Balancing My Portfolio

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    Balancing My Portfolio

    BTL has been receiving a lot of press write-ups in the past months and there seems to be more failure stories and than success stories as we emerge from the by-gone BTL boom. Some inexperienced investors are not finding it so easy especially if they bought off-plan. I'm interested to hear how other landlords are mitigating against this risk. Are you still buying? Selling? or holding tight? Personally I'm adopting a balanced risk from my portfolio to secure the future and I wondered what you thought....

    I have three diverse properties; a city flat, a 1 bed terrace house and a 4 bedroom student let all in W Yorkshire. For me this represents balanced risk portfolio.

    The city apartment is high turnover low profit with professional tenants that pay on time for the last 18 months. The rent only just covers the repayment mortgage but the capital appreciation is good. The 1 bed was bought for 59k 6 months ago I spent 7k on it and it's now worth 90k my repayment mortgage is 48k and it turns a profit. The student let is a 4 bed that bed that generates £250 profit after mortgage and insurances.

    - The city flat will provide me with long term capital appreciation
    - The 1 bed has already provided me with good capital growth and positive cash flow
    - The student let turns an insecure but high profit return and for me represents a high risk high reward investment.

    I want to add another 2 properties to my portfolio in the next 12 months but I'm really not sure what type of property I should be looking for to compliment my existing properties, maintain a risk-balance and make a profit......?

    Hi Shed, I've got a 3 bedroom family house in a nice town in the catchment area of a very popular secondary school. Within walking distance of all shops, schools, parks and a country park. Rent covers mortgage (so long as tenant pays) and leaves just enough for general wear and tear repairs etc.

    Not planning to increase or sell. Thinking ahead to when my children will be leaving home and hopefully will be able to use this to help them.


      Hi there shed buyer.

      I, like you, try to spread the risk. I have a three bed house with rent just covering the re-mortgage (but saying that the funds raised with the re-mortgage are sat nicely in the bank earning interest whilst awaiting my next purchase). Another property is a two-bed which again only just covers the mortgage, however, mortgage outstanding is £66k and property worth in region of £100k!

      My highest yielding property is three self-contained flats within a three storey property. Mortgage owing is £93k (interest only at approx £500pcm) and property currently worth in excess of £150k. Not bad when you consider we bought the property two years ago for £70k cash! We did spend about £25-30k doing the flats up but as rental income is £1,140 we are doing alright out it!

      We then bought another property (two houses in one which had been converted to a flat and a four-bed house). It's actually right next door to the 3 flats so we own 22, 24 & 26 (flats 1,2 & 3) all on the same street and potentially providing 5 tenancies. We paid £80k for 22-24, spent another £25-30k doing it up and that is also now worth in the region of £150k (just 18mths on). The profit from rental income from the 3 flats pays for the mortgage (£120k) on the flat & four bedder and so any rent brought in from them would be pure profit. This profit would be potentially £800pcm but we don't see that because I now live in 22-24 (using the flat as the company office and family room and the house providing plenty of space for me and my daughters.

      I do not pay an actual rent as such, I just deduct the monthly (discounted) rent from the Directors Loan Account. You would think this would result in reducing the DLA but as directors we now charge interest on the original loan to the company and as luck would have it that just happens to amount to what I should pay in rent.

      So in answer to your original question, the way to go with BTL in the current climate is to invest in multiple self-contained units within a larger property or to go down the path of HMO. It is probably the only way forward with house prices continuing to spiral on an upward trend preventing investors from now realising even the average yield of 5-6%!

      I'm currently in the process of buying another four bedroomed house with a view to converting it into two self-contained flats. To let the house as a four bedder would probably achieve a rent of about £450 - £500pcm (it's only Oldham). But if I manage to do the conversion I should be able to achieve £700 - £800pcm. That's an 8 - 9% yield (still not brilliant but much better than 5-6%).

      God I'm really rambling on now - sorry folks. Must be my bedtime (baby had me up since 6am so been another long day)!

      Hope my ramblings above make some sort of sense....



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