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What if your existing rental property portfolio could generate up to 50% more cashflow, without increasing rents or buying more property?
Many landlords have been telling us recently they “don’t know what to do for the best“.
The reasons most often cited are; increasing compliance, taxation, and thoughts about retirement, succession planning and inheritance tax. Others are simply seeking clarity on how and whether they should restructure, start selling properties, continue expanding or invest elsewhere.
If any of this resonates with you, we invite you to arrange a conversation with a Property118 consultant, shaped entirely around your portfolio, your objectives, and the decisions you’re already weighing.
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A conversation worth having?
If you are weighing up your own strategy, it is worth stepping back and reviewing how everything fits together.
These conversations are typically most useful for landlords with established portfolios and relatively modest borrowing who are beginning to think about how their assets will serve them over the next phase.
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Member Since January 2011 - Comments: 12232 - Articles: 1441
9:11 AM, 30th June 2026, About 3 weeks ago
I received an interesting email from a reader of this article today and thought it would be worth sharing the Q&A with a wider audience.
THE MAIN QUESTION (extracted from a much longer email)
I read your blog with interest and agree with all that the Landlord crusader says. It is unfortunate that much of this was not put publicly to our politicians as the RRB was being drafted.
Turning to your article on cash flow. I think the big question mark in your reasoning is to exclude capital appreciation in your argument.
Let me give you an example.I bought a six bed student HMO debt free in 2000 for 128k.The market value is now 700k, and the annual gross income last year was 40k with a net surplus of 31k. I’m very happy with my net return on capital invested of around 20%, and gain of some 570k equivalent to over 20k per annum.
This has been a lucky bet, but I’m happy to sit on what I’ve got. Would you disagree?
Perhaps my point is that “time in” is a big factor, and that the is a vast difference and much in between when compared with a recently bought highly geared 2 bed student property.
My response to “THE MAIN QUESTION”
I think we probably agree on more than it might first appear.
Your HMO is an excellent example of why I deliberately framed the article around cashflow return on equity rather than total investment return. There is no question that a property purchased for £128,000 and now worth around £700,000 has produced an exceptional overall return. Very few other investments would have delivered the same combination of income and capital growth over that period.
The question I was trying to encourage landlords to ask themselves is slightly different.
Would you choose to invest £700,000 today into that particular asset if you were starting from scratch? That is a much harder question than asking whether it has been a successful investment over the past twenty-five years.
Your figures actually illustrate the distinction rather well. A net cashflow of around £31,000 on £700,000 of equity represents a cashflow return of roughly 4.4% before allowing for future capital appreciation. Whether that is attractive depends entirely on your own objectives, attitude to risk, age, tax position and what alternative opportunities are available to you. An example alternative might be a highly rated institutional loan note paying a fixed annual coupon of 10%. Arguably less operational risk, less compliance and less day-to-day management
If, like you, someone has little or no debt, enjoys managing the property and expects further long-term capital growth, keeping it may well be the right decision. My article certainly wasn’t suggesting that every landlord with a modest cashflow return should sell.
What I was trying to challenge is the mindset that many landlords have developed of never reassessing whether their equity is working hard enough. A property can be a brilliant historic investment whilst simultaneously no longer being the best use of the capital now locked inside it. One alternative approach to selling, which would trigger Capital Gains Tax, is to retain the asset, sensibly leverage it with a mortgage costing say 6% per annum and reinvest the cash released to produce a return of say 10% per annum. This strategy is known as arbitrage. I wrote about it here: Interest rate arbitrage explained
I also agree entirely that “time in the market” has been one of the biggest drivers of wealth for landlords over the last thirty years. Unfortunately, the environment facing someone buying today is very different from the one that existed in 2000. Higher acquisition costs, higher borrowing costs, more regulation and a less favourable tax regime mean newer investors are unlikely to experience the same combination of income and capital appreciation that many of us enjoyed.