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  • Debt & Negative Equity

    Can you lose a fortune in BTL?

    There is a thread on here asking if you can make a fortune from BTL.


    I think the opposite question should be asked.

    Property is a high value asset, so if things go wrong, costs and financial loss can spiral out of control very quickly.

    I don't think this is mentioned enough - too much emphasis on how much money you can make (even with little knowledge or experience) not how much money you can lose if you get it wrong.

    What different ways can you lose money through BTL ... obvious ones are rogue tenant, property damage, buying poorly with negative equity and negative cash flow ... but I am sure there are more ...


    I think changes in legislation and failure to comply should score high.


    Gosh yes good question - the list is endless

    In no particular order

    Buy badly,
    bad tenants ,
    no rent ,
    tenants cause damage , 
    voids ,
    floods ,
    fire ,
    wind blows down fences, 
    service charges leap higher,
    major works surprises ,
    damp ,
    rewires ,
    accidents ,
    CPO`s ,
    rental demand drops as supply exceeds demand,
    ripped off by LA / maintenance people,
    bad neighbours,
    roof leaks ,
    boiler goes ,
    replace kitchen / bathrooms ,
    carpets ,
    redecorate ,
    sewage from mains backs up to yours,
    murder in the street ,
    crime rockets,
    lender recalls mortgage,
    forget to protect deposit so 3 x that for fine ,
    council comes after you with HHSRS reports,
    forget gas certs massive fine ,
    risk of jail -  ignorance of existing or new legislation ,
    tax and more tax ,
    SDLT rises,
    PRA strangles you,
    divorce ,
    ID fraud,
    threatened ,
    carbon monoxide poisoning ,
    legionaries ,
    radon gas ,
    government chaos,
    shower pump goes,
    vermin, rats mice squirrels ,
    bed bugs ,
    wasp nests,
    overhanging trees ,
    tenants slips and sues you ,
    accountancy errors,
    rip off training courses ,
    rip off property sourcers,
    inflated rents luring you in ,
    valuers down valuing, 
    break a leg,
    negativity taking hold ,
    low self esteem ,
    fear of success

    Phew!   there will be loads more . I think on balance I prefer the other thread.


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

    Any business can lose money - a positive cash flow is life blood of any business

    In short if you can’t pay your debt you will go under

    You are more at risk when you own a couple of properties in my opinion

    There may be times when you start you have to support your business if it lacks cashflow for all the reasons JC has outlined ... and a few more.


    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Registering the properties in joint names with a partner who turns out to be evil,  and spends the next five years fabricating a fantasy story about her financial input and trying to bankrupt you to get her share.   My contribution to deposits £106k.   Her contribution £6k.  I won.

    Keep meticulous records.


    Indeed. The legal bill came in at about £15k in the end.  But it was worth every penny.


    Many  Landlords will lose everything they own because of S24 but i guess most are not aware of the fact.

    For  landlords who kept remortgaging to release equity leaving them highly geared and their turnover now pushes them into being a higher rate tax payer  (due to S24 )they may now be technically insolvent as their tax bills will be more than their profit and if they sell they will not have sufficient funds to pay the CGT bills

    So yes you can most definitely lose with BTL as you can with any other business

    Unfortunately, HMRC don't IVAs only Bankruptcy when you are unable to pay them


    This topic is great timing for our new themed week looking at Business Risk Mitigation for landlords:

    Launch of "Business Risk Mitigation Week"