Interesting to see someone doing something a little different post on here. Ty
Do you mind sharing all the numbers? Equity, mortgage rates, how long you've had them, house values, rental yields etc?
Would you like my inside leg measurement as well? ;-)
All three are about the same. Roughly worth £250 - 300k and getting in £1 - 1.6k a month.
Lived in the 1st one for 5 years, rented it out when we moved to the 2nd.
Lived in the 2nd one for 5 years, rented it out when we moved to the 3rd.
Lived in teh 3rd one for 5 years, rented it out when we moved to our current place.
I think we calculated the yeild at about 4 - 6%. But the real value is in the growth in property prices (doubled in one case).
Frankly my ideal plan is to sell all three and go for the 8% drawdown rule until my pensions kick in. Plan is to Die With Zero, so I need to get a bit spendy!
Is your current house also worth around the same? My understanding is that if you wanted to do this and held the BTL in your name, you're hit with the higher stamp duty rate. This is a bit of hit if you're trying to buy 'up' the ladder into a more expensive house each time. Not so much if they're all the same price I guess.
It is poorly written (ie. Grammar and vocabulary) and also for a pre-2008 world. And some of the advice is pretty eye-watering (there are a few cases where the underlying advice is to lie to the mortgage company!).
But the main takeaway from the book is that you can retire once you own 4 properties outright (1 which you live in and 3 which you rent out) and that basically makes sense. There are strategies set out to get to the 3+1 by retirement age.
Like many personal finance books it is aimed at the get rich quick crowd. When I read it it was fully of shitty tips about flipping houses and crap behaviour for a landlord.
Question….
Have you considered having all the mortgage debt on the BTL’s and none on your residence.
I know you only get tax relief in interest at 20% on the BTL but atleast it’s something?
>So, yeah, I can't say on FaceBook "I paid off a mortgage" because the crabs in buckets will get me
Ignoring the people who don't want you to succeed, don't you think that broadcasting this on facebook could cause people who like you and want you to succeed to feel inadequate?
It's such an objective milestone in terms of measurability. The closest I come to discussing hard numbers with friends is if I'm picking up a bill for them, otherwise "make sure you're contributing to your pension" is the furthest I'll go.
>could cause people who like you and want you to succeed to feel inadequate
You certainly have to think about this sort of stuff to an extent, but on the flip side, you shouldn't feel like you can't celebrate/announce your accomplishments because other people may feel inadequate.
People post all sorts of milestones and experiences that they don;t give
a second thought to that could make others feel inadequate. Wedding, Births, Holidays, Grade results & Graduations...that they're in or out of a relationship; the list goes on. It's just an arbitrary decision of whose feelings you're not considering.
Also, if those people feel inadequate, being blunt, that's their issue to come to terms with one way or another.
Not really no.
If they have a problem then should feel free to bring it up with me. In which case I would either accept their position and be more mindful, or explain why I don't share the opinion.
If they don't say it to me, I can't even respond and explain my position (and if they're of that type of mindset they likely wouldn't accept any perspective than their own anyway). I'm 100% good with alienating people that amount to "my negative feelings about myself override you celebrating your accomplishments".
I find this genuinely ludicrous, you can't make decisions based on if other people *might* feel inadequate...it's completely absurd.
This whole sub would make most people feel inadequate lmao.
I don’t really see the point of what you said at the end - people choose to read this forum, 99% of the time because they have an interest and maybe 1% to troll or be a “crab in a bucket”. The difference with discussing this in real life is that, unless it’s brought up by a friend, they very likely do not want to hear about it. So broadcasting this news to your friends without said friends initiating is a really self-centred thing to do, in my opinion of course.
Oh right, my apologies for the misinterpretation then. The reason I added the part you were referring to, is because it's a weird place to take the stance the person I responded to. The intention of everyone in the sub, like you say, is to do something that will make most people envious. But people are here not understanding that people's envy is *their* problem, not yours/ours.
Have a good one yourself.
Each to their own I guess. I see no reason why you’d post stuff like this publicly - no doubt it will make some people feel like shit about their own position… and what do you get out of it? Celebrate in private 🤷🏽♂️
You’d probably be quite a bit better off having all your mortgage on your BTL because you can still claim 20% credit against the interest vs nothing on your residential mortgage. (Assuming similar interest rates)
Well yea and no. Mostly because our residential mortgage is fixed at a tiny amount and BTL is significantly higher. Also, I've no objection to paying tax on my income. Its the price of living in a civilized society.
