max101 0 Posted June 30, 2020 Share Posted June 30, 2020 Hello, Consider the following scenario: Person A has £100k to pay towards school fee over the next 5years. Fees are 20k per year (6,700 x 3 terms). On the basis that Person A has the lump sum up front is there a model, using residential btl property to fund the fees or at least part of the fees each term with the view of making the overall spend for the 5 years as close £0 as possible. Assume Person A; 1) is an experienced btl landlord (residential) 2) will only pay 20% tax ( ie wont be affected by the interest restriction) - simply because combined income from Person A and wife is within the 20% threshold. 3) Assume 5% return each year after maintenance etc but before tax 4) Assume 1% growth over the next 5 years ( before tax, likely not to be any liability) Thanks. Link to post
REinvestor 17 Posted June 30, 2020 Share Posted June 30, 2020 £100k needs to produce yearly £20k net after tax to fund schooling. some basic ideas, see if this works to your thinking! so lets suppose £100k is used as a down payment/leverage on 4 x £100k BTL's (or other multiplier value) student/multi room property.... location, location on the basis fully rented & that you could get a mortgage lets be aggressive that the income on 4 x btl's student housing is £4000/mth gross minus cost to carry a £300k 2.3% - 3% 5yr fixed 25 year amortization mortgage, insurance, maintenance total for approx mthly £2000/mth costs. This leaves net before tax £2000/mth £24000/yr- minus 20% tax , then yes it's likely possible. I'd forget any growth other than some repayment of principle. BTW 5% return before tax is only £5000/yr, you need to find another £15,000 to fund the schooling what were you thinking? Link to post
haf1963 105 Posted July 1, 2020 Share Posted July 1, 2020 I would say that there is additional risk in assuming you can actualy get 4 x 100k btl and 4k per month - sounds very optimistic and you will really need to know what you are doing to achieve it - nevermind finding a mortgage company willing to give you 4 mortgages - especially in a short time frame. There is also a risk of saturation in the student market. I would say 5% is achievable but not 20k unless you get into high risk areas like hmo's etc Link to post
REinvestor 17 Posted July 1, 2020 Share Posted July 1, 2020 12 hours ago, haf1963 said: I would say that there is additional risk in assuming you can actualy get 4 x 100k btl and 4k per month - sounds very optimistic and you will really need to know what you are doing to achieve it - nevermind finding a mortgage company willing to give you 4 mortgages The OP posted ""is an experienced btl landlord (residential)", on that basis using other BTL properties as leverage with their £100k capital, likely some fine tuned savvy finance for additional 1- 4 added BTL's for the long buy & hold/BTL past 5 years to see how the numbers unfold to get close to a £20k/yr net income? would like to see the OP come back with their own ideas/thoughts as well as more info to add to this discussion. Link to post
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