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  • Property-a-holics

    Are the first three houses the hardest?

    Hi Johnathan ,
    Brilliant post , would you still use 85%if you was still buying today.
    Thanks
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    Thank you

    Yes in principle 85% feels comfortable as it gives a healthy 15% error margin 

    Alas I would have to look carefully at Sec 24 and how that would effect that strategy

    So I would look at the prevailing tax structure and get that right before going 85%

    85% borrowing is good if I can offset that as a legitimate business cost

    That is where the government has entered the room and attempted to spoil the party  for some

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    Jonathan Clarke. http://www.buytoletmk.com


    Hi Johnathan,
    We are buying in ltd company, due to having another Ltd company.
    So I was thinking of just using deposits of 20% would be able to grow the portfolio quicker we have two in the company at the min.
    Some in personal names we have been taking 45,000 each. So company route with being able to transfer deposits from company to property company.
    Thanks
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    Yes Ltd is a route many are taking to negate S24

    But extracting cash then adds other layers of consideration

    There are also some LLP structures and various hybrid structures popping up.

    And then there is what the Gov may do in the future to consider as well

    So much of this is above my pay grade and in any case individual to the persons other finances

    My personal concern  is not to get inextricably linked within a complex tax structure or a specialist company which employs a complex tax structure where there seems to be little wriggle room to exit with inexpensive ease. If I don`t understand the basics of a tax structure it makes me worry as I rely on the company employing it to give me answers . They only have to say -  ooh as a result of amendment xyz you now should be doing this and that will be another 10K please to sort it all out for you.

    In a perhaps perverse logic of mine I at the moment prefer to pay my normal agreeable £800 pa  to my own accountant and the other 9.2K (if needs be) to HMRC . I then would go  and  buy 1 or 2 properties cash so the rent could cover that extra  bill. So those properties  are basically funding the tax man . That leaves my existing cash flow on the others in the portfolio roughly at where it was before . A proportion of my  cash reserves are used up yes but the cash flow coming in each month is sent to reinforce that stash so I sleep easy

    I currently have a holiday flat which i don`t holiday in but pays for my holidays

    I used to have a university flat in a town where there is no university but it pays for daughters fees

    I also have 2 tax flats now which i consider are owned by HMRC not me

    The deal is they all take the cash flow on them every year and I just take the CG at the end

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    Jonathan Clarke. http://www.buytoletmk.com


    Hi Johnathan ,

    We have two business one is for property and one is electrical contractor, so deposits come from the electrical company then transfer to property company we haven’t done any schemes I wouldn’t want to.
    I like to do everything correct and wouldn’t entertain any tax schemes as you say you never know when it can bite you.
    We always buy with 25% , but just thinking cash is king and could we get away with the 20% deposit rather than 25% just so we have more cash in bank that’s all.
    Was just seeing what you thought of 20% deposit thanks
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    How many BTL mortgage deals are out there with 20% deposits?

    I thought 25% for most BTLs was the minimum?

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    Hi I’ve only ever bought once with 20% deposit I have always bought with 25% due to better interest rates , but just read johnthans post and thought if I can use just 20% then it’s a thought.
    There Used to be mortgages with 20% but not  looked as always buy with 25%.
    I’ll ring my mortgage broker tomorrow to see if they still do this or not.

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    For me, 

    From #1 to #2, it took 9 years,

    From #2 to #3, it took 4 years,

    From #3 to #4, it took 9 months,

    I am becoming wiser, more efficient, and more confident. 

    I think the early years, the growth was purely funded by myself. As it expanded, the growth was funded by a mix of myself and the portfolio. I believe there will come a point where the portfolio can fund it's own growth and from there it can compound.

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    Yes, the first three are the hardest.

    I completed on my third in January and it has been real graft to get to this point, in terms of physically by completing refurbs myself to save money and mentally in terms of learning how to be a landlord.

    But now I can see the future direction, money is building up and the hard work is beginning to pay off, little treats here and there and a pot of cash ready for the next deposit from monthly cash flow and a couple of remortgages.

    Keep working hard to get to the three.

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    How does one scale up IE buy more property? I have 3 rented out, all with about 65%-75%LTV. I cant do further borrowings, certainly not enough, for a deposit for a 4th property. Are there any avenues I can explore to expand? My job income is fairly low. Thank you

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