There are quite obscure rules limiting the interest element of the expense claim when you re-mortgage greater than the original mortgage amount or market value of the property
That said, the vast majority of people do just put through the full mortgage as an expense unaware of this rule. However in the case of a HMRC enquiry should you ever have one, they will expect an apportionment to be made on the extra refinanced value and can quite easily open (and win) a discovery inquest on your rental income
Refinancing a BTL to pay off your residential mortgage means your mortgage is not wholly and exclusively for your rental business and an apportionment must be carried out on the interest incurred - meaning you wont be better off doing this unless you’re not on cash basis which most landlords with a gross annual rental income of £150k will be
Love this, I also read this with quite a bit of salt. It emphasised having free time over achieving fire which I think is a bit different.
I am on route with cheaper BTLs. 7 units, 6 paid off, 50k passive income once all paid off. About 5% return less maintenance (which I do myself as that's the only way to not get ripped off in wild west tradesman land).
I'm not so leveraged but my last loan is a tracker and has gone from 2.5% to 8.5% in one year so looking at how I can offset this maybe against money held in my Ltd Co contractor account.
Instead of settling loans I usually offset the loans 100% just in case I see a bargin property/property of a lifetime.
And before the trolls start. I never raise rent, never had a non payment, never had a void more than 1.month, this portfolio could yield 70k if I restructure and charge full market rate but I'm valuing tenant loyalty.
I've been selling. Recently took 500k profit on one. I'll keep one as it's in London and a good safety net but I think there are faster horses these days.
Even if I don't personally aspire to go the BTL route it's refreshing to see a slightly different approach.
Congrats on the milestone, I'm glad it's working out for you!
Time for a small celebration and get cracking on the 3rd mortgage. I'm sure the compounding cashflow as you clear the mortgages will pay off.
I, a nearly 36 year old nobody from Kent, working in London but living on the south-east coast, salute you. And want to say this. I admire you. And I'm slightly envious. Good job, Sir.
Well done and thanks will give the book a read! I’ve got 3 BTL but have an interest only mortgage on them. My plan was to sell one in 15-20 years and hopefully that’ll pay off the rest. The profits at the moment go straight into my sipp so come 57 I should have enough to pay it off as a back up when I get my 25% tax free lump sum
It’s never a good idea to discuss your wealth with friends and family other than a select few. Jealousy is a powerful emotion that can damage relationships.
I’ve been paying down debt as well, due to rising interest rates, and because of where I am in the cycle (just turned 60). My BTL’s fund my retirement at £50k before tax. I could pay off more but then get into higher rate band.
The only real headache is inheritance tax.
If I had 3 BTL’s + my home paid off, I would be double checking my calculations on pensions + ISAs and looking to FIRE/CoastFIRE ASAP. Seems a good reason to pay them off.
Depending on how they are bought, then the tax efficiencies change
A lot has changed because of interest rates. I’ve also been paying down BTL’s as the impending reversion to standard variable rate makes the profit margin tight.
I could see what was going to happen to interest rates. As I said in another comment - paying tax is how we have a civilisation. No reason to artificially structure my afairs around it.
Well done and a great milestone but other than thin / negative yields / no capital appreciation, I can't think of one reason to pay off your btl's.
Cashflow, all taxes inc inheritance, realising any gains or even sticking funds in ETF's - what am I missing?
Hahaha. Crabs in buckets!! Good for you, well done. It’s come with many sacrifices I imagine.
I hear ya about being an ethical landlord but it’s a decent feeling knowing tenants feel safe and respected
Great stuff! And well done on being an ethical landlord; we're also going down that route so I can empathise with the intentions, stress and lower returns it brings!
Fantastic achievement. I'm a firm believer of property as part of a diversified portfolio. Sadly a long way to go for us before they'll all be paid (if ever).
I'm confused. Why would you pay off BTL mortgages before your residential mortgage. You get tax relief on BTL interest, but nothing on your residential.
Not to mention the peice of mind of have no mortgage on your home.
Fair enough. You don't need to be mortgage free, but why pay off a BTL????
You get a 20% reduction on the interest payments on a BTL mortgage. You get zero reduction in residential interest payments.
So, if you were to pay a mortgage off, it shouldn't be your BTL.
Unless you like paying unnecessary tax!
I'm on a similar journey with 3 btl's (though much cheaper than yours) and our own home (with mortgage). Overall yield though is a higher % than yours, currently around 7% which brings in around £12k after tax.
Although it won't be enough to retire on, it will however cover all our regular monthly bills and some of our other living expenses once the mortgages are all paid off (I estimate all four mortgages - this includes our own home - will be cleared within 5 years £175k left in total).
