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  • Buy-to-Let

    Critique my portfolio to facilitate growth

    Hello all,

    I'm looking for some advice, I'm 25 and I've currently got a portfolio of 3 properties. My strategy this year was to carry on buying, but after having a meeting with my accountant he said perhaps it's worth me slowing down to see what changes Brexit could bring.

    Everyone seems to have slowed down and I personally think this is a great time to try and take advantage of a slower market.

    Anyway, below is my current portfolio, if you need any further info please drop me a message - 

    Property 1 

    Purchased for £214,750

    Outstanding mortgage £140,000

    Current value £250-£260

    Net PCM - £525

    Property 2

    Purchased for £92,500

    Outstanding mortgage £75,500 (Have refinanced)

    Current value £100,00

    Net PCM - £226

    Property 3

    Purchased for £92,500

    Outstanding mortgage £69,375

    Current value £100,000

    Net PCM - £330

    My plan was to remortgage property 1 and pull some equity out to buy a further 1 or 2 investment properties.

    I've worked really hard to build this portfolio and I don't want to ruin it all by putting a foot wrong somewhere. I could potentially pull 50k out of property 1 and add it to my savings, to have a total of £100k ready to put towards new investments.

    Do you think I'm over leveraged? Do you think my strategy has holes in it? I would love to hear other investors opinions.

    I'm not in a massively high paying job, I earn over £25k but under £40k. I still live with my parents (believe it or not!) so my outgoings are fairly minimal, giving me a good chance to save as much as I can.

    There are 4 main strategies I see as options -

    1 - Buy 3/4 £60-£80k at 75% LTV properties up north, Manchester, Sheffield, Liverpool etc, this should cashflow around £1000-£1200 PCM. I would also expect to see some good capital growth here

    2 - Buy 1 HMO property for £250-£300k at 75% LTV, this should also cashflow a similar amount

    3 - Pull out a smaller amount of equity from property 1 and fix it on a 5 year deal. Add this money to my savings and put down a 35% deposit on a property, this should make about £675-£750 PCM. Purchase the new property on a 5 year fix and then aggressively pay the property down by £7500PA for 5 years to reduce my overall debt

    4 - Fix Property 1 on a 5 year deal, sit tight and do nothing. This is the answer I fear the most, although I want to play things safe and not put a foot wrong, I also understand that to develop myself financially I need to take a certain amount of risk to increase my earnings.

    I'm currently on option 3, as it increases my cashflow and also mitigates risk as much as possible.

    Which one would you choose and why?

    I welcome any advice and opinions from other investors.

    Thanks for reading.



    Hi James,

    Well done for what you have achieved so far.  You sound like a very sensible young man with a good head on your shoulders, and this bodes well for your future property career!

    There are additional options you that you may have not thought of:

    1.  Release equity from property 1 and use that a deposit on your own home - perhaps somewhere that needs facelift refurbishment.  You could undertake this work over time, then, later down the line, change this property onto a BTL mortgage, release equity, buy another residence, and repeat.

    See - Using residence as stepping stone to BTL

    2.  Release equity from property 1 and use it to refurb/develop your existing stock to increase value and lock in further equity as a buffer going forwards.  This may also enable you to increase rents if you were able to create another bedroom in the loft for instance. 

    When things become clearer, you will be able to release equity from these improved properties to start growing again.

    I would advise against options 1 and 2 as they are both very high risk imho.

    If any of the above properties are flats, I would advise that you consider a house for your next purchase and terraced houses in good streets in good school catchment areas are unlikely to go out of fashion despite brexit.

    3.  One really clever strategy is to buy a property which is unmortgageable, using cash/bridging finance, bring it up to mortgageable standards, and then redeem your cash/bridging loan with a BTL mortgage to recycle your cash.  Have a look at EPC improvement strategy - Brightstar .  This helps you leverage your cash to the max. and build in equity through improvements while adding to your portfolio.

