t want to overcomplicate the video as everyone has different tax situations 🙂
I have built up to 6 houses since 2004 and have a few thoughts on your video- As you did with the consumer unit, try to put of some upgrades when you buy and do them later. You can then claim then as maintenance rather than be part of the captial. I personally would not buy any house older than say 1980s, older houses have more issues and suffer from damp, drafts, cracks, rot, new roofs, etc. What are you paying the agent £75 per month for? I manage the houses myself so agents only paid a finder fee. If you pay an agent to find you electricians, plumbers etc they will charge double as the agent gets a cut. Really best to do as much maintenance as you can yourself, the time it takes to get someone in is more than it takes to do most things. I have found that there is no one right way with BTL. Cheers!
Love these nitty gritty finance vids haha. Always satisfying when the numbers you run on paper translate into the real world. How do you think your second property will do compared? Keep it up bro 👊
Cheers Richard 😃 I think the second property which Cashflow just over £300 per month, but it usually takes 2 or 3 months for the tenants to move in and maintenance to settle, so we’ll have to see how the first 12 and 24 months goes 🙂
And you still have not refurbished that bathroom - something which will need doing, probably in the next year or so, costing (or setting you back) around £2,000-£2,500. It's these constant repairs/maintenance issues which put me off rental. However, I too would not increase the rent (until bathroom redo) to reward and keep your tenants happy and, more importantly, in situ. Very interesting video Justin, very clear breakdown. Hope your next property works just as well, if not better 🤩🏠
The bathroom will definitely need redoing at some point in the near future 🙂. There are often repairs and refurbs they need doing, which is why I wanted to share the realities of long term renting - hopefully it helps others see the actual profits. Thanks for watching as always and giving useful tips for others 😃🙏
Very grateful for that video Justin. Thank you. If you are up in Liverpool in the near future let me know and perhaps we can meet up? Explaining how that property has performed over two years with the ROI dropping and then recovering due to differing issues will be so helpful to anyone who has just dropped in or are in fact subscribing to your channel. You presented it like a pro . Well done 👏
That's an Amazing Price to Buy that Property for! How'd you manage that? (Also love your videos, best property videos, no propaganda, and not selling stuff, power to you mate ✊).
Thanks Bobby. Appreciate the support 🔥 this property was negotiated well, but I also believe bought at a good time (2019) the years since have been harder to find deals like this.
Hi Justin, I own a BTL in the North West. Why don't you manage the property and increase your annual profit by 48% vs your Y1 performance? £75.60 x 12 = £907.20 / year which equates to an extra 48% on top of your £1,902. I personally don't think the managing agent is worth paying vs increasing your returns by 48%. Interested to hear your views on this.
Thanks for the suggestion Matt, it’s definitely been a consideration as I hate to give away profit. The figure of 48% is only that high on a ‘bad year’. On more profitable years that figure jumps down a lot. The main thing for me is that out of every landlord that I have networked with in the North West, the landlords that have had bad paying tenants or endless issues are the self managed landlords. The paperwork, efficiency, and due diligence that comes with a managing agent is the the reason I pay it. Granted the due diligence can be done by the average self managed landlord, however I think it’s the brand and agent themselves that works as the perfect barrier to the tenant 🙂 I like both opinions to be honest, but with TH-cam, sourcing, my program, other refurbs, and a full time job 😅 I’m happy to outsource the management and lose some profit! Cheers for watching and sharing that thought
Thanks for the high quality detailed video. My questions would be - do you feel you've had good value from your Letting Agent, and would you consider managing your own tenants in return for the extra returns?
Very good video, well presented. Thank you. Most of my properties rent at £525pcm, but that's after refurbishment has brought them up to a total spend of around £85,000, all in. So achieving £525pcm on a £58,000 house sounds very good indeed, if you didn't have to then spend money on refurbishing it. I've thought about investing in Liverpool, but don't know the area so am hesitant. It would be interesting to know in which postcode your set one is located.
Infinite ROI.. I like that but let's hope property prices doesn't crash because we could go into negative equity and then the next time when we are due for a renewal on mortgage might run into problems?
Thanks for watching mate. And absolutely, can’t take the fact that another property market cycle is almost inevitable. I have stress tested this house so that it Cashflows at higher interest rates. But got to make sure we don’t get caught out on remortgages 👍🏻
@@JustinWilkins i think my message got deleted but we should get in touch mate through some form of social media. I think we need to create a big network in order to actually get really far..
Hi do you have a video about taxes and what's deductible and what's not also ltd vs. In your own name trying to decide whether to flip a couple to build capital for a couple of BTL or to just go straight to BTL
The amount of times I hear "net cashflow" that excludes maintenance, certs etc. from sourcers is quite unbelievable for the purchasing of an asset in the many multiple tens of thousands of pounds.
Haha I’m very transparent, but not that transparent. Some things I keep private for my sake, and my employers 🙂 I’m not here to sell a dream, I’m not earning £100k at work put it that way. I’m probably a bit above average salary but not much. Property is a very achieveable for most people, once you know the ins and outs of how much it costs, how to find good deals, and how to partner with other investors 🙂
When refinancing a property using a LLC, how does a bank reevaluate it - based on appreciated house value as in personal loan or based on the income the property generates, as in commercial loans?
Commercial loan basis. The bank has a particular segment code attached to commercial properties usually code is CRE = Commercial Real Estate. These loans carry a different set of Credit Risk profile vs traditional loans. I work for a bank.
No I’m not very familiar with properties in Sheffield. I have no experience in that area. But Liverpool is one of the leading growing cities in my opinion, and the stats also reflect it too 🙂
It's good of you to be so transparent - and I've congratulated you on your enterprise before. I understand why you feel the need to have a managing agent but that cost is hurting you - especially as you've not accounted for tax on the rental income. For me, you're a bit exposed and relying on there being no inflationary pressure in the economy. Overall you can feel fairly happy because you've been rescued by the capital growth - but if you put that aside I don't really think the fundamentals are completely right.
Thanks for watching! Appreciate your comments, but this is the truth of property investing. When I don’t show all the truths and realities, I’m accused of ‘selling a dream’. When I do show everything, then people tell me I’ve not made a good investment 😂 I can’t win! Regardless, I’m happy with the Cashflow this property produces, the capital appreciation is an added bonus because I bought well - good things come to those that take action!
@@JustinWilkins I bought four modest houses and I do sometimes wonder if I wouldn't have done equally as well with one pricey city centre property - both in terms of income and appreciation. Maybe you too could have been better off with a single (or fewer), self-managed property where you live? I've made the point before - it's so important to stop income being nibbled away by others. £75 a month! - for what?
Nice little summary there mate. That was pre-tax profit there. How is profit taxed on a BTL? Have you got a separate Ltd company that owns the property? Also need to account for capital gains at some point.
Thanks man! Yes the tax is 19% corporation tax on profits as the BTL is in a ltd company. No need for capital gains, as that’s only ever paid on the sale - no capital gains on rent or refinancing 🙂
Hi Justin, good video but are your numbers missing costs of other legal requirements such as PAT tests, Legionella tests, Smoke alarm tests and Landlord registration fees ?
Thanks Gerry! I did miss a gas saftey cert when creating this video. But the PAT tests and smoke alarms were sorted and covered with my consumer unit and electrical update. I also reduce the amount of appliances I provide to almost 0, so that PAT testing is not in my ongoing responsibility. Landlord reg fees not required, and legionella isn’t a yearly cost 👍🏻
What about the new mortgage repayments…? Your debt has increased as would your mortgage.? As you say, you end up with your money out but you now carry higher debt with a higher mortgage so you monthly income drops..!
