What would you do? Brilliant property strategy and planning (I hope…)

What would you do? Brilliant property strategy and planning (I hope…)

10:02 AM, 12th November 2014, About 10 years ago 19

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Hi All

I’m a landlord because I doubt that a pension alone will feed me in my dotage… What would you do

Anyhow…I generally know what I want to do and how, but the next decisions I make could be critical and I feel that some wiser heads than mine could be very useful. I may need to review my strategy! Here’s my portfolio as it stands:

1) worth £365k, mortgage 22k
2) worth £160k, mortgage 76k
3) worth £255k, mortgage 56k
4) worth £190k, mortgage 127k
5)absolute turkey – negative equity 🙁

Apart from #5, the others all look hopeful; rising prices, in demand areas, regeneration, improved transport links and lots of goodies coming soon.

So good news is equity galore.

Being an earnest type I want to pay all these off as soon as possible so I can retire and live off the proceeds.

Before I do that I was thinking of borrowing back the £25k deposit I put into #2 to pay off property #1 completely, or to invest in equities or to save towards a bigger residential property.

The new EU laws coming about affordability tests make me wary about going on an equity spree in case I can’t remortgage in future if the powers that be decide I’ve bitten off more than I can chew or they regulate BTLs and we all have to get repayment mortgages etc etc so I’ve been focussing on the overpayment/repayment plan instead.

I’m not much of a risk taker, but something makes me think I might also be missing a trick. I could buy a ton more properties with my equity or use the money to invest in stocks or something else, but I had more properties and got rid of them as they were stressing me out and I realised I don’t want to own 100 properties after all. More hassle than it’s worth sometimes… I want a simple life, but to also live well. If I make some savvy choices now I feel I could be laughing…

Am I being an idiot?

Shall I play it safe and repay and leave it there?

Have I overlooked some brilliant options completely?

Thanks very much in advance.


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Comments

Adrian Jones

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16:49 PM, 12th November 2014, About 10 years ago

To be honest if you only need £18k a year I can't see why you should change anything.

You've got a good income stream and can always sell in the future if the need arises.

Mark Alexander - Founder of Property118

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17:05 PM, 12th November 2014, About 10 years ago

Reply to the comment left by "Adrian Jones" at "12/11/2014 - 16:49":

"Missed opportunities" was the question though.

Who would want to settle for £18k a year if more was realistically achievable?
.

Jonathan Clarke

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17:41 PM, 12th November 2014, About 10 years ago

Sorry but you are being an idiot ( your words not mine) I`m far to well brought up of course to call you that.:-)

But honestly get a grip and don't lose sight of what you can really aspire to now through what you have achieved so far. Caz has got it spot on. Leveraged it all up buy some more and put down a decent portfolio footprint which will keep feeding you till you are 100 years old

Manage the stress if you don't want it. That's what letting agents are there for.

18K is Ok I guess but 36K is better
If having double the properties stresses you out pay 10% of your profits to an LA and still make 14.4K more a year than you were with less hassle / stress.

Put the fear / apprehension / worry / stress hat back in the box and go out and build a portfolio and give it to some willing hungry LA.
Then and only then sit back with your slippers and pipe.

Go on - you know you want to....
.

Mark Alexander - Founder of Property118

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17:47 PM, 12th November 2014, About 10 years ago

Reply to the comment left by "Jonathan Clarke" at "12/11/2014 - 17:41":

Well said Jonathan, but why pay 10% for full management when you can get it for as little as 4% from the agents that CaZ and I both use - see >>> http://www.property118.com/property-management-checklist/67891/ - that's assuming a landlord lets to tenants who qualify for RGI though in fairness.
.

user_ 1346

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18:02 PM, 12th November 2014, About 10 years ago

Obfuscated Data

Dunsaw

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20:00 PM, 12th November 2014, About 10 years ago

You have been quite "lucky" with your portfolio and I define luck as what happens when preparation meets opportunity.

I do understand where you are coming from and why you are hesitant. If I were in your shoes I would go for it with the proviso that property nr 3 (my home) is paid off in full via my earnings asap. Physiologically and especially if you are nervous about property investment, once you have a low or no mortgage on your home, you are then more comfortable about taking risks. So this strategy might work for you. A low or no mortgage is quite an exhilarating feeling and it spurs you on in other ways.

Look at the turkey and with Christmas coming up, decide if it time to roast it! However check the numbers and see if by thinking outside of the box you can make the numbers work for that property.

Investing is all about your appetite for taking on, managing and controlling risk and it is generally a very personal decision. However listen to what others have to say as you will not have time to make all the mistakes we have made; make some new ones and we will forgive you that!

Bricks n Mortar

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21:03 PM, 13th November 2014, About 10 years ago

Reply to the comment left by "Lou Valdini" at "12/11/2014 - 15:41":

Thanks Lou. Good luck. Do let me know how it goes if you get a spare moment!

Bricks n Mortar

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21:49 PM, 13th November 2014, About 10 years ago

Reply to the comment left by "Dunsaw " at "12/11/2014 - 20:00":

Thanks Dunsaw, Caz and everyone for your comments.

Caz and others have made some great points. It's not great to tie up my cash, but I have some heavy duty emergency funds available and will use income to overpay. I won’t be draining my cash reserves.

Part of the issue is that I think I've been spoilt - all the properties I've ever bought have been ‘cheap’ and I’ve never had a 'scraping by' phase at the start.
I bought them all before major booms and during the CC so they were bargains. I balk at paying some of the prices being asked right now.

Of course there are bargains out there and I can do a decent job of finding them (and have before) but it is time consuming and tiring (for example I saw 25 properties to buy 1 flat with the right lease length (185 years) and tiny ground rent (£50 p.a. and service charge £0.) Yes – thrifty and risk averse!

It'll be harder to repay a huge mortgage easily and my plan is that I want to own all the properties I want virtually outright (i.e. just on very tiny mortgages that I can draw cash from if needed.)
To me buying some properties to hold which will hopefully return a big enough profit at future date to repay some of the others is speculation to some extent. It’s uncertain - I don’t know when they will ‘pop’, whereas If I overpay and plan things I can predict exactly when I will be close to owning each property outright assuming I think they are worth the effort…

If I don't buy more and want to hold the hand I have for the foreseeable future (except for turkey), then how else do I pay them off?

I'm not totally naïve – if I overpay, then as rents grow the amount of money that is due to me will increase anyway as will my cashflow and if I see a bargain I'll have the reserves to pounce. Yes, the taxman will get more, but I’ll have more too.

The prospect of getting another 3 or 4 and going through the whole hoopla again (exhausting) vs. paying down and then just focusing on keeping them in good nick (whilst watching rents and value grow) gives me some sense of peace but I won't be nervous as the heavy lifting will have already been done.

Surely 4 decent properties with small mortgages that I can draw on when I like is better than winging it and waiting and hoping a few extras bought to prop things up will grow enough in value to pay off the ones I'd like to keep?

I've probably done things the hard way but I hope the security of my portfolio will be more certain.

I take everyone's comments on board and if / when I spot more bargains I will go for it!

Bricks n Mortar

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21:50 PM, 13th November 2014, About 10 years ago

P.S. Mark, I've also read several of your articles, thank you!

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