    I will give it some further thought, but those were my initial ones.  Hope that helps and I wish you every success in moving forwards in 2019!

    Further reading:

    Growing a property portfolio - resources 

    Give me 3 reasons to remain invested in BTL 

    Is BTL dead or am I just late to the party?


    Hi Vanessa,

    Thank you for your reply. Perhaps you are right, it may be time to finally flee the nest and see how well I fly! I like the concept of adding value to a property that I'm living in, not only from a tax perspective but also I like the thought of making a house a home. I also have considered the tax benefits of letting a room in a property you own, I believe the first £7500 is tax free?

    There's still lots of thinking going on in my head and the truth is, ultimately, these difficult decisions are down to me and me alone.

    I'm relatively new here but I look forward to building relationships with other Tribesmen&women!

    Thanks again,



    Lots of variables and unknowns but .... Are they  bought within a company ?

    1 - If you dont know these areas well you could get stung

    2 - Diversification into a specialised market has risks . Do you self manage ?

    3 - I dont like the concept of borrowing to invest only to then start paying it down the very next day - Its counter intuitive. You are 25 so  look to expand now and pay down in 25 years time when inflation will have  eroded much of the value of your debt

    4- Nothing wrong with sitting tight. You have done well so far,  there is no rush

    Your accountant is your accountant .

    I`m sure they mean well but you are the entrepreneur and no one knows the brexit outcome

    In the last 20 years someone has expressed doubt in every one of those years that it may not be a good time for me to buy

    If I listened to them i would have zero properties. 

    Listen to everyone of course but check why they are saying that and what their credentials are

    You are not over leveraged but you havent got much wriggle room either

    Much as you dont want to hear it  - I would steer towards Option 4 for now


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

    Hi Jonathan,

    Thanks for your reply.

    Out of interest, if I did go with option 4, would you take money out of the refinancing or would you leave it how it is and just lock it down for 5 years? I'm just thinking, having a large lump of cash in an uncertain market isn't the worst idea as there could be plenty of opportunity.

    I understand what you're saying re using borrowed money to pay down debt, it doesn't really work, unless one % far outweighs the other, in this case it doesn't.

    Thanks for your time.


    Hi - 50/50 I guess

    I would be tempted to get it out now as if not and you are locked in then a lot can happen in 5 years

    Or look at products where you can lock it in but also take out a further advance. I had one of those once

    Or look at an offset mortgage perhaps so take it out when you need it with no penalties


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

    Hi James,

    Great going and keep the trend going of course be cautious but don’t stop.

    if I am in your position, I would remortgage 1st property for 5 year fix but try to find the deal with no ERC so things substantially change and want to remortgage or want to convert house into two flats etc, I will able to do it without paying ERC.

    The first option I will opt for which Vanessa has suggested but would try to maximise the benefit of first time buyer where possible. No Stamp duty to pay upto £300k which I would maximise or govt. deposit bonuses on savings.

    All the best for whatever you decide.

    Viral Shah


    Hi Viral,

    Thanks for the reply.

    It is to my understanding that as I already own property I would be liable to pay the additional fees on stamp duty, I also believe that being a homeowner makes me ineligible for any of the government schemes or deposit bonuses.

    I would like clarification re the stamp duty as this would be a huge cost should I consider buying my own property. The last time I checked I'm pretty sure I would have to pay stamp.



    I won't critique your portfolio, I'll leave that to those with more experience.

    I would recommend you take financial advice and tax advice, if you haven't already done so.


    Thanks Gary.

    I have taken professional advice, I was just merely looking for opinions from likeminded people.



    Hopefully the professional advice included guidance on PRA requirements for portfolio landlords (4 or more rental properties) and advice on managing S24 tax on mortgage interest relief. I'm assuming you are already a higher rate tax payer, or about to become one, based on income, not profit.

    I've linked the Property Income Manual for Rent a Room and the HMRC guidance for First Time Buyers to assist with your other questions.