I have very little money/no assets, my job is only just starting out so the disposable salary will be low and my plan is to continue with my career but on the side have property building up till I have enough rent to live comfortably. I'm a total layman, I'm not looking for a step by step, but feedback and pointers.
My plan is, to do buy to lets, with no intention of selling later. The idea is to have as small a deposit as possible and the lowest interest rate on property through buy to let agents that advertise 8%+ rental with maintenance and tenants taken care of by them.
I don't think I can get buy to lets on a 10% deposit, the best I've seen is 25% at 4.74% fixed.
The UK is doing a help to buy, they put up 20% at 0% interest but you have to pay 5% and if pay it back by the fifth year, and only on live-ins not buy to lets, so my strategy is to get a live-in mortgage (around 3.69%) for a 3bed £325,000 property. I'll use letting agents just for the two rooms, and hopefully rent will cover the interest, it works out ~£87 per room a week for a full 52 weeks.
After the 5years are up, living on the bare minimum the money I save ~£50,000 +a loan from family of £15k gives me the 20% to pay off and I now have 25%.
I then change the mortgage to a buy to let assuming the tenants are gone, at the rate of 4.74%.
The property is then let by the agents as a whole at the 8%, 8% at 325k minus 4.74% of 75% 325k is ~14.5k.
I move in to a smaller/cheaper place mortgage for 225k, with hopefully 3beds. Hopefully I can use agents to bring in rent to cover the new mortgage, which will also be 20% deposit covered by "help to buy".After 5years I pay off the deposit loaned to me and now live in a place with a small enough mortgage that without rent I can still comfortably pay the interest. In the 5years that passed here, I got £70k rent from the 325k property, this plus one year's savings can foot the next deposit on the next 325k property through the agent at 8% yield.
I now have two 325k properties which generate the deposit for the third 325k property at 8% yield after 1.5 years plus a year's salary.
The 4th property's deposit comes after another 1.5 years, the 5th 1 year, and so on. I get more properties each year at a faster pace until after 15-16years, I am generating 1.5-1.67million a year in rent.
Is this unrealistic? I am banking on keeping 8% rent but Iam using an agent who is supposed to maintain occupancy. The money builds quickly, but at any time there is no actual money until the rent comes because only 25% is held of each and only the interest is paid, it could turn to zero.
I guess what I'm asking is:
- if you can rely on the agents who's business it is to sell buy to lets that say they provide tenants
- can you expect to maintain the 8% rental? (I am not banking on growth,but thought rent would be more stable)
- is it too risky to keep putting rent into further deposits without paying off mortgages? I really just wanted to have lots of rent, not have to buy and sell properties to make a profit.
Many thanks.
更新1:
Just to reiterate- the agents say they provide tenants and sort the maintenance.
更新2:
I am not about to do this right now, it is at least one year off, I am just wondering about a plan that makes sense.
更新3:
Peter- 25%
更新4:
Under help to buy 20% deposit is loaned, I pay 5%, totalling 25%- see above.
更新5:
Great pointers Dave. -would you say then, the main thing I need to change is to make more money before each purchase, or do you think a different strategy altogether would be better?