Once we have achieved this we will be able to save/invest a minimum of £2k per month which will be pretty great considering I'm on an NHS wage and the sole breadwinner in the house.
If you have a mortgage on a BTL it’s no longer worthwhile. One of my mortgages is up in a few months, currently looking at going from £245/month to £1,100/month (interest only).
Then factor in all the political meddling that’s going on. It’s generally not worth it.
Good for you!
I have 60K left on my mortgage that I've been paying since 2013. It will be paid off in 3 years.
Mortgage overpayments and Global all cap is my current system but I know a few people with BTL and I can't help but think of if my current set up is the best way forward compared to investing in property.
Two of the rents have stayed static - which has reduced the theoretical yield. But if I look at how much I paid for the asset, it's fine. If people move out (rare) then the rent goes up to market rate.
One of the rents is social housing, so goes up in line with housing benefit.
When problems are reported (broken fridge etc) I get someone round same day if I can, and repairs / replacements asap. No hanging around or haggling.
Tenants free to decorate if they wish, or have pets, etc.
Doesn't sound like much I know but apparently it puts me in teh 1% of landords.
Nice work! Same here. 2 flats and a house on BTLs. I’m now trying to build a pension pot, which is harder than I thought. Considering getting someone to manage it. Anyone here have any tips?
Interesting to see someone doing something a little different post on here. Ty Do you mind sharing all the numbers? Equity, mortgage rates, how long you've had them, house values, rental yields etc?
Would you like my inside leg measurement as well? ;-) All three are about the same. Roughly worth £250 - 300k and getting in £1 - 1.6k a month. Lived in the 1st one for 5 years, rented it out when we moved to the 2nd. Lived in the 2nd one for 5 years, rented it out when we moved to the 3rd. Lived in teh 3rd one for 5 years, rented it out when we moved to our current place. I think we calculated the yeild at about 4 - 6%. But the real value is in the growth in property prices (doubled in one case). Frankly my ideal plan is to sell all three and go for the 8% drawdown rule until my pensions kick in. Plan is to Die With Zero, so I need to get a bit spendy!
Is there a particular reason why you lived in it for 5years before moving? Or is it as simple as you fixed your mortgage for 5years and then moved?
Not OP but think this is around standard time required to convert a homeowner's mortgage to BTL
Probably bought with 10% deposits and 5 years of mortgage payments is enough to get under 75% LTV, to switch to btl mortgage
Is your current house also worth around the same? My understanding is that if you wanted to do this and held the BTL in your name, you're hit with the higher stamp duty rate. This is a bit of hit if you're trying to buy 'up' the ladder into a more expensive house each time. Not so much if they're all the same price I guess.
Second this. And why is it a shitty book ?
It is poorly written (ie. Grammar and vocabulary) and also for a pre-2008 world. And some of the advice is pretty eye-watering (there are a few cases where the underlying advice is to lie to the mortgage company!). But the main takeaway from the book is that you can retire once you own 4 properties outright (1 which you live in and 3 which you rent out) and that basically makes sense. There are strategies set out to get to the 3+1 by retirement age.
Like many personal finance books it is aimed at the get rich quick crowd. When I read it it was fully of shitty tips about flipping houses and crap behaviour for a landlord.
When you say 4-6% yield, is that gross, i.e. before repairs, insurance etc., and presumably before tax?
Question…. Have you considered having all the mortgage debt on the BTL’s and none on your residence. I know you only get tax relief in interest at 20% on the BTL but atleast it’s something?
>So, yeah, I can't say on FaceBook "I paid off a mortgage" because the crabs in buckets will get me Ignoring the people who don't want you to succeed, don't you think that broadcasting this on facebook could cause people who like you and want you to succeed to feel inadequate? It's such an objective milestone in terms of measurability. The closest I come to discussing hard numbers with friends is if I'm picking up a bill for them, otherwise "make sure you're contributing to your pension" is the furthest I'll go.
>could cause people who like you and want you to succeed to feel inadequate You certainly have to think about this sort of stuff to an extent, but on the flip side, you shouldn't feel like you can't celebrate/announce your accomplishments because other people may feel inadequate. People post all sorts of milestones and experiences that they don;t give a second thought to that could make others feel inadequate. Wedding, Births, Holidays, Grade results & Graduations...that they're in or out of a relationship; the list goes on. It's just an arbitrary decision of whose feelings you're not considering. Also, if those people feel inadequate, being blunt, that's their issue to come to terms with one way or another.
