15/07/2020
What up my party people guess what?
I got my remortgage offer today! Now I just have to wait for the solicitors to do something they call “conveyancing” ….. Whatever that means?????
A lot of what I have read and some pretty obvious tactics by this government have made it clear that BUY TO LET is dead!!!!
It might well be, but just because everyone and his dog is saying it doesn’t mean it has to be true for YOU!
What you have to analyse and truly focus on when it comes to any of this is shit is the REAL NUMBERS.
Not the “ I bought it for this and now it’s worth that” numbers or “ I wish I never bought the damn thing” numbers I’m talking about the REAL NUMBERS!
Ok bear with me on this because I’m just conceptualizing as I type…………………..
1.The flat was priced at £227,000 but when you include all the fucking fees the total price was
£238,455
- Collectively Me and Dad put down a deposit of 77,000 down, which left me with a mortgage left to pay back of £161,455
- So off the bat you could say I’m technically £ 77,000 in the minus,,,,,,, I think.
- After the mortgage is paid the rental income I receive is £647. That means in one year I make £7,764 (647 x 12)
- Now I have to pay tax on this shit
So I have used this calculator (https://taxscouts.com/calculator/rental-income-tax/) and if I was straight down the line and didn’t claim any expenses I would have to pay £2733 in tax! 🙁
That leaves me making £5031 a year.
- Now let’s just suppose all I ever did was save this £5031 every year until I made £77,000 how long would that take me?
- £77,000 (divided by) £5031 would take………….15.3 years before I make a profit!!!!!!!!!
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Now 15 years seems like a really long time and in this fast paced “give me everything NOW” world that we live in it is a really long time. It’s safe to say that there are probably PLENTY of ways to make money (more importantly profit) quicker than 15 years.
However two things that I have yet to factor in do (for me anyway) make quite the difference.
- To be able to say that in 15 years I would be making a profit, is no joke. (Ask UBER or WEWORK when they are planning to make a profit?!)
I would also be profitable for the next 10 years before the mortgage end date which works out to be £50,310 (£5031 x 10 years)
So I actually made £50,310 on top of the 77k that I eventually regained in the first place. (That’s an incredible 65% profit I made on my initial investment of 77K!)
- I bought the property for £227,000. As part of this re-mortgage it had to be re-valued and guess what the valuation came in at?!!!!!!!!! £251,000!!!!!!!!!!!!!!!!!
In just two years the property gained £24,000 in value! This is a 31% gain on my 77K investment!
So what to do with this information!!?!?!?!
I guess I start by working out how long it would take to get profitable after this 31% increase right?
£77,000 – £24,000 = £53,000
Now let’s divide by my yearly £5031 income.
£53,000 (divide by) £5031 = 10.5 years.
In the space of 2 years since I bought the flat I cut 5 years off being profitable!!!!! Lololololol What the fuck!?? How does that even happen?
Now OBVIOUSLY I’m no house price expert and of course next year the value of my flat may drop, but let me just for one second have my “allegiance with the other side” (that other side being happiness) and assume that in another two years the value of the property goes up at the same rate.
I would be a shade above 5 years away from being in profit on my initial investment!
Finally I can actually answer my own question!!!!!
Go on ask me guys, say it ,,,,,, sayyyyyyyyyyyyyyyy it!!!!!!
“Abhi is BUY TO LET dead?”
“Well my fellow follower of this blog, the answer to your question is this, if you are willing to wait 8 years then the answer is NO, but if you are not willing to wait 8 years then the answer is YES it’s as dead as Kanye West’s quest to become president!”
Now if you don’t rate me after this blog post , you never will !!!!!!!!!!!!!!!!!!
Fire and the flames
Your boy J.Kidd