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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

retiring at 40, btl the best way?

142 replies

marieinlondon · 18/07/2015 18:33

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?

OP posts:

workingdilemma · 18/07/2015 22:04

Buy to let is going to be very tough for new entrants and any existing over leveraged ones since the budget changes. Think very carefully. Its a tax target now. If we get a flood of landlords selling up, house prices are only going one way from here.

It isn't up. And neither are rents, despite what people may think.

I think George has done a wonderful thing with this change btw for society.

workingdilemma · 18/07/2015 22:06

Oh and the best way to retire at 40. Start a proper business, one that doesn't rely on tax breaks and debt, work damn hard to make it a success, and sell it to someone else.

Peshwari · 18/07/2015 22:13

Would you even get a 300k mortgage on a 450k house on that sort of combined income?

BuggersMuddle · 18/07/2015 22:26

Assuming this isn't a GF thread, then no, I can't see this working.

£56k in London is not the sort of salary that produces these outcomes. In fact, I earn slightly more in Edinburgh, have done for a number of years, am a similar age and wouldn't be able to make this work (and my DP earns ~£45k)

Landlords are not exactly liked on MN IME, but being a landlord is not necessarily easy. Yes if you have somehow got a cheap property in an area where loads of people want to rent and get good tenants it's a nice income, but none of that is guaranteed. I am not a LL, but several family members are. One lot gave up after a horrendous tenant; others let to family (never again); yet another had a tenant who had a leaky shower but rather than report it they left it until the floor below fell in, then blamed the LL (who would absolutely have preferred they reported it at the first sign of a problem as the rental was actually a house they were planning on moving back to at a later date).

I actually plan on adding BTL to my portfolio at some point, but I'd be as much speculating on the capital as rental incomes, even in Edinburgh are often fairly marginal in relation to mortgage costs for those buying in now. (I sometimes curse the fact we both sold up for a house rather than keeping a flat and buying a nicer / bigger flat tbh).

butterfly133 · 18/07/2015 22:28

Pagwatch "Are they actually ready for a life without scheduled work"

I'm always baffled by this question. Why not give them the benefit of the doubt? I've been ready for that since I was 18 for years - so have lots of people.

To the poster who made the repayments £3k a year - I make it half that over 25 years. I am guessing they will apply for a regular 25 year mortgage and that overpayments will be made?

Like Peshwari, I am also wondering if you can actually get the mortgage on that combined salary though.

OP, come back and put us out of our misery on figures please

butterfly133 · 18/07/2015 22:30

OP - guessing you have savings on top of this?

Jewels234 · 18/07/2015 22:34

I personally couldn't morally do this. And struggle to have any respect for people who do.

Pagwatch · 18/07/2015 22:35

[sigh]

I didn't say 'you are not ready'

I said 'are you actually ready'

It's a question.

It's often a hard adjustment.

How long have you been retired?

workingdilemma · 18/07/2015 22:39

This person got a gift in right to buy, and rather than count their blessings despite now having a reasonable household income, wants to (or rather, attempt to - they won't, borrow to let is now dead for anyone with an ounce of sense given the budget) hoover the income off a bunch of less fortunate people who probably don't earn nearly as much and don't have access to a massive discount on a house.

Also they think the debt will be inflated away very soon, but there won't be any interest rate rises. How exactly does that work?

Nah, not buying it. It's a joke thread. No-one could be this oblivious to what's going on in society (or this oblivious to the news from the budget).

MaggieJoyBlunt · 18/07/2015 22:42

Nah, not buying it. It's a joke thread. No-one could be this oblivious to what's going on in society (or this oblivious to the news from the budget).

Quite.

WHY would they even mention RTB if they were serious?

It makes no difference to the question being asked.

countryandchickens · 18/07/2015 22:43

They posted in property as well; I think it is serious.

MaggieJoyBlunt · 18/07/2015 22:45

Is property a joke-proof board then?

workingdilemma · 18/07/2015 22:48

They've worked out where they are likely to get the traffic - says so in the OP.

They are right on one thing, for something like this, AIBU is the best place to get the desired responses - especially for such an obvious emotive thread like this.

Figster · 18/07/2015 22:50

Seriously I'm fascinated by what you plan to do for the rest of your lives of retiring at 40??

MaggieJoyBlunt · 18/07/2015 22:52

They've worked out where they are likely to get the traffic - says so in the OP

No comment

workingdilemma · 18/07/2015 22:53

Seriously I'm fascinated by what you plan to do for the rest of your lives of retiring at 40??

Go on a long series of cruises while a set of less fortunate 39 year olds pay for it I imagine.

workingdilemma · 18/07/2015 22:54

Or post a never ending series of wind up threads on mumsnet.

Justanotherlurker · 18/07/2015 22:58

Government has now homed in on BTL as a taxable source, now that flood gate has opened expect it to hit accidental landlords going forward, with IR rises promised to be coming within a year it's going to be a shit show for the over leveredged hoping for capital appreciation.

Fun times ahead....

Hannahouse · 18/07/2015 23:00

This reply has been deleted

Message withdrawn at poster's request.

workingdilemma · 18/07/2015 23:03

Yes and they can be referred back to this thread and many others previous to it which talked about it being an inevitable tax target when they say

'No-one saw this coming' or 'No-one told me' in future.

What I find mind boggling is there are people prepared to borrow vast sums of money who don't appear to have done any research, planning whatsoever. Or given a thought as to what the future might bring rules wise given the demographics of how the housing market changed through the (credit-fuelled) boom years.

Bythedowns2 · 18/07/2015 23:03

Exactly why the right to buy scheme is wrong !

workingdilemma · 18/07/2015 23:06

The right to buy scheme is wrong - no question. But not right to buy beneficiary thinks to take their unearned gift and use it to get into property speculation.

That's a whole 'nother level of wrongness.

workingdilemma · 18/07/2015 23:09

*not every

mintpoppet · 18/07/2015 23:35

Not possible I'm afraid OP. That's not retirement at 40 kind of money.

You've also got to think of house repairs, boiler breakdowns etc. There's a program on at the moment about rogue landlords and tenants and some tenants refuse to pay their rent and sit tight for months until the courts say they have to go. Then weeks more (and thousands of pounds) for the bailiffs to actual evict them. Some landlords lose thousands and thousands. Could you afford that in one or more of your properties?

WhirlyTwos · 19/07/2015 00:21

Interesting thread. But another who thinks the numbers don't seem to add up.

Very doubtful that 2 btl flats in 10 years time will provide sufficient income for 2 to live on while still paying down the remaining debt.

Also seems to be another few financial flaws in the plan, but difficult to evaluate or quantify without more info.

Advice, I would say push out your timeline a bit. Look for properties where you can add value. If you can, avoid flats / bed sits and stick to freehold properties. Use husbands income to secure mortgage, but see solicitor to arrange tenants in common ownership to maximise tax efficiency with you as lower rate tax payer. Bank on moderate rate rises, and slow erosion of tax breaks on interest repayment. Consider keeping current house as your btl, this has significant CGT advantages.

As an aside. Always intrigued as to whether those that play the immorality card on btl direct the same sentiments to those who hold shares in food producers and retailers. If not, why not?

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