I'm just about to buy my first BTL. I currently don't own any other property but have done in the past. My mortgage is a BTL but some solicitors are telling me I will pay the standard rate of SDLT and others are telling me I'll pay the higher rate. I've spoke with HMRC and they insist I will pay the standard rate. Why are the solicitors divided on this and is anyone in the same situation or have bought their only property as a buy to let and paid which rate? I know I'm not entitled to the first time buyer up to 300k due to me owning property in the past.
Practical as always, this one one those quick rich scammers need to do ;). Can I ask, as a total beginner in this space, if you had 50k shall invest in a big one, or in small property, house or flat? Keep it up mate. You ROCK!
Haha legend thank you! If starting again with £50k, I would look to maybe do a flip or two at the beginning. Take my £50k to £75k-£100k, then that opens more options up to me. Alternatively a BRR, to keep my money moving each time into new projects.
@@JustinWilkins You're the MAN and you deserve 1M subs! I was thinking use as a deposit and get a mortgage for 300k and buy a house and turn into HMO with 8 rooms? but that's starting big, I like your approach more. Start small and scale up.
Hi Justin great video......just want to ask all the maintenance work you done after renting is arranged by you or its by the letting agent.plz reply that would be great. Thanks
Very good deal at 58k. Incredibly cheap. Seems in good condition too....are you sure there's no strings attached here? No structural damage? Rough street..? What were the EPCs when you bought it?
Thanks. I mean it’s not located in Mayfair and it has Marilyn Monroe wallpaper 😂 it wasn’t quite perfect! But I had a full structural survey with only small issues raised. Price is always the sign of a bad property. It depends on the opportunity and how well it’s negotiated 🙂 (IMO)
@@JustinWilkins Yeah, houses of that calibre now are going for 120k, so i guess you bought at a good time. Do you know what the Energy certificate rating was at the time? done anything to bump its efficiency up?
What's your comment on the managing agent, because it's quite a significant amount and wondering if you found it useful considering you're paying for every month, be glad of comments
Hi Adrian, yes I’m a fan of managing agents because it means I can be more hands free. I do still take the occasional call and email from them, but they have reasonably priced trades people on hand ready to complete the work! Admittedly on this deal I pay a fairly high fee, but I have other properties with cheaper rates. 8-10% is usually my preferred rate 👍🏻
No you are correct! This was purchased in 2019, but properties can still be purchased for this price in parts of the North of the UK. In this instance, I purchased this property in Liverpool!
Hi Justin, great video! I plan to refinance my BTL two years later. Do I have to be employed or I can reply on the rental income from BTL when I apply for the refinance? Thanks
Hi Freddy, I think it’ll probably be easier to refinance if you are employed and have a couple of years worth of decent earnings and accounts. However I believe there are lenders out there that can cater for different circumstances 👍🏻
Love the vide. Are your btl on interest only or repayment mortgages when was brought? If so when refinancing do you swap the deals around out? And is it short term or long term investment?
Thanks! So I currently use interest only mortgages to help me maximise Cashflow and grow my portfolio quicker. I’m the future I will refinance at the end of my agreed terms and will review whether to stay on interest only or switch to repayment 👍🏻
Are you factoring in tax taken by HMRC in your calculations. The tax has destroyed my profits and currently running at a 3% loss on my properties in London
Yes taxes can be harsh, especially if you own the property in your personal name, and especially in high value areas like London where the rents are high!! I have not included taxes in this example as I wanted to keep it really relatable for everyone. Tax on this income can massively differ depending on what a person earns, and their circumstances. It also differs if the property is purchased in personal name or a limited company.
Justin, I see you can't win with some of the comments! If you keep your property for the long term and keep it cash flowing you'll be fine. We have just completed on our first but are self managing - a lot to get our head round but the NRLA are well worth joining for resources. I saw a reply you made to someone and meant to chip in but forgot and now can't find it. Just bear in mind with your LTV that once you get to 4 + properties, lenders will want 75% across the entire portfolio so just bear that in mind with any tempting 80% 85% LTV deals now, you could end up shooting yourself in the foot. I'm no expert but my very good broker sat down with me and explained when we were making our business plan. Find the videos really helpful - have started an excel spreadsheet myself thanks to your vid.
Haha yes you aren’t wrong! I’ve somewhat come to terms with the fact I can’t always win now lol. But I appreciate your message and the knowledge you have shared in your message. All of my refinances are 75% LTV as it’s the slightly less risky option and the rates are a lot better too! 🙂👊
Is it a interest only loan when you refinanced , like it’s a infinite ROI either way but in the long term if you pay the principal down it would benefit you from having to put more money into the deal when the market crashes (it’s a extra 2% ROI in principle pay down per year but then your cash flow will only be around £60 p/m, which isn’t to bad regarding you have no money in the property)
Yes I’ve run the numbers for a few different scenarios, and the refinance is definitely the best option for me. You’ve made some really good points about building equity into your homes in case of a crash - I do have 2, 5 and 10 year plans for my portfolio and repaying the debts to reduce my LTV % 🙂👏
This is a really useful breakdown, thanks Justin. One question on the Managing Agent - are they doing full management of the property (ie tenant speaks to them about any problems, agent deals with workman for repairs etc)? Or are they just finding you a tenant?
I would expect that's fully managed. Don't forget you still pay for the work that's done. When I did BTL after they found me the tenant I never dealt with the agent again.
Cheers for watching and glad it was useful! I have full management which means the agent takes the calls, and helps me organise the repairs if needed. They also help find potential tenants, carry out credit checks and references to make sure they are suitable.
I have a question. I owe HMRC £820,000. I own a 9 bedroom Licensed HMO whose income is £60, 000 inclusive of electricity and gas, property is valued at £810, 000. Should I refinance, pay off tax and continue with HMO paying for loan, or should I sell and pay off tax?
So I haven’t actually finished refinancing the property yet. But if the price achieved is £85,000 as planned, then I will be able to release a new 75% LTV mortgage which means I get £63,750. After paying off the previous mortgage I’m left with around £21,000 new equity. Minus fees and it becomes less. That new equity is from the market increases over the last 2 years. It might not continue to grow at this rate, but this is probably the only time to refinance money out of this house to help me continue investing! Hope that makes sende
Infinite roi? Based on the assumption house value stays the same/ goes up. Point 2: where is the tax element? Is the purchase via a company or not? Accountancy fees?
So the infinite ROI is based on the fact I’ve pulled out all of my initial investment amount, and I still have a house earning money each month 🙂 tax I didn’t add in because depending on personal earnings and circumstances it differs for people watching, and depending whether the house is purchased in personal name the tax differs. Re accounting fees, I don’t pay any due to the volume of business that I help refer to my accountant. Thanks for watching!
Genuine question - why bother? You can easily make 10% in investment funds (personally about 25% this last year) with literally no hassle and easier access to the cash. What draws you to property when it seems to be getting more and more unattractive? I’ve thought about it myself but just can’t justify it over a fund. Is there something I’m missing?
Yes - property value appreciation. And in many cases it's more than the cash flow. Also, Justin very soon will have no his own money left in the property while getting profit. At the same time you can't afford this luxury even with best interest you get from investment funds.
It’s a very valid question, and property isn’t right for everyone! Requires a lot more work and effort which not everyone wants or has time for. For me the added bonus is Cashflow and capital appreciation. Whilst the profit can be sometimes unpredictable because of maintenance and void periods, it still produces a monthly income. And capital appreciation from the fact the property market is strong in the UK - although this does of course fluctuate. Overall my belief in real properties and real assets is greater than numbers on a screen that can be effected by market influencers (big hedge funds or the likes of Elon musk 😝). Personally I don’t believe there is a winning argument for both - whichever suits you better!