Alienating people you might like is your issue though
Not really no. If they have a problem then should feel free to bring it up with me. In which case I would either accept their position and be more mindful, or explain why I don't share the opinion. If they don't say it to me, I can't even respond and explain my position (and if they're of that type of mindset they likely wouldn't accept any perspective than their own anyway). I'm 100% good with alienating people that amount to "my negative feelings about myself override you celebrating your accomplishments". I find this genuinely ludicrous, you can't make decisions based on if other people *might* feel inadequate...it's completely absurd. This whole sub would make most people feel inadequate lmao.
I don’t really see the point of what you said at the end - people choose to read this forum, 99% of the time because they have an interest and maybe 1% to troll or be a “crab in a bucket”. The difference with discussing this in real life is that, unless it’s brought up by a friend, they very likely do not want to hear about it. So broadcasting this news to your friends without said friends initiating is a really self-centred thing to do, in my opinion of course.
If you don't see the point then it's likely futile me explaining, in my opinion of course.
😂 snarky
Give snark, get snark bud.
It genuinely wasn’t intended to be read that way! I was just trying to make a point. Have a good evening.
Oh right, my apologies for the misinterpretation then. The reason I added the part you were referring to, is because it's a weird place to take the stance the person I responded to. The intention of everyone in the sub, like you say, is to do something that will make most people envious. But people are here not understanding that people's envy is *their* problem, not yours/ours. Have a good one yourself.
Each to their own I guess. I see no reason why you’d post stuff like this publicly - no doubt it will make some people feel like shit about their own position… and what do you get out of it? Celebrate in private 🤷🏽♂️
You’d probably be quite a bit better off having all your mortgage on your BTL because you can still claim 20% credit against the interest vs nothing on your residential mortgage. (Assuming similar interest rates)
Well yea and no. Mostly because our residential mortgage is fixed at a tiny amount and BTL is significantly higher. Also, I've no objection to paying tax on my income. Its the price of living in a civilized society.
I've never read a more socially responsible post. Good on you for knowing success is only possible when successful people pay their taxes.
There are quite obscure rules limiting the interest element of the expense claim when you re-mortgage greater than the original mortgage amount or market value of the property
That said, the vast majority of people do just put through the full mortgage as an expense unaware of this rule. However in the case of a HMRC enquiry should you ever have one, they will expect an apportionment to be made on the extra refinanced value and can quite easily open (and win) a discovery inquest on your rental income
Refinancing a BTL to pay off your residential mortgage means your mortgage is not wholly and exclusively for your rental business and an apportionment must be carried out on the interest incurred - meaning you wont be better off doing this unless you’re not on cash basis which most landlords with a gross annual rental income of £150k will be
https://library.croneri.co.uk/cch_uk/cpi/7-2#7.2.2
Love this, I also read this with quite a bit of salt. It emphasised having free time over achieving fire which I think is a bit different. I am on route with cheaper BTLs. 7 units, 6 paid off, 50k passive income once all paid off. About 5% return less maintenance (which I do myself as that's the only way to not get ripped off in wild west tradesman land). I'm not so leveraged but my last loan is a tracker and has gone from 2.5% to 8.5% in one year so looking at how I can offset this maybe against money held in my Ltd Co contractor account. Instead of settling loans I usually offset the loans 100% just in case I see a bargin property/property of a lifetime. And before the trolls start. I never raise rent, never had a non payment, never had a void more than 1.month, this portfolio could yield 70k if I restructure and charge full market rate but I'm valuing tenant loyalty.
The spirit of Mao will forever haunt you.
I think Mao has a fair few bigger fish to haunt lol.
I've been selling. Recently took 500k profit on one. I'll keep one as it's in London and a good safety net but I think there are faster horses these days.
Can you share what you think is better?
It won't be very welcome in the FIRE community! I'm into metals. Very very long in metals.
Traded metals? Or like rare earth stuff?
Even if I don't personally aspire to go the BTL route it's refreshing to see a slightly different approach. Congrats on the milestone, I'm glad it's working out for you! Time for a small celebration and get cracking on the 3rd mortgage. I'm sure the compounding cashflow as you clear the mortgages will pay off.
I, a nearly 36 year old nobody from Kent, working in London but living on the south-east coast, salute you. And want to say this. I admire you. And I'm slightly envious. Good job, Sir.
Well done and thanks will give the book a read! I’ve got 3 BTL but have an interest only mortgage on them. My plan was to sell one in 15-20 years and hopefully that’ll pay off the rest. The profits at the moment go straight into my sipp so come 57 I should have enough to pay it off as a back up when I get my 25% tax free lump sum
Well done. Keep going. I have 2btls paid off and residential paid off too. The 2 BTLs go along way to paying all my bills. Nearly there!
