Hi Fonduster,
Are these all residential BTLs or are there any commercial units in your portfolio ? If you claimed VAT relief at purchase on any of these, then you may have a service income VAT liability given your level of rent roll.
Overall, I think you are quite exposed to, what I assume is, the residential market. If there is a significant downward market adjustment on CMVs, are you at risk of invalidating any existing banking covenants such as <50% LTV ratios that currently qualify you for a lower rate for your cost of funds.
Do you have public liability insurance (in addition to landlord buildings insurance) ? Heaven's forbid, but what happens if you get sued by a tenant (or a tenant's visitor) for damages i.e. slipping on stairs, blown light bulb, CM alarm with batteries removed etc etc etc ? If you are conducting your BTL business as a sole trader, how do you limit or protect any court claim against your overall assets ?
In my view your free cash flow is razor thin and would be too risky for my book given the level of uncertainty the BTL market is exposed to under current government policy.
While you appear to have built a decent portfolio, there is significant underlying risk based on the limited information you have provided. I would strongly suggest you obtain qualified legal and financial advice.
If you are conducting your BTL business as a sole trader, how do you limit or protect any court claim against your overall assets ?
I’m not able currently to do the figures but that’s not good.Will you be in trouble with your cashflow when the mortgages go to full repayment?
Income 13,095
Repayments 9,800 (my estimate)
Tax 4,833 (income 13,095 less int 3,428 gives profit 9,667 taxed at 50%)
Monthly shortfall 1,538
Give or take rent increases voids, other expenses, etc.
Your solicitor is clearly not the one acting for Ireland richest developer Sean Dunne.When this looked like a becoming a pressing question for me in 2009. I put the mortgage free assets in my wife's name as far as possible and took mine off.
My solicitor said that this would be ineffective as a ploy to defeat my creditors. I think he was wrong as I had no unpaid creditors at that time, i.e. there were no mortgage arrears. Fortunately it was never put to the test.
I’ve seen rents go up and down, had voids, had major costs, (10k for a roof, 6k to renovate bathrooms, 2k for a boiler, 8k to renovate on tenant leaving etc)bad tenants not so much. Seen banks throwing out money. Seen banks refuse lending. Started at sky high interest by today’s terms. In my case over 9%. Seen 17 % down to less than 2%. I’ve seen governments change the rules from allowing interest relief, to cutting it entirely (remember Bacon anybody) then allowing it again, then restricting it to 75% and now back to 100%.6) Im also looking for other peoples knowledge and experience during the bad times and how cashflow impacted them. I was debt free in the last recession and although i saw rents decrease, it didnt impact as much as others.
When this looked like a becoming a pressing question for me in 2009. I put the mortgage free assets in my wife's name as far as possible and took mine off.
My solicitor said that this would be ineffective as a ploy to defeat my creditors. I think he was wrong as I had no unpaid creditors at that time, i.e. there were no mortgage arrears. Fortunately it was never put to the test.
I inherited 2 properties when i was 18. I worked part time while i was in college which covered my living expenses while the rental income was saved.Fascinating thread.
One thing I didn't get, how do you have so many properties before age 30? Must have had a lump sum to begin with?
Always great when a poster comes back. Initial thoughts.
- Don’t buy any more rentals.
- Forget about sentimental in your thoughts on selling PPR
- Sell PPR to buy new home
- No CGT on PPR
- stay as long as possible in PPR to give you time to have paid down more capital on the rentals
- you both are relatively low income, better then not to have a large repayment on your home
- marriage means probably one income
- Marriage means cost of bring up children and having a nice lifestyle
- you won’t have save for education as the rentals will by then pay for that
- Pay as much as you can into your pension. Now.
- Do you really need to spend 20k on one day
- Good you did major renovations on the rentals, don’t let that slide
- you should have separate savings for the rentals, I aim to keep 10k in my rental account for anything unexpected. Keep rental money in a separate account so you really know how you are doing. When you’ve a limit on the account then drip feed the actual income to yourself
Tell us more about how you borrowed please. I’m interested in seeing how easy it is to borrow. Because I thought your work salary might have prevented all the mortgages.I inherited 2 properties when i was 18. I worked part time while i was in college which covered my living expenses while the rental income was saved.
i then bought my 3rd rental at the height of the recession with cash.
Since then, i again saved cash for a few more years and more recently Sold one of the properties to give me liquid cash of circa 500k. This along with refinancing my 3rd property enabled me to be where i am today.
I’ve seen rents go up and down, had voids, had major costs, (10k for a roof, 6k to renovate bathrooms, 2k for a boiler, 8k to renovate on tenant leaving etc)bad tenants not so much. Seen banks throwing out money. Seen banks refuse lending. Started at sky high interest by today’s terms. In my case over 9%. Seen 17 % down to less than 2%. I’ve seen governments change the rules from allowing interest relief, to cutting it entirely (remuneration Bacon anybody) then allowing it again, then restricting it to 75% and now back to 100%.
My principles are that the rents must cover the costs, that money be set aside for eventualities and that I never took interest only. I fundamentally disagree with interest only. Made no money for the first decades. But I am now. Never cared about property crashes. And I’ll maybe sell at the peak. If I get too old or sick.
Your ltv when good, that’s the time to move everything to one bank who might give you an attractive interest rate to get your business.
I advised you before to educate yourself to a better job, same advise now, and same for your intended.
Clever, you say the wedding budget is 20k but know it will be 30k.
You need to keep rental income and expenditure in one account or two, but always separate to your own income from work and your own savings. My accountant told me one account is best and it makes everything much easier to manage. Like you I do most transactions by card or bank transfer with little cash withdrawals.
Did not see the logic in renovating to reduce tax bills. In general the tax rule is enhancement is for cgt, not income tax.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?