Leverage is the key here. You can't easily get leverage trading in stocks or equities. All depends on your appetite for risk. Most Wealth managers now advise spreading your wealth across different asset classes. The property market has become more liquid in recent years.
Absolute rubbish. You can make 10% but you can't make it EASILY..... Sure there are plenty of funds that have made 10% or more consistently but without a crystal ball there's no way of knowing what they'll do tomorrow. Everything's easy with the benefit of hindsight.
Maybe a simplistic look at it but you invested 16k so profit only starts after roughly 5-6 years. I know you refinanced but you'd be doing the same at the next house. Im quite lucky that i rent a property out that I've owned for over 10 years. I make £800 per month £9,600 per year. Obviously will be less due to maintenance. £800 is worth around 2 houses at around 60k value. Id like to buy more but need to build a loft on my own property so need the profit from my rent to pay for that.
Correct! It would have taken that long to break even, not the ‘ideal’ investment for some people. But I was as calculated as I could be with the experience and knowledge that I had 🙂
Hey where abouts in Liverpool are houses that much where about is your place what area thanks I'm looking to get into it how can I speak to u love your videos
Thanks for watching! There’s lots of good and bad places, like any city really. Good areas to focus on are L15, L13, L9, L4, L6 - plus plenty of other areas … but those are good ones to start considering
What about the tax you have to pay on all the rent even the portion that pays the mortgage. Have you taken that in to account? Or are you doing this through a limited company
This is through a limited company - I have taken tax into account during this video, but it would usually be 19% corporation tax paid on ltd company profits 🙂
Hi Jack, I found my mentor through Instagram. I was looking for someone that was a couple of buy-to-let’s ahead of me so that I could pick their brains and knowledge. Let me know if you want help with getting started 👊 propertyxprogram.com/
The returns should include capital appreciation too. The problem people often ignore is the risk of a property market decline that can, in the extreme case, leave people with negative equity, ie. loosing more than their original investment. There is a risk of interest rates rising which would make mortgages more expensive and likely cause property prices to fall. With interest rates so low, it's arguably a very risky time to invest, though it's anyone's guess.
Great video! Super insightful. Just wanted to ask, honestly, do you find being further up north rather than say South East, makes this more feasible? Have you got properties in the south?
Hi Justin, great job. We spoke early last year if you remember and I’ve been following you ever since. One thing I would say bid younger my included your tax liability in the calculation. Once you work that in then your ROI is a lot lower for years one and two. Does that make sense? Cheers buddy. Keep up the good work.
Yes thanks Ian! Appreciate you following 🙂 I did consider adding the tax calculation in, but I didn’t want to confuse things for brand new beginners - seen as some people invest in personal name, and some in ltd company. The ROI is definitely lower after tax, but all depends on the amount of expenses, and travelling that an individual registers through their company I guess. Tax liability is a very individual thing. Cheers for watching!
Hi Chris, this is an interest only mortgage. So this just pays the interest on the mortgage, it’s quite common with property investors in order to make the most of the properties cashflow each month
How does this work so I have two proerties one where i deposit on and another where i Spent 80k deposit on and the house I bought at 210 but its woeth at least 250 probably 280 how can refinance that?
It’s £75 pm which is a lot but I get a much better deal on my other property so it equals out. They collect rent, hold the deposit, deal with the renewals, arrange maintenance works… some months they do a lot, some months they don’t. But having been an estate agent in the past, I know the true value of a managing agent. Less experienced people don’t really know unfortunately until it’s too late.
@@JustinWilkins rent will likely be a bank transfer & renewals are once per 6/12 months paper signing if not just letting them roll over to periodic. Sounds like they call a plumber then send you the bill
You probably have to minus the income tax on your ROI which if one is 40 percent tax payer takes 40 percent away from net profit. Net comes down to be 8-10 percent.
Hi Ash, thanks for watching. Whilst I’m a 40% tax payer, I will only pay 19% corporation tax on profits because the property is bought in a limited company 🙂👍🏻
Can't believe property up North is this cheap. Did I hear right that you paid £58,000 for a 4-bed? I have a 1-bed flat in Bristol that I paid £175,000 for almost 2 years ago.
Hi Simeon, I haven’t done a huge amount of changes / improvements to this property over the years. The value of the asset had mainly increased due to the price I paid, and the market increases.
In your calculations are there some items missing? Some basic expenses like boiler service, gas safety certs etc were not mentioned. Then you need to account for tax IMO to be able to claim true ROI, your investment was post tax, so you should compare post tax ROI. For future years, are you projecting an increase in rent, mortgage rate on your higher borrowing, higher agents fees (as result of rent), voids and future finders fees etc... Don't get me wrong, this still looks like a very decent return but quoting 20% is a bit misleading imo
Thanks for watching! The EICR was mentioned, and that’s only needed once every 5 years. I did however miss the Gas safety certificate (my bad). I completely disagree about tax as everyone’s tax liability differs. The whole point of this video is to show the true reflection that maintenance and voids happen, and full rent isn’t always achieved! I don’t know how I can be any more honest and not mislead people than I already am 😃. Hope you can see my point of view!
@@JustinWilkins Yes, everyone's tax differs, but so does their expenses and everything else. This was YOUR ROI you were sharing. You also suggest growing to 7 or more properties so assume LTD company standard tax. Projecting out considering the other factors I mention in my post will mean a more realistic ROI over say a 5 year period (my guess looking at your numbers is closer to 10%). What would be nice is say a total profit comparison of a 5 year outlook (including capital gain and taxes) vs an average Stocks and Shares ISA invested in an index fund compounding with no tax to pay.
Great video Justin, your content is always easy to follow and understand. Just wondering as to why the mortgage interest is so high at over 3.8%? Looks like you managed to get an 80% LTV which is great but that surely put a dent in the cashflow over that two year period?
Thanks Dave, appreciate it. 100% could have got a better rate with a higher LTV, but using a higher LTV allowed me to continue investing sooner after purchasing this property :) but overall, yes it probably cost me £20-£30 extra per month.
@@JustinWilkins Fair enough mate I thought that would be the reason. I didn't see a whole lot in when it came to the numbers. There were definitely sub 2.5% rates floating around in 2019 meaning an extra £60+ cashflow would have been possible, so £1440+ extra for the two year term, but then again if you're achieving 20% ROI on other deals then the extra £2900 you managed to keep hold of from the 80% LTV mortgage would be making you around £1200 over the same period plus the fact that the extra mortgage interest you're paying is tax deductible so yeah it probably evens out in that case. Always interesting to see how people go about the numbers that's what I love about ROI videos!
Hello Justin, i love your videos. I have question. I dont understand refinance 75% mortgage 63.750£. From where come this number? You said with that you pay previous mortgage. Is that mortgage for this property or some other? Greetings from Germany 👋
The new value of the property is £85 000. BTL mortgages require 25% deposit, which is £21250 So the money you can get from the loan is maximum 75% of the value, which is £63750.
Good question, Nick has answered this perfectly below. The figure £63,750 is the new 75% mortgage that will be on the property following my refinance at the price of £85,000. That money will be used to repay the previous interest only mortgage, and the remaining amounts will go into my bank account for future investments :)
@@JustinWilkins So have you started off with an interest only mortgage and then switched to a capital repayment mortgage after appreciation? Very clever move, was that your plan form the start? Was it less cash initially to get an interest only and hence why you preferred that over capital repayment as the initial mortgage? Sorry so many questions Justin 😅
Did you start your portfolio in your personal name or Ltd company? What sort of tax did you pay on those first 2 years (expected 2nd year)? Great video and insight thanks. Hopefully more content coming 👍
Hi Justin! Thanks for the great info. I gather you buy/invest away from home and I'm slowly forced into having to do the same (due to lack of any decent/affordable deals in the are). Have you made any videos on investing away from your own area? Would be super helpful of you have. Thanks! (If anyone in the comments has any input, please do!)
