18:37 PM, 15th February 2015, About 7 years ago 9
Firstly, can I say what a great website this is – full of really useful content and discussion, especially for us newbie’s.
Over the last two years I have read most of the articles at least twice! I am really keen to hear your views on our current situation and get your best advice…
Our objective is (to be in a position) to retire in 15-18 yrs with modest property income of circa £25-30k p.a.
In the last 2 years, we have purchased x5 houses at a total purchase price of £436k. Mortgages are all interest only and properties are 2-3 bed houses targeting mainly the young/professional market.
Total outstanding mortgages is £322,625.
Total mortgage cost pcm is £1,116.
Total rental income pcm is £2,675.
Ave gross yield 7.35% ranging from 6.86% to 8.14% across the portfolio.
I am a 40% taxpayer. My partner is a low-rate tax-payer. The houses are in both names.
Two properties are managed, three are self-managed.
I invest into the portfolio by using personal income to pay for tax/maintenance bills/void periods where possible. I have used spare funds for deposits and have not re-mortgaged.
So far, we have accumulated £7k in a bank account from the property overpayments (profit) – as we have just completed on 3 properties (now are rented out). We have £55k additional savings. £15k personal loan. I expect to have £15k from shares in next tax year. Our own house is worth approx. £400k, £95k mortgage outstanding, interest free approx. £100 pcm, 17 years left outstanding. No significant funds in pensions.
Strategy options – what’s your vote and best advice?:
1. Do nothing – Let the overpayments build-up in an ISA account (however the overall cost of interest over the term would mean the overpayments would not pay-off the mortgages in 15 years’ time). Payoff personal loan with shares. Revisit the situation when have more savings from personal income.
2. Consolidate – Pay-off existing properties over next 15 years with the overpayments instead of putting into an ISA (this would increase tax position and require my current contribution from income for repairs & maintenance etc. however, the drip affect would enable 15 yr pay-off plan – subject to the current interest rates)
3. As above but pay-off properties using snowball method (focus on paying one-off at a time – subject to mortgage conditions). Pay off our own home (but v low interest rate) or highest BTL mortgage?
4. Expand portfolio – Buy another property with share funds and keep £50k ish in savings as emergency fund.
5. Buy 2-3 additional properties in the next year, which would mean less emergency funds.
6. Expand aggressively. Keep buying for next 5 years and do not plan to pay-off all outstanding balances in 15 years time.
7. Diversify – keep the current position but save for another investment e.g. commercial property or non-property related investment (this is hard for people to comment on)
8. Any other options?
Your expert opinions would be greatly appreciated!
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