Increasing our Buy to Let property porfolio
We already own two apartments (or flats as the are known as in the UK) which we have successfully rented out for several years.
In the beginning, the income wasn’t passive, it took awhile to find the right apartments, we had to redecorate them and since we managed the tenancy ourselves, every 6 months to a year we had to find new tenants, do credit checks and maintenance on the properties.
After a few years, we got to the stage where we decided to pay for a letting agent. This isn’t cheap, they charge a finders fee for new tenants which is the equivalent of a month’s rent and 10% commission each month. The major benefit is they handle all the hassle.
For example, the shower stopped working in one property the day before we were due to go on holiday. If we had managed it ourselves, we would have had to rush around trying to find tradesmen, but the letting agent arranged the replacement shower and all we had to do is authorise the cost of the work.
So whilst we aren’t squeezing every penny of income from the properties, this is now a good source of passive income since we don’t have to do anything and the payments keep rolling in each month.
We are in the lucky position where we don’t have any loans or mortgages on the properties. The property market may dropped in the UK over the last few years, but we bought several years ago, so our property portfolio is still worth a lot more than we paid for it.
UK property prices are relatively low at the moment and the demand for rental properties is high, we are considering increasing our property portfolio.
Since we don’t have a big pile of cash sitting around idle at the moment, we will need to be creative in how we raise the funds, potentially taking a mortgage on one of the existing properties to raise the capital for the deposits on some new properties.
Current Buy to Let mortgages are typically a maximum of 75% loan to value. To get a good deal you really need a 40% deposit.
We will update you on how what kind of mortgage we manage to get and how the property hunt goes.