Property Investment to pay for school fees

[max101 0]

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.

[REinvestor 17]

£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?

[haf1963 62]

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

[REinvestor 17]

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.