retiring at 40, btl the best way?

[marieinlondon]

We are currently in our early 30s and want to retire in 10 years time. We have been working really hard to pay off the mortgage on our house and only have 30k left. We bought our place for 120k several years ago and is now worth over 300k. In a years time the clause from right to buy will end and we can finally sell it on and start planning our future.

We are planning on selling it next year and this will leave us with 280k ish in cash. We want to buy a slightly bigger place on a mortgage for about 450k using 150k deposit and then use the rest to buy two or three flats in good areas to rent out. I only work part time so take in just 8k, but my husband earns a heahtly 56k + bonus.

Can any one give me tips and advice? I want to remain in north London and have my investments in north London also. We plan to work hard for the next ten years to pay down the mortgages and then hopefully we will make enough to retire. Did originally post this in property but this seems to be the active forum here.

Am I crazy for thinking this is totally possible?

You would like the websites early retirement extreme and Mr.money moustache though.

No this won't generate any decent income after you've paid the associated costs of maintaining BTL property. Your husband will still be working right? Your numbers don't add up. What sort of post tax yearly income are you expecting with this plan?

I think sometimes it's worth thinking "if this is such a great idea then why hasn't everyone done it". A lot of people have lost money on BTL- mostly the 1-5 properties people.

I knew someone in the early-nineties who "retired" around that age on a similar plan. Of course she owned 40+ outright - and found the management pretty much a full-time job. Your figures don't add up.

Btw I'm 37, earn more than your combined income, have more equity and there's no bloody way I can retire at 40 and live in London! I'm really curious about how you think this is possible?

Why do you want to retire at 40? This all sounds bonkers and unrealistic!

BTL mortgage are usually for max 75% of value. In addition NET income needs to be at least 130% of mortgage value. By the time you have paid service charges of flats, council tax etc for empty months, factored in lack of rent both for empty months and for tenants who decide not to pay, decorations, repairs, gas and electricity safety certificates etc average yields are unlikely to be more than 3%. The reason people go for BTL is that they benefit from the increase in property value but this is also subject to capital gains tax.

Not saying that you shouldn't do it but don't think it is a licence to print money because it isn't.

Planning on paying off the 300k mortgage in ten years. Once we move dh can go contracting for more money, I can quit work and offset dh income to use my tax free allowance.

spec if that was aimed at me - yes I do think anyone who buys up FTB properties for which hardworking normal workers would have stood a chance but for the BTLers advantage - is morally wrong - especially if it is to enable them to retire at 40 - most of us work all our lives.
I am entitled to my opinion (did I say I hated landlords - your words not mine) and it is something I would never do. (even if others do not see it as leeching off others)

Speaking as an IFA I have to say thAt in my view, what you propose is not possible on the figures you give. If you want to stay in North London, you'd need to add two zeros, at least, to those amounts have a realistic chance of achieving retirement at 40.

Putting aside the morality, you need to find a good independent financial adviser and start working with them NOW.

As a previous poster says, rental value is more important than income with BTL but you still need 25% equity. Don't be so fixated on having your investments in the same place - your investments should be where the gain is greatest/most secure. There are other places in the SE (e.g. Oxford, Brighton) with healthy rental sectors and cheaper property. Also one property might yield better returns than two - it depends on all sorts, esp service charges because you'll be looking at flats on the same budget.

You're in a reasonably healthy financial position but focus more on asking the right questions rather than having a fixed solution in mind that might not fit.

and no I have never used right to buy - always paid my own way and I think it is abhorrent that someone takes a social housing property out of circulation so they can make a quick profit. my opinion.

Not a chance.

How is "We plan to work hard for the next ten years" compatible with "Once we move dh can go contracting for more money, I can quit work"?

Surely if you want to pay down the mortgages as quickly as possible you need to maximise your income and work full time?

Aim for it, and reappraise the situation in 5 years, 8 years to make sure you are on target.

Oxford isn't cheaper. There are very few flats and very well established btl landlords who buy up everything on the market before it's advertised.

Contracting is not guaranteed money. You have voids between jobs, no sick pay or other benefits.
Yes it is more money in pocket month to month but you need a decent war chest to see you through the leaner times.

This is surely a wind-up so that a poster on another forum (houspricecrash?) can link to to say how idiotic those little mummy's are on MN if the response to the OP had been more positive not cynical me, oh no

So marie if that really is your name just a little joke I think the consensus is your numbers are way off and you're dreaming if you think you can retire at 40 in London using BTL.

To me it sounds too good to be true. £300,000 for two or three flats is ambitious to say the least. So the rent on two flats have to pay your mortgage and provide you with an income enough to live on plus cover repairs on your own property and the property you are renting out. . I'd go back and do your sums again.

You're going to pay a 300k mortgage in 10 years?! Ha! Good luck with that!!

Most BTL's need a 25% deposit minimum.

Why do you only work part time if you're looking to retire early?

OP - you need 3-5 times the amount of money and income you currently have to be able to retire at 40

There is more holes in your plan that a Swiss cheese. I am not going to list them all

I am afraid you will just have to
Work until 70 like most people

300K mortgage paid off in 10 years on a salary of 56K / 8K ??
Plus buying 3 BTL flats in NL with the remaining 150K even more

OP have you actually looked at what one flat in NL costs ?

Don't be silly OP.

The rental income after running costs and tax ( changed by the recent budget ) will not provide you with enough to retire on ( unless you intend to retire in poverty ).