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  • Buy-to-Let

    Have I achieved a good return on investment?



    Hello everyone, just checking with knowledgeable landlords here for your expert opinion. In 2015 bought a first BTL for £305K including all cost. Mortgage was £168K.

    This year, remortgaged that property, bought another for £410K, including higher SDLT, legal, product fees etc.

    In total two 3 bed houses just outside of M25, mortgage £471K, equity £289K. Initial and latest investment total around £220K. Rental income yearly gross £31200.

    After all running cost, finance, tax, void etc expecting net rental profit around £15600.

    Do you think it is a good ROI?

    Your opinion and next move, if any, will be highly appreciated.

    Thank you.

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    is the total amount you have invested £220k including the deposit you put down on the properties? and is the figure of £4711k the outstanding amount on both mortgages? have you had both houses valued so that you know that the amount of equity you state is correct?



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    Yes, £220K total investment from my pocket so far.

    total mortgage both properties £471K.

    Houses valued for remortgage/mortgage purposes £400K each.

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    Are you a high rate taxpayer - and have you allowed for Cl.24?

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    I was about to ask the same question if he has not thought about S24 he should

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    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.

    No and will not be in near future. Wife is not working and will not be so minimum S24 effect, hopefully.

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    Are the Propertys in joint names

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    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.

    Yes, both are jointly held, so 50/50 for tax purpose.

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    So your other gross income (earnings plus savings etc) is less than say £38000 pa?

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    Earned income + gross rental income = £45K

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    "Good" or "bad" ROI is subjective but your figures will generally be considered bad as it fails the PRA stress test, meaning you will not be allowed any mortgage when trying to purchase your 4th property. Your total gross income has to be at least £38000 pa to qualify for mortgage once you are a portfolio landlord with the 2 property examples provided. So unless you change your strategy drastically, you will be limited to 3 BTLs based on current mortgage lending rules.

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