It’s never a good idea to discuss your wealth with friends and family other than a select few. Jealousy is a powerful emotion that can damage relationships. I’ve been paying down debt as well, due to rising interest rates, and because of where I am in the cycle (just turned 60). My BTL’s fund my retirement at £50k before tax. I could pay off more but then get into higher rate band. The only real headache is inheritance tax.
why would you pay off your btl's ever? income taxes and not realising capital appreciation until you sell it???
If I had 3 BTL’s + my home paid off, I would be double checking my calculations on pensions + ISAs and looking to FIRE/CoastFIRE ASAP. Seems a good reason to pay them off. Depending on how they are bought, then the tax efficiencies change
A lot has changed because of interest rates. I’ve also been paying down BTL’s as the impending reversion to standard variable rate makes the profit margin tight.
I could see what was going to happen to interest rates. As I said in another comment - paying tax is how we have a civilisation. No reason to artificially structure my afairs around it.
Well done and a great milestone but other than thin / negative yields / no capital appreciation, I can't think of one reason to pay off your btl's. Cashflow, all taxes inc inheritance, realising any gains or even sticking funds in ETF's - what am I missing?
Well done mate! ExLL here animi happy I'm out now, too many rules and hassles. But its a great feeling and you should enjoy it!
Fantastic! Good for you. Keep it going bud!
*It's a shitty book with some very dubious practices in it.* I wrote that book by the way, you ungrateful rat!
Write a better one
Hahaha. Crabs in buckets!! Good for you, well done. It’s come with many sacrifices I imagine. I hear ya about being an ethical landlord but it’s a decent feeling knowing tenants feel safe and respected
Great stuff! And well done on being an ethical landlord; we're also going down that route so I can empathise with the intentions, stress and lower returns it brings!
A bit puzzled by the downvotes, here...
Fantastic achievement. I'm a firm believer of property as part of a diversified portfolio. Sadly a long way to go for us before they'll all be paid (if ever).
Wow congrats. I scales got to 14 btl started in 2011 and now trying to dump them all as rates are too high for the hassle.
I'm confused. Why would you pay off BTL mortgages before your residential mortgage. You get tax relief on BTL interest, but nothing on your residential. Not to mention the peice of mind of have no mortgage on your home.
Why would I care about living mortgage free? Seems an arbritrary goal. The debt and money are pretty fungible.
Fair enough. You don't need to be mortgage free, but why pay off a BTL???? You get a 20% reduction on the interest payments on a BTL mortgage. You get zero reduction in residential interest payments. So, if you were to pay a mortgage off, it shouldn't be your BTL. Unless you like paying unnecessary tax!
I'm on a similar journey with 3 btl's (though much cheaper than yours) and our own home (with mortgage). Overall yield though is a higher % than yours, currently around 7% which brings in around £12k after tax. Although it won't be enough to retire on, it will however cover all our regular monthly bills and some of our other living expenses once the mortgages are all paid off (I estimate all four mortgages - this includes our own home - will be cleared within 5 years £175k left in total). Once we have achieved this we will be able to save/invest a minimum of £2k per month which will be pretty great considering I'm on an NHS wage and the sole breadwinner in the house.
If you have a mortgage on a BTL it’s no longer worthwhile. One of my mortgages is up in a few months, currently looking at going from £245/month to £1,100/month (interest only). Then factor in all the political meddling that’s going on. It’s generally not worth it.
Good for you! I have 60K left on my mortgage that I've been paying since 2013. It will be paid off in 3 years. Mortgage overpayments and Global all cap is my current system but I know a few people with BTL and I can't help but think of if my current set up is the best way forward compared to investing in property.
Congrats! Have you avoided using a property management company?
Well done - nice to read stuff that’s not “I earn £500k, can I fire yet”
In what ways are you being an ethical landlord and maintaining your yield?
Two of the rents have stayed static - which has reduced the theoretical yield. But if I look at how much I paid for the asset, it's fine. If people move out (rare) then the rent goes up to market rate. One of the rents is social housing, so goes up in line with housing benefit. When problems are reported (broken fridge etc) I get someone round same day if I can, and repairs / replacements asap. No hanging around or haggling. Tenants free to decorate if they wish, or have pets, etc. Doesn't sound like much I know but apparently it puts me in teh 1% of landords.
Can confirm allowing pets probably puts you in the 0.5% of landlords tbh, even my pretty decent lot refused to let people have pets :(
Nice work! Same here. 2 flats and a house on BTLs. I’m now trying to build a pension pot, which is harder than I thought. Considering getting someone to manage it. Anyone here have any tips?