I received the email below from one of my readers yesterday morning requesting advice on buy to let property portfolio building. I’m happy to share my thoughts and will do so in due course in the comment section below this article. However, I thought my reader may appreciate a variety of opinions so I emailed him back and offered to publish his email as an article so that other people could also comment. He agreed but wanted to remain anonymous which is obviously fair enough.
This is the email received:-
A quick background to my property development : I am based in (location removed but a UK City) and am 36 yrs of age… I have been lucky that my father gave me a house that he has owned for years, which had no mortgage on it so I borrowed 75k against it about 50% LTV and used this money to put I deposit on a buy to let which I purchased back in 2009.
Sine then I have built 2 flats in 2011 which cost me about 150k to build (money came from savings and going back to my mortgage company and getting a further advance on the original mortgage I had).
These flats were therefore mortgage free and were given a total value of around 270k. I have borrowed around 175K against them around 65% LTV, and have used this money as deposits on 3 more buy to let properties.
My total portfolio to date is 2 flats and 5 houses which are now all mortgaged at around 70% LTV bringing in a net annual income of around £35,000 once mortgages and expenses are paid.
As you can see I am now stuck as to getting more money against my properties to use as a deposit (a familiar scenario no doubt), so was just going to wait until my mortgages mature and remortgage them to take more money out – providing property prices increase!
I now have 7 mortages (1 on each property) all maturing around the year 2014.
In your opinion, if you were in my position, is my best strategy to carry on borrowing as much as I can to develop my portfolio? (obviously as long as I’ve got enough cash as back up to cover expenses voids etc).
Also what market conditions, etc should I be wary of when using this strategy to develop my portfolio?
Really appreciate your thoughts on this Mark.
What buy to let property portfolio building advice would you offer to Laurence?
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