Hi Justin, well done. Good videos. Do you have the mortgage on your personal name or on your limited company? Who is your lender? I think the letting agent is charging you a bit too much and also the insurance seems to me a bit high too. Keep it up.
Cheers Kristof! I purchase BTLs in my ltd company, so the mortgages are on that company. I have a couple of different lenders, one of them is TMW. The agent fee is slightly high but I’ve opted for all the possible services that I could have - I have rates between 8-12% agreed on different properties 🙂 10% is usually my go to amount! Thanks again for watching
Hi Brad, massively depends on the purchase price and size property that you are buying, but I would say £25,000 is a sensible amount for deposit, fees and expenses on a £80,000 turnkey property in the north west 👍🏻
Seems like alot work for 12 months to make 2k profit when you can make substantially more in stocks 🤔 I dk about BTL but thinking put more in shares or get a rental
Yes that’s a really good point, and I kind of wanted to show that really. Property is a great investment class - offers monthly Cashflow, capital appreciation and the chance to refinance… which no other class can match all of those. However, yearly profits aren’t usually what everyone hopes they are. So worth factoring in maintenance costs for sure! 😃
@@JustinWilkins thanks mate, I have around 20-30k deposit and thinking to partner up with someone for a BTL. I used to manage on behalf of landlords for a agency so can cut out the lettings agent etc and do the advert on sparerooms myself. Have some decent contractors in my books too for maintenance. If you open to it let me know
Great to hear your plans! Drop me a message on Instagram if that’s alright with you - definitely worth exploring in more details. Sometimes JVs can be worthwhile, depending on the projects and amount of them you do. If it’s just the 1, then my advice is normally go it alone and take the full profit yourself 🙂 but let’s chat!
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Few points to note: 1) I missed my gas safety cert cost and service (my bad). 2) the managing agent fee seems high, but I have a set lower fee arrangement with the agent on another property I own. 3) I calculate my tax end of year once Ive factored in all my expenses and know my tax liability for the year! Everyone does it different, please respect that. This video is to show the realities of investing 😅👊
Still would be prudent to show what the tax bill is
Also you should be putting aside 1% of the value of the property a year to cover maintenance. I know you are showing the things you fix as they come but there is a bigger picture to look at. The purchase price seems very reasonable.
What is the EPC rate at the moment? Is this something you take into account when buying new properties? As you know, this can potentially be very costly to resolve for landlords from 2025.
Well done mate. I really likenfrom day one you have kept your information and delivery plain and simple and relatable to a true beginner or an advanced property guru. Love this channel and will help me massively to my property journey
Legend! Really appreciate you watching and sharing this. Glad to hear it 🔥
A refreshingly honest review compared to the likes of Scamuel Leeds. However, these videos never factor in contingency costs for some of the most expensive - and almost inevitable - repairs that you will undertake during your tenure as a landlord.
For example, a boiler tends to only last 10-15 years, so there's a couple of grand there to apportion across its lifetime. Roofs need regular maintenance; fencing doesn't last particularly long; uPVC windows and doors have a recommended lifespan of ~20 years; kitchen and bathrooms need updating, too. And did you have your cabling checked? Many old properties still have rubber cabling which is likely to be badly perished and a potential safety hazard. A full rewire costs thousands. And what about council tax and utilities standing charges for void periods (including the period between you purchasing the house and then renting it out).
Thanks for watching and for the review 😂👍🏻 glad I haven’t been given a nickname yet haha.
Some really good points raised. I have bad electrics cabling and plumbing checked so the fundamentals of the house are in good working order! But I obviously haven’t factored in any of the larger costs that could arise such as roof, windows, kitchen or bathroom! For now I am keeping hold of all Cashflow that this property produces in order to reinvest into my portfolio when issues like that arise 😃
@@JustinWilkins just to clarify, are you saying that you aim to have a large portfolio so that the cash flow from it can cover issues as expensive as a new roof?
Remember when Justin was on 2k subscribers!!!
One of the most decent honest guys on TH-cam, great material 👏
Onward to 100k!!!
Legend! Thanks for being here since the start 🔥 appreciate it!! Yes next stop 100k subs haha ✌️
Well done Justin
Very upfront and realistic of you
Keep up the good work. I wish you much more success mate.
Thank you mate 😃 glad you like seeing the realistic side of property, makes it worth while sharing. It would be much easier just to talk about the good points, like some do 😂😂 cheers for watching as always!
Hey Justin: I remember watching you when you explained the financial side of your BTL in Liverpool (2 years ago!! How time flies). I was busy saving up for a deposit for my BTL at the time. You really inspired me, felt motivated. Now I am in process buying my own BTL now, thanks to you. Hopefully it will be ready in March 2022 (my first BTL and a new built). Again thanks for your simplicity and honesty.
Legend! Appreciate the support, what a 2 years it’s been 😅 haha.
So pleased to video was motivating and great work securing your own BTL property 👌🎉
That’s impressive. Keep on pushing forward 💪🏻
Cheers mate 💯🔥
Was it expecting to see you here but great minds think alike cars and houses! 😁
Looking back would you buy this property again or would you wait for a more expensive house? Also would you be looking to buy another property on the 50-60k range?
Great video, and thanks for being honest with the figures. Too often I see people claiming to be earning all the rent over a period of the year, without mentioning voids, maintenance etc which reduce their amount of income.
Cheers man! I completely agree, and I would have found this so interesting to see at the beginning of my investing - so glad you think the same 🔥🙏
Or the nightmare tents many run into. Never thought being a landlord would be something I'd want to get into, but clearly doing it right and scaling up to can make decent money for the work and effort you put in.
Great video. It would be good to know the tax implications vs a stocks and shares ISA at a steady growth rate. 19.1% ROI is good but what is it after tax?
Yes that would be interesting to compare!! The ROI will definitely sink a bit after tax, but I didn’t want to overcomplicate the video as everyone has different tax situations 🙂
This video worth a gold. Thank you so much for all your videos. Well done.
Thank you man! Respect for watching 👊
I have built up to 6 houses since 2004 and have a few thoughts on your video-
As you did with the consumer unit, try to put of some upgrades when you buy and do them later. You can then claim then as maintenance rather than be part of the captial.
I personally would not buy any house older than say 1980s, older houses have more issues and suffer from damp, drafts, cracks, rot, new roofs, etc.
What are you paying the agent £75 per month for? I manage the houses myself so agents only paid a finder fee. If you pay an agent to find you electricians, plumbers etc they will charge double as the agent gets a cut.
Really best to do as much maintenance as you can yourself, the time it takes to get someone in is more than it takes to do most things.
I have found that there is no one right way with BTL.
Cheers!
