Buy to let portfolio – help me see the bigger picture

Buy to let portfolio – help me see the bigger picture

9:59 AM, 23rd July 2014, About 10 years ago 27

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I have just cleaned up my act, paid my debts and now got 2 jobs earning avg £2500 a month and living with my mum!

Now – I want to get into property development. Build my own buy to let portfolio! I can only save £10, 000 a year.

looking at the figures, in order to start small – say for eg buying 1 bed apartments at average of £50,000. I would need £10k (20% deposit) plus costs. Rental value will be £400 a month and repayments over 25 years will be £150 – profit generated per month will average £250.00

Then it will take me another 12 months to save another £10, 000! At this rate I can only afford to buy 1 property per year. However, by the looks of it, some people are boasting buying 3 to 5 properties per year!! Now can someone give me a bit of inspiration as to how I can achieve to buy more properties per year. I need a bit of an eye opener to further my vision and my dream to become a millionaire (one day..!)



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13:31 PM, 23rd July 2014, About 10 years ago

Hi Kelvin,
some really good comments above. I didn't see any mention of network meetings. so I will add that its worth going to them but please don't jump into training courses without a good deal of thought first. - Use them to meet people in your area that are walking the walk and not just Talking the talk. - Do us the suggested calculator and include the comments above about expenses especially those linked to flats.
Here is a sideways thought. IF you have good credit then you might be able to share a deal with another person who has hit their personal B2L mortgage limit or is no longer working. I am in this situation but am not offering to Joint Venture. good luck and enjoy. Allan


13:48 PM, 23rd July 2014, About 10 years ago

Reply to the comment left by "kelvin kaliyati" at "23/07/2014 - 12:23":

Kelvin i think most if not all landlords have become millionares from buy to let portfolios through capital appreciation not the rental income.

Neil Patterson

13:59 PM, 23rd July 2014, About 10 years ago

Hi Kelvin,

Rob is correct on standard residential BTL the difference between yields and costs are too small to make anyone a millionaire unless they have hundreds of properties.

Property should be viewed as a long term investment unless you are developing or refurbing and flipping properties.

You are obviously a very determined person and I am sure you will be successful if you take it one step at a time. Unfortunately non of use know economically what the future holds other than historically over long periods property has always increased in value. With reward there is always risk,

Mark is the most successful BTL investor I know well and without giving figures it took him 20 years from the age of 19 to build his portfolio.

If you have read his How to become a Landlord initial guide and have any specific questions I am sure we would all love to help 🙂

Neil Patterson

14:02 PM, 23rd July 2014, About 10 years ago

Oh PS you should find the Property Research tool useful as well for your due diligence

see >>

kelvin kaliyati

14:22 PM, 23rd July 2014, About 10 years ago

Thank you guys!

So its all about property appreciation.. I guess the big picture is to aim to buy cheap, under market value property - achieve rental yields which at the least break even with mortgage interest payments.. keep pushing and buying more.. 20 years down the line my net worth of all my properties is a big figure, sell and retire!!

Okay - it makes clearer sense now. I aim to save up for my first BTL property by December 2015.. so i will have plenty of time to do some research.

Any further comments welcome..


Neil Patterson

14:34 PM, 23rd July 2014, About 10 years ago

Reply to the comment left by "kelvin kaliyati" at "23/07/2014 - 14:22":

Hi Kevin,

That is exactly how most in BTL have done it 🙂

There are others that invest in the commercial environment such as building offices and buying nursing homes etc but that usually comes from originally being your profession to start with.

Ian Ringrose

16:50 PM, 23rd July 2014, About 10 years ago

Hi Kelvin,

On average I make more than £100 profit per month from rental yields on a newly brought property. However the important thing is the rents tent to INCREASE in line with earnings, therefore if earning go up only 2% a year, in 30 years time rents will have doubled. The mortgage will have remained the same or been paid off. Property values tent to also go up with earnings, and as you have a 75% LTV mortgage, you get a gain on your capital at 4 times the rate that property values increase.

But you must have enough cash in the bank that you don’t get into trouble in the mean time. Think of it like going down a wild river, you know you will hit rapids, but not when, you also know that you will get to the sea with all the rewards, but not when. So you must be able to remain sitting in the boat even when a tenant does not pay the rent, or a boiler needs replacing etc.

