Is this the way you'd do it? (Landlords)

[DomBertone]

Another topic for landlords...apologies!

Currently have a BTL, and we want another. We have enough equity in the current BTL to release 40-50k ish which is enough to put down on a second. Then once we have two under our belt we will look to move into a house ourselves (time frame of 1-2 years, just saving, using no equity this time, no rush at all.), meaning the place we are in now also eventually becomes a BTL, making 3 and a home. My plan was to keep repayments up high to pay them all off quicker, this leaves a very minimal profit each year but I'm looking at the end game, no mortgages and three incomes (and the option to perhaps buy more). But would you do it that way? I just want to check that although this may not be a traditional way to do it, it's a way that makes sense still? How did you start and what did you do differently when building a portfolio?

Thanks

[DomBertone]

Hi all, thank you for your suggestions. I'm on mobile so sorry for the poor format and lack of quoting, but to try and answer some of these thoughts:

I had worked out that the properties we were looking at would return from 45k around 8% (after costs) a year without considering any capital appreciation. For that reason I wrongly thought it was a much better return than a stocks and share ISA, I will be looking into that as a possibility too now.

In regards to releasing equity, we have 53k left on a 140k flat, and we wouldn't be doing anything until next March, I don't think taking it to 90k is that much of a push? I think by then we would know (as well as you can) if releasing equity is a good idea, but without doing it I can't see a way forward to creating a healthier income anyway.

I mentioned wanting to do it for down the line, retirement...I do...but I also want to reap the benefits earlier. I know you can't have it all but generally speaking I want to create a passive income great enough to one day be able to lessen my actual working hours. We currently save a good amount. And so any void periods don't worry us, neither does taking out the extra equity, I'm certain with rates where they currently are (yes I know they will rise one day) the money is best released and used elsewhere.

I also wondered the landlords who go interest only, what's their end game? What do you do when you sell? Or do you not sell? Can't see a way that replicates that income once you've had to clear your mortgages...maybe I need a workshop!

I think in short, we are ready for a little risk because we really want to try and improve our situation and we aren't getting any younger, I'm just questioning the best way forward, you've all made some great points, thanks.

Edited by DomBertone on Thursday 21st July 21:23

[DomBertone]

Thanks all, especially your insight drainbrain, a really nice positive read.

Rufus sorry I missed your earlier reply, I guess paying down the current BTL wouldn't feel like enough of a step forward, as we already do overpay it. I think the idea of growing a portfolio is what excites us right now. Agree it would be nice to have more equity but to get to that stage I first need the properties We could wait until we have saved ourselves but we aren't getting any younger and property prices could easily get away from us (or not-who knows) if we don't look soon.

WelshBeef...no, absolutely haven't checked any of this is actually possible! How's that for honesty reason for that being we won't be doing anything until March when the only debt we will have are the mortgages. If the computer says no then so be it and back to the drawing board. We are currently over 150% cover of the mortgage though, although I haven't spoke to the providers I have checked current requirements to the best of my knowledge and all seems fine. I'm merely exploring options at this stage.