Love these nitty gritty finance vids haha. Always satisfying when the numbers you run on paper translate into the real world. How do you think your second property will do compared? Keep it up bro 👊
Cheers Richard 😃
I think the second property which Cashflow just over £300 per month, but it usually takes 2 or 3 months for the tenants to move in and maintenance to settle, so we’ll have to see how the first 12 and 24 months goes 🙂
And you still have not refurbished that bathroom - something which will need doing, probably in the next year or so, costing (or setting you back) around £2,000-£2,500. It's these constant repairs/maintenance issues which put me off rental. However, I too would not increase the rent (until bathroom redo) to reward and keep your tenants happy and, more importantly, in situ. Very interesting video Justin, very clear breakdown. Hope your next property works just as well, if not better 🤩🏠
The bathroom will definitely need redoing at some point in the near future 🙂. There are often repairs and refurbs they need doing, which is why I wanted to share the realities of long term renting - hopefully it helps others see the actual profits. Thanks for watching as always and giving useful tips for others 😃🙏
Very grateful for that video Justin. Thank you. If you are up in Liverpool in the near future let me know and perhaps we can meet up? Explaining how that property has performed over two years with the ROI dropping and then recovering due to differing issues will be so helpful to anyone who has just dropped in or are in fact subscribing to your channel. You presented it like a pro . Well done 👏
Infinite ROI is my favourite kind of ROI. Nice one, you've done a great job in a short amount of time!
😂🤝
My favourite kind too! Thanks Dafydd
This is a good video explaining interest only btl... made me realise now im not going to this routw for my first property investment
Thanks for watching and interesting to hear your views 🙂
Interesting stuff, thanks for the run down
Cheers Connor 🍻👊
Great video mate. Good to get insight to the real returns.
Thanks! Glad it was useful 😃
That's an Amazing Price to Buy that Property for! How'd you manage that? (Also love your videos, best property videos, no propaganda, and not selling stuff, power to you mate ✊).
Thanks Bobby. Appreciate the support 🔥 this property was negotiated well, but I also believe bought at a good time (2019) the years since have been harder to find deals like this.
Fab video. Would you describe yourself more of a property investor than landlord? Do you manage the properties?
Thanks! I like to think more of an investor, as I employ a managing agent to take care of these, whilst I look to purchase more.
@@JustinWilkins I thought so, but you mentioned you were a landlord. Lol
Hi Justin, I own a BTL in the North West. Why don't you manage the property and increase your annual profit by 48% vs your Y1 performance? £75.60 x 12 = £907.20 / year which equates to an extra 48% on top of your £1,902. I personally don't think the managing agent is worth paying vs increasing your returns by 48%. Interested to hear your views on this.
Thanks for the suggestion Matt, it’s definitely been a consideration as I hate to give away profit.
The figure of 48% is only that high on a ‘bad year’. On more profitable years that figure jumps down a lot.
The main thing for me is that out of every landlord that I have networked with in the North West, the landlords that have had bad paying tenants or endless issues are the self managed landlords.
The paperwork, efficiency, and due diligence that comes with a managing agent is the the reason I pay it.
Granted the due diligence can be done by the average self managed landlord, however I think it’s the brand and agent themselves that works as the perfect barrier to the tenant 🙂
I like both opinions to be honest, but with TH-cam, sourcing, my program, other refurbs, and a full time job 😅 I’m happy to outsource the management and lose some profit!
Cheers for watching and sharing that thought
Thanks for the high quality detailed video. My questions would be - do you feel you've had good value from your Letting Agent, and would you consider managing your own tenants in return for the extra returns?
Very good video, well presented. Thank you. Most of my properties rent at £525pcm, but that's after refurbishment has brought them up to a total spend of around £85,000, all in. So achieving £525pcm on a £58,000 house sounds very good indeed, if you didn't have to then spend money on refurbishing it. I've thought about investing in Liverpool, but don't know the area so am hesitant. It would be interesting to know in which postcode your set one is located.
Exactly what I would like to know where abouts great price
Where are your houses located
Nice honest video pal..i need one of those excel spreadsheet lol. I don't know how to code it.
Infinite ROI.. I like that but let's hope property prices doesn't crash because we could go into negative equity and then the next time when we are due for a renewal on mortgage might run into problems?
Thanks for watching mate. And absolutely, can’t take the fact that another property market cycle is almost inevitable. I have stress tested this house so that it Cashflows at higher interest rates. But got to make sure we don’t get caught out on remortgages 👍🏻
@@JustinWilkins i think my message got deleted but we should get in touch mate through some form of social media. I think we need to create a big network in order to actually get really far..
Hi do you have a video about taxes and what's deductible and what's not also ltd vs. In your own name trying to decide whether to flip a couple to build capital for a couple of BTL or to just go straight to BTL
What documents do you need for a buy to let? For example, gas certificate etc?
Great work. Realy enjoying your videos, explain things so well 👍
Cheers Jamie! Great feedback 🔥
Think every newbie needs to see this. The reality of the numbers
100% agree! Thanks for watching 👌
The amount of times I hear "net cashflow" that excludes maintenance, certs etc. from sourcers is quite unbelievable for the purchasing of an asset in the many multiple tens of thousands of pounds.
Seeing as your transparent about your finances... Whats your take home salary? It'll be useful to see whether this is a viable career option.
Haha I’m very transparent, but not that transparent. Some things I keep private for my sake, and my employers 🙂
I’m not here to sell a dream, I’m not earning £100k at work put it that way. I’m probably a bit above average salary but not much. Property is a very achieveable for most people, once you know the ins and outs of how much it costs, how to find good deals, and how to partner with other investors 🙂
When refinancing a property using a LLC, how does a bank reevaluate it - based on appreciated house value as in personal loan or based on the income the property generates, as in commercial loans?
Commercial loan basis. The bank has a particular segment code attached to commercial properties usually code is CRE = Commercial Real Estate. These loans carry a different set of Credit Risk profile vs traditional loans. I work for a bank.
Do you have any experience in buy to let property’s in Sheffield? And how do you think Liverpool compares to other big England cities
No I’m not very familiar with properties in Sheffield. I have no experience in that area. But Liverpool is one of the leading growing cities in my opinion, and the stats also reflect it too 🙂
It's good of you to be so transparent - and I've congratulated you on your enterprise before. I understand why you feel the need to have a managing agent but that cost is hurting you - especially as you've not accounted for tax on the rental income. For me, you're a bit exposed and relying on there being no inflationary pressure in the economy. Overall you can feel fairly happy because you've been rescued by the capital growth - but if you put that aside I don't really think the fundamentals are completely right.
Thanks for watching! Appreciate your comments, but this is the truth of property investing. When I don’t show all the truths and realities, I’m accused of ‘selling a dream’. When I do show everything, then people tell me I’ve not made a good investment 😂 I can’t win!
Regardless, I’m happy with the Cashflow this property produces, the capital appreciation is an added bonus because I bought well - good things come to those that take action!
@@JustinWilkins I bought four modest houses and I do sometimes wonder if I wouldn't have done equally as well with one pricey city centre property - both in terms of income and appreciation. Maybe you too could have been better off with a single (or fewer), self-managed property where you live? I've made the point before - it's so important to stop income being nibbled away by others. £75 a month! - for what?
Nice little summary there mate. That was pre-tax profit there. How is profit taxed on a BTL? Have you got a separate Ltd company that owns the property? Also need to account for capital gains at some point.
Thanks man! Yes the tax is 19% corporation tax on profits as the BTL is in a ltd company. No need for capital gains, as that’s only ever paid on the sale - no capital gains on rent or refinancing 🙂
Love infinite ROi deals well done brother keep smashing it 🏆💪💪
Haha yes Luigi! Cheers bro, likewise keep killing in man 🔥
Absolutely smashing it mate. I'll be completing on my 4th house shortly so sounds like you're right on my heels 😃
Haha I’m not quite on your heels! But give me sometime 😝 great work on getting securing number 4, hope it goes through ok!
