BTL business. Starting capital.

[LondonPM1]

Both income and capital growth. I'll keep to myself the details
I was lucky enough to buy one flat in middle of nowhere (close to the center though) only to be surrounded by 3x more expensive high rises which inflated it's value 3 years later. The other steadily grows 8% a year yielding around 50% of deposit net yearly after repayment mortgage. If I transferred both into interest only I could retire now having 2-3k income monthly. I want to retire by 40 so 3 more years to accumulate as much as possible.

Now that I have proven model I want to expand on that and accelerate buying (which is not easy as supply is also tulipe)

You can easily say something like value 600K income is 24K which gives a 3% yield

Or value is 260 and income is 20K which gives yield at 7%

Just get ready for cgt which is not inflation adjusted - There is no way around that

[GitMaster69]

You can easily say something like value 600K income is 24K which gives a 3% yield

Or value is 260 and income is 20K which gives yield at 7%

Just get ready for cgt which is not inflation adjusted - There is no way around that

depending if you want to know the yield from deposit or value of the property, the latter being rather useless as you are not putting 100% down only 25%.

so based on 25% deposit the yields calculation are :
prop 1: 25% yield net at deposit of 40k (normal let)
prop 2 ~40% yield net at deposit of 40k (airbnb) - 2 months out during pandemic, and pandemic year in general so expecting that to go up next year and years on cause of inflation and helicopter money

[hugebrain]

asset which the Government has taxed highly and could potentially focus on again.

I did a quick check and the net tax on buy to let is less than zero. The handouts and tax breaks given to landlords are greater than the total tax on the rents. This is unlikely to change since vast numbers of MPs rent out property (often to other MPs for their second homes, so again the tax payers pay).

Compare the total of corporation tax, vat, national insurance, dividend tax and income tax that productive people pay to the taxes on the idle rich. The tax on working is double the tax on idleness - and that’s before the 20 odd billion a year the landlords get in benefits.

“Taxed highly”, Eek!

[LondonPM1]

depending if you want to know the yield from deposit or value of the property, the latter being rather useless as you are not putting 100% down only 25%.

so based on 25% deposit the yields calculation are :
prop 1: 25% yield net at deposit of 40k (normal let)
prop 2 ~40% yield net at deposit of 40k (airbnb) - 2 months out during pandemic, and pandemic year in general

This is a mental answer

No one does yield on deposits - Come on

Yields are measured as cost vs income

Im interested in your airbnb - is that really working out - dont you get a bunch of nutters rocking up

[GitMaster69]

This is a mental answer

No one does yield on deposits - Come on

Yields are measured as cost vs income

Im interested in your airbnb - is that really working out - dont you get a bunch of nutters rocking up

yeah I had nutters twice over 9 months period, a party of 100 people, neighbours complain HARD, 8 police cars, fights on the street, mob jumping on cars etc. I've implemented precautions since then to not to be a target again. It's stressful but profitable. So if you want perm vacations in Cayman better have someone manage it locally and shield you from tulip. Ideally multiple so it's cost effective to hire a "guest experience manager"
as for the yields , just divide them by 4 if you want vs property value.

[ChimpMaster]

yeah I had nutters twice over 9 months period, a party of 100 people, neighbours complain HARD, 8 police cars etc. It's stressful but profitable. So if you want perm vacations in Cayman better have someone manage it locally and shield you from tulip

I wouldn't do AirBnB myself, due to the workload involved and of course you need to have different, more expensive financing in place. But it can be very profitable. Best to automate it as far as possible.

[LondonPM1]

I wouldn't do AirBnB myself, due to the workload involved and of course you need to have different, more expensive financing in place. But it can be very profitable. Best to automate it as far as possible.

If its the studio flats in kings cross that can be pfroitable then ok - I highly doubt a four bed semi in Hendon or balham will be anywhere near profitable

[GitMaster69]

I wouldn't do AirBnB myself, due to the workload involved and of course you need to have different, more expensive financing in place. But it can be very profitable. Best to automate it as far as possible.

It's grey area at best, as far as I know theres no products tailored towards airbnb. Prove me wrong i'd look at that.

[anim]

I've done all of this and more. But more importantly I have researched a lot into the mechanics, and learned that there is much not worth doing.

I have a good IT and property accountant who can help you with this. PM me if you want his details.

It would take me too long to tell you what to do and of course I don't know your specific situation, but briefly you could:-

1. Close your IT company and claim ER - assuming you don't need it any more. You then have personal funds available to invest.
2. Set up a SPV and loan the personal funds into it.
3. Transfer your property into the SPV, using the loaned funds to buy. This will be a sale/purchase transaction and you will pay CGT (if applicable & payable within 30 days) and SDLT.
4. If you need a mortgage then apply ASAP. Be prepared for a long wait and a lot of hassle from the limited numbers of Ltd Co mortgage lenders, and be prepared for interest rates that are double those of personal BTL mortgages and the extortionate fees for them.
5. So now you have the properties in the SPV and all rental income goes into the SPV. The first thing you can do is extract all funds that you loaned into the company - of course this is tax free because you already paid ER CGT on it. This extraction could take several years.
6. After all loaned funds have been extracted, all further rental income remains in the SPV and can be taken out or re-invested, after CT is paid.

This is just one example of what you can do. I do agree with the other posters here that you need to get a real grip on this though.

Did I do the above? No. But I know exactly how to do it and more importantly I know exactly why I didn't do it. It was easier to swallow S24 tax in the end, and give up the notion of ever working in a 'job' ever - so the real loser is the government because they taxed my job/business out of existence.

Thanks for that. I might ping you for the acctnt details.

I have been looking at many different options - LTD or personal (including life rents), hybrid. While I am still crystallizing ideas and approaches I wanted to see what the clever folk are doing.
So any more details on how you did it are appreciated. If you dont like to post here, PM would work.

Generally for the property I own, I will not pay CGT because it is < 12300 increase in the price. Only SDLT by the LTD.

Here is one for you: If a property is bought for 100k and now market value is 115k. Can you sell BMV say at 12.3k?

One question: do you need SPV or LTD will do? Is is in relation of BTL mortgage?

[GitMaster69]

Thanks for that. I might ping you for the acctnt details.

I have been looking at many different options - LTD or personal (including life rents), hybrid. While I am still crystallizing ideas and approaches I wanted to see what the clever folk are doing.
So any more details on how you did it are appreciated. If you dont like to post here, PM would work.

Generally for the property I own, I will not pay CGT because it is < 12300 increase in the price. Only SDLT by the LTD.

One question: do you need SPV or LTD will do? Is is in relation of BTL mortgage?

I think you need 1 SPV per property which is quite stupid