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Friday 24 October 2014

EARN £20,000.00 per year


 A couple came into the office the other day talking about buying to let and how much money you needed!  After a bit of investigation it transpired that they were soon to complete on a family house upcountry and had £300,000.00 to invest.  We could buy one house as a  buy to let it was suggested!
Was this going to be a significant part of their income I asked?   Apparently yes! How could you maximise your return then.
Scenario 1      Buy a property for £300k and let it out.  Rental return £1000 per month.  Return on investment  4%  or £12000 per year
Scenario 2      Buy four buy to lets at £150k each with a 50% to 60% mortgage on each.  (The best mortgage rates are on loans less than 60% LTV
Each lets for £700 per month with mortgage costs of £200 per month at 3%
Total income would be 33600.00 less mortgage costs of £6750 leaves a profit of £26850 or 8.95% Assume agents costs, insurance and maintenance leaves a net profit in excess of £20k per year which is still 6.6% .   Find a good agent and forget about it!
This is called leveraging or ‘using opm’ (other peoples money) and can provide a way to produce an income far and away in excess of what you could expect using all your own money.   Landlords in this country have been doing this for years and many have become very successful with this strategy.
If you have ideas for property investment and would like a second opinion please stop by for a chat- Martin and Co top of St Thomas Street, Weymouth or call us on 01305 775504



Philip Wakefield    Property File 7

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