💪🏻
@@JustinWilkins thanks, conveyancing is a nightmare atm
Hi Justin, good video but are your numbers missing costs of other legal requirements such as PAT tests, Legionella tests, Smoke alarm tests and Landlord registration fees ?
Thanks Gerry! I did miss a gas saftey cert when creating this video. But the PAT tests and smoke alarms were sorted and covered with my consumer unit and electrical update. I also reduce the amount of appliances I provide to almost 0, so that PAT testing is not in my ongoing responsibility. Landlord reg fees not required, and legionella isn’t a yearly cost 👍🏻
@@JustinWilkins Yeah that makes sense - thanks for the reply
What about the new mortgage repayments…? Your debt has increased as would your mortgage.? As you say, you end up with your money out but you now carry higher debt with a higher mortgage so you monthly income drops..!
insignificant
I'm just about to buy my first BTL. I currently don't own any other property but have done in the past. My mortgage is a BTL but some solicitors are telling me I will pay the standard rate of SDLT and others are telling me I'll pay the higher rate. I've spoke with HMRC and they insist I will pay the standard rate. Why are the solicitors divided on this and is anyone in the same situation or have bought their only property as a buy to let and paid which rate? I know I'm not entitled to the first time buyer up to 300k due to me owning property in the past.
Practical as always, this one one those quick rich scammers need to do ;). Can I ask, as a total beginner in this space, if you had 50k shall invest in a big one, or in small property, house or flat? Keep it up mate. You ROCK!
Haha legend thank you!
If starting again with £50k, I would look to maybe do a flip or two at the beginning. Take my £50k to £75k-£100k, then that opens more options up to me. Alternatively a BRR, to keep my money moving each time into new projects.
@@JustinWilkins You're the MAN and you deserve 1M subs! I was thinking use as a deposit and get a mortgage for 300k and buy a house and turn into HMO with 8 rooms? but that's starting big, I like your approach more. Start small and scale up.
Amazing video! Thanks so much for sharing
Thanks for watching !! 🙏
Hi Justin great video......just want to ask all the maintenance work you done after renting is arranged by you or its by the letting agent.plz reply that would be great. Thanks
Great work Justin!! Like the detailed videos 💪🏽👍🏽
Thanks and glad to hear it 🙏
Very good deal at 58k. Incredibly cheap. Seems in good condition too....are you sure there's no strings attached here? No structural damage? Rough street..? What were the EPCs when you bought it?
Thanks. I mean it’s not located in Mayfair and it has Marilyn Monroe wallpaper 😂 it wasn’t quite perfect! But I had a full structural survey with only small issues raised.
Price is always the sign of a bad property. It depends on the opportunity and how well it’s negotiated 🙂 (IMO)
@@JustinWilkins Yeah, houses of that calibre now are going for 120k, so i guess you bought at a good time. Do you know what the Energy certificate rating was at the time? done anything to bump its efficiency up?
great vid thanks. Like the simple explanations
This is a really useful honest video!
Cheers Luke! Awesome 👊
What's your comment on the managing agent, because it's quite a significant amount and wondering if you found it useful considering you're paying for every month, be glad of comments
Hi Adrian, yes I’m a fan of managing agents because it means I can be more hands free. I do still take the occasional call and email from them, but they have reasonably priced trades people on hand ready to complete the work! Admittedly on this deal I pay a fairly high fee, but I have other properties with cheaper rates. 8-10% is usually my preferred rate 👍🏻
Sorry if I've misunderstood, but where are you finding a 58k house in the UK!?
No you are correct! This was purchased in 2019, but properties can still be purchased for this price in parts of the North of the UK. In this instance, I purchased this property in Liverpool!
Sorry but on the spreadsheet it says mortgage interest? How mi h do you pay a month for the mortgage yourself ?
Hi Thomas, so the I have an interest only mortgage on this property. So the payment you see on the spreadsheet is the exact amount I pay each month 👍🏻
Hi Justin, great video! I plan to refinance my BTL two years later. Do I have to be employed or I can reply on the rental income from BTL when I apply for the refinance? Thanks
Hi Freddy, I think it’ll probably be easier to refinance if you are employed and have a couple of years worth of decent earnings and accounts. However I believe there are lenders out there that can cater for different circumstances 👍🏻
@@JustinWilkins Thanks, dude. Really appreciate it.
Proud of you! Agency fees are pretty cheap, nice. Which agency are you using?
Thanks man! Appreciate it. I have found reeds rains and Northwood to be good letting agents in the north west 🙂👍🏻
Amazing video mate, thank you.
I’m also from north west 👍
Legend, thanks Connor!
Love the vide.
Are your btl on interest only or repayment mortgages when was brought? If so when refinancing do you swap the deals around out? And is it short term or long term investment?
Thanks! So I currently use interest only mortgages to help me maximise Cashflow and grow my portfolio quicker. I’m the future I will refinance at the end of my agreed terms and will review whether to stay on interest only or switch to repayment 👍🏻
Good work, great results Justin.👍📈
Thank you Levente 👍🏻
Can’t wait for the refinance video - I will be due to do the same soon so be nice to see the process and fees etc
Haha cheers man! Will make sure to cover that soon enough. 🔥
Are you factoring in tax taken by HMRC in your calculations. The tax has destroyed my profits and currently running at a 3% loss on my properties in London
Yes taxes can be harsh, especially if you own the property in your personal name, and especially in high value areas like London where the rents are high!!
I have not included taxes in this example as I wanted to keep it really relatable for everyone. Tax on this income can massively differ depending on what a person earns, and their circumstances. It also differs if the property is purchased in personal name or a limited company.
Hi. What does your managing agent do for you each month, I don't have an agent unless I need a new Tennant
It’s the collection of rent and dealing with maintenance that’s important to me.
Some months they do lots, other months not much 🙂
Great video! Just out of interest do you own a home which you live in yourself on top of your BLT’s?
Thanks Andrew! Yes correct I do 🙂
Justin, I see you can't win with some of the comments! If you keep your property for the long term and keep it cash flowing you'll be fine. We have just completed on our first but are self managing - a lot to get our head round but the NRLA are well worth joining for resources. I saw a reply you made to someone and meant to chip in but forgot and now can't find it. Just bear in mind with your LTV that once you get to 4 + properties, lenders will want 75% across the entire portfolio so just bear that in mind with any tempting 80% 85% LTV deals now, you could end up shooting yourself in the foot. I'm no expert but my very good broker sat down with me and explained when we were making our business plan. Find the videos really helpful - have started an excel spreadsheet myself thanks to your vid.
Haha yes you aren’t wrong! I’ve somewhat come to terms with the fact I can’t always win now lol. But I appreciate your message and the knowledge you have shared in your message. All of my refinances are 75% LTV as it’s the slightly less risky option and the rates are a lot better too! 🙂👊
Is it a interest only loan when you refinanced , like it’s a infinite ROI either way but in the long term if you pay the principal down it would benefit you from having to put more money into the deal when the market crashes (it’s a extra 2% ROI in principle pay down per year but then your cash flow will only be around £60 p/m, which isn’t to bad regarding you have no money in the property)
Unless you have a plan when it crashes if so would you share your plan
Yes I’ve run the numbers for a few different scenarios, and the refinance is definitely the best option for me. You’ve made some really good points about building equity into your homes in case of a crash - I do have 2, 5 and 10 year plans for my portfolio and repaying the debts to reduce my LTV % 🙂👏
@@JustinWilkins would be great to get a video on this. No one talks about property strategy!
This is a really useful breakdown, thanks Justin.
One question on the Managing Agent - are they doing full management of the property (ie tenant speaks to them about any problems, agent deals with workman for repairs etc)? Or are they just finding you a tenant?