Being a landlord is about getting rick SLOWLY.


17:42 PM, 23rd July 2014, About 10 years ago

Hi Kelvin,

The "classic" way to build a BTL portfolio is to max out on your loan-to-value at the start, keep your head above water in income terms (i.e. rent exceeds mortgage interest and maintenance costs, and allows you to build up rainy-day reserves), and rely on long-term capital appreciation as house prices rise. Of course the more houses and less percentage debt you have in a rising market, the more opportunities you will find to remortgage and release capital for further investment, if you wish. This is how the really big portfolios were built. However, all this can come crashing down if you over-extend yourself and the housing market turns. You should also always, always retain a capital reserve in case you have a problem tenant.

I would also argue that in the early years, you can push yourself further along if you get involved in renovation, and even some new-build development as your free capital levels improve. Renovation is an excellent way to add value, and is something you can do in part yourself to keep your costs down, provided you have spare time and moderate DIY skills. Renovation is a capital-intensive business and you need to pick your properties carefully, but finding a beaten-up Victorian house in a nice street, doing it up nicely and selling into a rising market can be an excellent way to improve on your £10K a year savings rate.

Another way to push yourself on is to go into business with someone and pool your capital; ideally that someone should be involved in the building trade. You could then look to build a portfolio of income-generating long-term growth properties, pushed on by occasional renovation and new-build projects.

A good number of small builders and developers are adopting a similar strategy but starting from the new-build end: they use their skills and contacts and existing capital to renovate or build three or four houses, sell most of them to release their capital for their next projects, but retain one house per project and rent it out for long-term growth and income. Builders have seen that if they rush to sell all of their houses as soon as they are built, they may get more of their money back in the short term, but they don't gain as much benefit from all their hard work as they could, because they consistently miss out on the houses' future capital appreciation. So, instead of just rushing from project to project, with all their money tied up in each one, and with the risk that one day they will come a cropper, they make sure they always keep something back as an investment. They gradually build up a portfolio of rental properties alongside their building business, which quietly grows and eventually becomes their pension (something that small builders and tradesmen are notoriously poor at remembering to save for).

Janet Carnochan

21:03 PM, 23rd July 2014, About 10 years ago

Really research your area before you start. Try to buy local if the returns are there as the no of times you have to run to properties over small issues is immense. I wish I had researched more before I started as a thought I would buy minimum 3 bed houses, which we did to begin with but these are more expensive than 2 beds and don't command a much larger rent. In my area you can get a 5-6 % return on a 3 bed house but on a 2 bed house you can get an 8-9 % return if you are careful what you buy. Also try to buy something which you can add a little value to ie an ex council house which is very dated and someone wants a quick sale on ( someone may have died and relatives just want a quick sale ) These can be tarted up relatively cheaply and with a little elbow grease and a few cans of emulsion. They can be remortgaged 6 months later to draw a little bit of money out of. Last of all leave some money in the bank as if you spend it all that is the time when someone will take you to the cleaners. Good luck in your new venture.

Jeremy Smith

1:58 AM, 24th July 2014, About 10 years ago

Lots of good advice on here Kelvin:
-Keep a money reserve in the bank
-Make sure there's a profit margin in each property, even if rates rise.
-Be aware of ALL the costs relating to a property, and budget for unforseen ones as well.
-Look to add value to a property needing some renovation.
-etc, etc.

Best advice, I would say, is to buy yourself a house first:
As already said, most, if not all lenders will not lend for a BTL if you don't have your own house first.
...But just as importantly, is the fact that you can take a lodger, or lodgers, and get an extra £4,250 per year income with NO tax to pay, you don't even have to put it on your tax return !!
If you buy a property for yourself that needs some work, then after you've made some improvements, you might be able to increase your personal mortgage to add further funds for your first proper BTL property deposit.
With your first house, you will learn all the things you need to look out for when being a home owner, and all the things you need to fix for your tenants, since they usually don't have a clue, or expect you to do it anyway.

The very best of luck to you...
...One step at a time, don't try to run before you can walk, you might stumble or worse, fall flat on your face.

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