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  • Buy-to-Let

    Valuation of a portfolio held in a company

    I'm saying the value of the company is assets less debts. If you think the value of the houses is going to drop to the same as your mortgages then yes, your company will be worthless.

    Do you think owning the property in your company adds significant value? The only extra value I can see is the reduced stamp duty. In my opinion, the current rental income is pretty meaningless as the tenants can leave when their contracts are up and the new owner has to find new tenants. Would you pay more for a house with a tenant in situ?

    If I was looking to buy your company, I would be looking for a discount on the total value as you will need to find someone with sufficient cash to fund the purchase - they won't be able to get a mortgage on the properties - and so will not be that common.


    To be honest, your question came across as something from a newbie, not someone who has 13 years experience. I'm not the only one who thought so as dislexic_landlord has picked it out in the post about tyre kickers. Did you manage to get a higher valuation on the property which was sold for £48.5K a month before you were going to buy it for £63.5K and were struggling to get a mortgage?

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    I am glad You picked up on what I saw ??

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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.

    Sorry, don't know which property you are referring to.

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    As you will by now have realised there is no straightforward answer to the question about future values.  There are, however, things you can do to try and stack the odds in favour of a premium being paid.

    Make sure that the properties are on good order and repairs/improvements kept up to date;

    Make sure that all paperwork is in good order - especially compliance (gas, EPCs, etc.);

    Keep good records of everything that happens - all repairs, tenant contact, tenancy agreements and (especially) accounts;

    If you actually manage the portfolio like a business then you are more likely to be able to sell.

    If you run the portfolio as a limited company, you can sell the company and the buyer will pay less stamp duty than if you had sold the individual houses.  The stamp duty that applies will be on the share sale and the actual value of the houses is not relevant.

    The main issue for any sale is whether any loans are transferable.  Although borrowing will be in the company's name, lenders will tie directors up like kippers with Personal Guarantees; this may make it harder to do a straight transfer once the company is sold.

    The problem with building value on portfolios is that entry costs are (comparatively) low for new entrants.  The main cost is the house and houses are, of course, freely available on the open market.  Therefore most investors will be reluctant to pay any premium for houses which are already let - their fallback price if they have to sell will be the vacant possession value.  Nevertheless there may be some value in a well managed portfolio which has a decent track record, especially if the houses are in the same area.

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