I would expect that's fully managed. Don't forget you still pay for the work that's done. When I did BTL after they found me the tenant I never dealt with the agent again.
Cheers for watching and glad it was useful!
I have full management which means the agent takes the calls, and helps me organise the repairs if needed. They also help find potential tenants, carry out credit checks and references to make sure they are suitable.
I have a question. I owe HMRC £820,000. I own a 9 bedroom Licensed HMO whose income is £60, 000 inclusive of electricity and gas, property is valued at £810, 000.
Should I refinance, pay off tax and continue with HMO paying for loan, or should I sell and pay off tax?
How do you make an infinite ROI if you are re-gearing with capital appreciation (equity release). It's equity
No original equity left in 👍🏻
When you said you refinanced at 85k and this left you with 21k could you explain the maths on that and how it increased your deposit please
So I haven’t actually finished refinancing the property yet. But if the price achieved is £85,000 as planned, then I will be able to release a new 75% LTV mortgage which means I get £63,750. After paying off the previous mortgage I’m left with around £21,000 new equity. Minus fees and it becomes less.
That new equity is from the market increases over the last 2 years. It might not continue to grow at this rate, but this is probably the only time to refinance money out of this house to help me continue investing! Hope that makes sende
Infinite roi? Based on the assumption house value stays the same/ goes up. Point 2: where is the tax element? Is the purchase via a company or not? Accountancy fees?
So the infinite ROI is based on the fact I’ve pulled out all of my initial investment amount, and I still have a house earning money each month 🙂 tax I didn’t add in because depending on personal earnings and circumstances it differs for people watching, and depending whether the house is purchased in personal name the tax differs. Re accounting fees, I don’t pay any due to the volume of business that I help refer to my accountant. Thanks for watching!
@@JustinWilkins cool. Really interesting stuff. Have subscribed.
Thanks for subbing !! Lots more property videos on the way 🤙
@@JustinWilkins Hi Justin. Did you buy this in your name or a Ltd co?
Genuine question - why bother? You can easily make 10% in investment funds (personally about 25% this last year) with literally no hassle and easier access to the cash. What draws you to property when it seems to be getting more and more unattractive? I’ve thought about it myself but just can’t justify it over a fund. Is there something I’m missing?
Yes - property value appreciation. And in many cases it's more than the cash flow. Also, Justin very soon will have no his own money left in the property while getting profit. At the same time you can't afford this luxury even with best interest you get from investment funds.
It’s a very valid question, and property isn’t right for everyone! Requires a lot more work and effort which not everyone wants or has time for.
For me the added bonus is Cashflow and capital appreciation. Whilst the profit can be sometimes unpredictable because of maintenance and void periods, it still produces a monthly income. And capital appreciation from the fact the property market is strong in the UK - although this does of course fluctuate.
Overall my belief in real properties and real assets is greater than numbers on a screen that can be effected by market influencers (big hedge funds or the likes of Elon musk 😝). Personally I don’t believe there is a winning argument for both - whichever suits you better!
Easier to use leverage in property. Also, not sure if you can easily make 10% in funds. They're certainly more volatile than property too.
Leverage is the key here. You can't easily get leverage trading in stocks or equities. All depends on your appetite for risk. Most Wealth managers now advise spreading your wealth across different asset classes. The property market has become more liquid in recent years.
Absolute rubbish. You can make 10% but you can't make it EASILY..... Sure there are plenty of funds that have made 10% or more consistently but without a crystal ball there's no way of knowing what they'll do tomorrow.
Everything's easy with the benefit of hindsight.
Maybe a simplistic look at it but you invested 16k so profit only starts after roughly 5-6 years. I know you refinanced but you'd be doing the same at the next house.
Im quite lucky that i rent a property out that I've owned for over 10 years. I make £800 per month £9,600 per year. Obviously will be less due to maintenance. £800 is worth around 2 houses at around 60k value. Id like to buy more but need to build a loft on my own property so need the profit from my rent to pay for that.
Correct! It would have taken that long to break even, not the ‘ideal’ investment for some people. But I was as calculated as I could be with the experience and knowledge that I had 🙂
Hey where abouts in Liverpool are houses that much where about is your place what area thanks I'm looking to get into it how can I speak to u love your videos
Thanks for watching!
There’s lots of good and bad places, like any city really. Good areas to focus on are L15, L13, L9, L4, L6 - plus plenty of other areas … but those are good ones to start considering
What about the tax you have to pay on all the rent even the portion that pays the mortgage. Have you taken that in to account? Or are you doing this through a limited company
This is through a limited company - I have taken tax into account during this video, but it would usually be 19% corporation tax paid on ltd company profits 🙂
Hi Justin, I was wondering if you live relatively close to the property? Just for maintenance and other issues which you may have to tend to
Hi Andrew, thanks for watching. No I’m about 5 hours drive away 😅 I have a managing agent that takes care of maintenance when it arises!
Awesome and insightful video thanks! Looking to start buy-to-let myself soon. Can I ask where you found your mentor? Thanks and keep it up!
Hi Jack, I found my mentor through Instagram. I was looking for someone that was a couple of buy-to-let’s ahead of me so that I could pick their brains and knowledge. Let me know if you want help with getting started 👊 propertyxprogram.com/
The returns should include capital appreciation too. The problem people often ignore is the risk of a property market decline that can, in the extreme case, leave people with negative equity, ie. loosing more than their original investment. There is a risk of interest rates rising which would make mortgages more expensive and likely cause property prices to fall. With interest rates so low, it's arguably a very risky time to invest, though it's anyone's guess.
sage advice....
@@nauxsi Only now do people begin to understand.
Great video! Super insightful. Just wanted to ask, honestly, do you find being further up north rather than say South East, makes this more feasible? Have you got properties in the south?
Well done mate, brilliant. 👏🏼
Legend, cheers Glen! 👊
I'm 34 would love to start in property. Would like to not have to work after 55
Haha I’m with you there! Retired by 40! 😃🔥
Hi Justin, great job. We spoke early last year if you remember and I’ve been following you ever since.
One thing I would say bid younger my included your tax liability in the calculation.
Once you work that in then your ROI is a lot lower for years one and two.
Does that make sense?
Cheers buddy. Keep up the good work.
Yes thanks Ian! Appreciate you following 🙂
I did consider adding the tax calculation in, but I didn’t want to confuse things for brand new beginners - seen as some people invest in personal name, and some in ltd company.
The ROI is definitely lower after tax, but all depends on the amount of expenses, and travelling that an individual registers through their company I guess. Tax liability is a very individual thing.
Cheers for watching!
Honest, I had almost exact experience with my first property.
👏 👏 glad to hear it. It can be a rocky start sometimes, but the long term plan is what makes it worth while!!
Sorry if it's been covered, but on the spreadsheet you've listed "mortgage interest".
Do you not pay back capital or just interest only?
Hi Chris, this is an interest only mortgage. So this just pays the interest on the mortgage, it’s quite common with property investors in order to make the most of the properties cashflow each month
@@JustinWilkins thanks for the reply mate, keep grinding!
How does this work so I have two proerties one where i deposit on and another where i Spent 80k deposit on and the house I bought at 210 but its woeth at least 250 probably 280 how can refinance that?
Awesome way to go Justin :)
Cheers Gareth 👊🔥
Do you ever get to use that insurance that you pay for? Is that necessary
It’s definitely necessary as it covers the landlord in case of a tenant injury or damage to the property 🙂
What is this £75/m? What are the agents doing if not arranging the repairs etc?
It’s £75 pm which is a lot but I get a much better deal on my other property so it equals out. They collect rent, hold the deposit, deal with the renewals, arrange maintenance works… some months they do a lot, some months they don’t.
