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Your income from your Buy to lets?

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  • Your income from your Buy to lets?

    Just a general question really, I was wondering how many buy to lets people on this forum own and what sort of income they achieve after all expenses are paid on them? Do some people even have enough to live on their income from their properties?

    I appreciate some people are a bit funny about this type of thing, but it is just genuinely a question out of complete wonder, and it would be interesting to see the differences.

    Adam

  • #2
    Re: Your income from your Buy to lets?

    Hi Adam,

    From my own experience and that of many of my colleagues and clients, I can say that you are unlikely to earn sufficient revenue from just one property or a small portfolio of properties.

    Most mortgage lenders require your rental income to be at least 125% of your monthly mortgage repayments; in other words, an average BTL mortgage repayment accounts for 80% of your total monthly income. After costs for repairs and refurbishments, service fees, marketing, EPCs and gas safety certificates et al, only very highly performing properties (for instance, those for which the investor is able to consistently secure the best rates by remortgaging, or put down a large deposit) will turn over much of a profit.

    Indeed, the profitability of a BTL investment is from a mix of capital appreciation and rental income. It is anticipated that a property will pay for itself, with any profits either spent, reinvested into the property or further properties, or other investments such as ISAs, for the duration of the mortgage, and after the mortgage is paid can be sold or let for further income.

    I wrote an article last October: Buy to let running costs. It should help you calculate how profitable a property will be.

    N.B. Many expenses incurred by landlords can be offset against rental income for the purposes of calculating income tax.

    I hope this information helps.

    Warm regards,
    B
    TurnKeyLandlords.co.uk
    BTL mortgage broker and free landlord resource

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    • #3
      Re: Your income from your Buy to lets?

      Some people get a mortgage to help build up a portfolio. They get tenants on a rolling long term contract which covers the mortgage and can give people a couple of hundred a month. Yes it does mean you don't get a 10% annual yield like you would if you owned the property out right but at least you have cash flow.

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      • #4
        Re: Your income from your Buy to lets?

        Actually more workers approaching retirement are considering a buy-to-let property to supplement their income.

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