But having been an estate agent in the past, I know the true value of a managing agent. Less experienced people don’t really know unfortunately until it’s too late.
@@JustinWilkins rent will likely be a bank transfer & renewals are once per 6/12 months paper signing if not just letting them roll over to periodic. Sounds like they call a plumber then send you the bill
You probably have to minus the income tax on your ROI which if one is 40 percent tax payer takes 40 percent away from net profit. Net comes down to be 8-10 percent.
Hi Ash, thanks for watching. Whilst I’m a 40% tax payer, I will only pay 19% corporation tax on profits because the property is bought in a limited company 🙂👍🏻
@@JustinWilkins oh very well. Then it bumps up yield. True indeed. Not true for mere mortals with day job :)
What is the profit with the new mortgage though
It will cost more right
Yes the new mortgage will cost more, but the difference each month is only £35-£40 from current quotes I’ve been given
Can't believe property up North is this cheap. Did I hear right that you paid £58,000 for a 4-bed? I have a 1-bed flat in Bristol that I paid £175,000 for almost 2 years ago.
Haha yes you heard right! I have the same pain where I live down south, my first flat was around a similar price to yours 😂
You have a great deal there!
But why don't you count the improvements as increase of the overall value of the asset?
Hi Simeon, I haven’t done a huge amount of changes / improvements to this property over the years. The value of the asset had mainly increased due to the price I paid, and the market increases.
In your calculations are there some items missing? Some basic expenses like boiler service, gas safety certs etc were not mentioned. Then you need to account for tax IMO to be able to claim true ROI, your investment was post tax, so you should compare post tax ROI. For future years, are you projecting an increase in rent, mortgage rate on your higher borrowing, higher agents fees (as result of rent), voids and future finders fees etc... Don't get me wrong, this still looks like a very decent return but quoting 20% is a bit misleading imo
Thanks for watching! The EICR was mentioned, and that’s only needed once every 5 years. I did however miss the Gas safety certificate (my bad).
I completely disagree about tax as everyone’s tax liability differs.
The whole point of this video is to show the true reflection that maintenance and voids happen, and full rent isn’t always achieved! I don’t know how I can be any more honest and not mislead people than I already am 😃. Hope you can see my point of view!
@@JustinWilkins Yes, everyone's tax differs, but so does their expenses and everything else. This was YOUR ROI you were sharing. You also suggest growing to 7 or more properties so assume LTD company standard tax. Projecting out considering the other factors I mention in my post will mean a more realistic ROI over say a 5 year period (my guess looking at your numbers is closer to 10%). What would be nice is say a total profit comparison of a 5 year outlook (including capital gain and taxes) vs an average Stocks and Shares ISA invested in an index fund compounding with no tax to pay.
Great video Justin, your content is always easy to follow and understand. Just wondering as to why the mortgage interest is so high at over 3.8%? Looks like you managed to get an 80% LTV which is great but that surely put a dent in the cashflow over that two year period?
Thanks Dave, appreciate it.
100% could have got a better rate with a higher LTV, but using a higher LTV allowed me to continue investing sooner after purchasing this property :) but overall, yes it probably cost me £20-£30 extra per month.
@@JustinWilkins Fair enough mate I thought that would be the reason. I didn't see a whole lot in when it came to the numbers. There were definitely sub 2.5% rates floating around in 2019 meaning an extra £60+ cashflow would have been possible, so £1440+ extra for the two year term, but then again if you're achieving 20% ROI on other deals then the extra £2900 you managed to keep hold of from the 80% LTV mortgage would be making you around £1200 over the same period plus the fact that the extra mortgage interest you're paying is tax deductible so yeah it probably evens out in that case. Always interesting to see how people go about the numbers that's what I love about ROI videos!
Hello Justin, i love your videos. I have question. I dont understand refinance 75% mortgage 63.750£. From where come this number? You said with that you pay previous mortgage. Is that mortgage for this property or some other? Greetings from Germany 👋
The new value of the property is £85 000. BTL mortgages require 25% deposit, which is £21250
So the money you can get from the loan is maximum 75% of the value, which is £63750.
Good question, Nick has answered this perfectly below. The figure £63,750 is the new 75% mortgage that will be on the property following my refinance at the price of £85,000. That money will be used to repay the previous interest only mortgage, and the remaining amounts will go into my bank account for future investments :)
Thank you guys 😊
@@JustinWilkins So have you started off with an interest only mortgage and then switched to a capital repayment mortgage after appreciation? Very clever move, was that your plan form the start? Was it less cash initially to get an interest only and hence why you preferred that over capital repayment as the initial mortgage? Sorry so many questions Justin 😅
What roi do you look for when making offers
Ideally these ranges or above:
- Turnkey 17-20% +
- BRR 25-30% +
Did you start your portfolio in your personal name or Ltd company? What sort of tax did you pay on those first 2 years (expected 2nd year)? Great video and insight thanks. Hopefully more content coming 👍
Hi Justin! Thanks for the great info. I gather you buy/invest away from home and I'm slowly forced into having to do the same (due to lack of any decent/affordable deals in the are). Have you made any videos on investing away from your own area? Would be super helpful of you have. Thanks! (If anyone in the comments has any input, please do!)
Do you buy through a LTD company? Or is it taken as earnings on top of a salary?
Hi Lee! Yes I purchased this through a limited company as the tax setup suits my situation better 🙂
Hi Justin, well done. Good videos. Do you have the mortgage on your personal name or on your limited company? Who is your lender? I think the letting agent is charging you a bit too much and also the insurance seems to me a bit high too. Keep it up.
Cheers Kristof! I purchase BTLs in my ltd company, so the mortgages are on that company. I have a couple of different lenders, one of them is TMW. The agent fee is slightly high but I’ve opted for all the possible services that I could have - I have rates between 8-12% agreed on different properties 🙂 10% is usually my go to amount! Thanks again for watching
Great video!👌 Subscribed
Legend thanks Carlos!
Are you using an Interest only mortgage?
Hi Harry - yes thats correct :) better for cashflow and levering my money at the present time in my investing journey.
Great video Justin… 👍🏾
Cheers Garran! Appreciate you watching mate 👊
What’s a good enough deposit for north west?
Hi Brad, massively depends on the purchase price and size property that you are buying, but I would say £25,000 is a sensible amount for deposit, fees and expenses on a £80,000 turnkey property in the north west 👍🏻
Seems like alot work for 12 months to make 2k profit when you can make substantially more in stocks 🤔 I dk about BTL but thinking put more in shares or get a rental
Yes that’s a really good point, and I kind of wanted to show that really. Property is a great investment class - offers monthly Cashflow, capital appreciation and the chance to refinance… which no other class can match all of those.
However, yearly profits aren’t usually what everyone hopes they are. So worth factoring in maintenance costs for sure! 😃
@@JustinWilkins thanks mate, I have around 20-30k deposit and thinking to partner up with someone for a BTL. I used to manage on behalf of landlords for a agency so can cut out the lettings agent etc and do the advert on sparerooms myself. Have some decent contractors in my books too for maintenance. If you open to it let me know
Great to hear your plans!
Drop me a message on Instagram if that’s alright with you - definitely worth exploring in more details. Sometimes JVs can be worthwhile, depending on the projects and amount of them you do. If it’s just the 1, then my advice is normally go it alone and take the full profit yourself 🙂 but let’s chat!
@@JustinWilkins okay 👍 will.ping you there
If you refinance and the loan amount becomes more because although still a 75% its on more money, doesn't that mean the mortgage rates go up?