How To Invest £30,000 In A Buy To Let Property | Samuel Leeds

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[derin]

Somebody below (Charlie Sharp) questioned and brought up the matter of factors not addressed in this video (and many other similar videos) when it comes to presenting the figures. They often don’t mention such annoying little things like “income tax” when presenting the apparent “profits”. Charlie Sharp did a nice little estimate that you can see in his post but essentially these show that for the higher rate taxpayer the profit (not even factoring in other ‘unforeseen situations’ ) is circa a mere £1500/year on an example like this. Check it out.

I think he’s absolutely right. These type of videos never seem to factor those things in.

Also, there are the additional purchase costs that often don’t seem to be mentioned e.g. the EXTRA stamp duty that is incurred in buying anything over your first property which is ‘lost’, dead money.

And, that’s assuming absolutely NIL other initial costs such as a redecorating/refurbishments etc.

As said, a net profit of £1500 starts to look pretty poor on a £70K (plus lost initial costs as above) investment/exposure with 25% down and a mortgage.

£1500 really isn’t going to go very far these days.

I can see how this model works, the sums add up and can be worthwhile if done MANY MULTIPLE times over i.e. lots of small profits, from lots of properties but if we take the above example, you have to have 10 of these to even get £15k/year profit!

I’m not saying £15K isn’t some decent money but it’s not really going to be sufficient for anyone to rely on as their sole source of (passive) income, not work and “go skiing” instead.
For £150K/year…..100 of these properties?!

Now all these sums also work whilst the cost of borrowing has been and still remains very low. But will that remain so and for how long? We currently have inflation running at a 40 year high in the UK. Those of us old enough remember with fear the late ‘80s/ early ‘90s which is I bought my first properties when interests rates then hit circa 18% on our mortgages !

If you’re sitting holding a large number of properties that you suddenly can’t service the borrowing on and need to bail out quickly….and every other landlord in the same position is trying to do the same thing…you suddenly have a marketed flooded with properties for sale and hence falling prices. I could see how one could end up in a very nasty multiple negative equity scenario trying to sell lots of houses in a falling market which doesn’t bear thinking about.

I still have one BTL left (and my own home) after having to divide my small, debt-free property portfolio with my wife due to a divorce. I also have about £300K in cash and can’t decide how to invest it. One option of course is property. However, if I did, my inclination is to just buy one thing outright again with a single lot of initial ‘starting costs’, no borrowing costs and more importantly no risk because of potential interest rate hikes.

The other thing that these type of videos never seem to mention is the human dimension. By that I mean “for whom is this sort of model appropriate?”

Whilst going from “Broke to £10 million in 10 years” is undoubtedly impressive and I take nothing away from him for this, simply presenting the a set of numbers cannot be the whole story. Even if they do add-up to show an profit thus presented. The appropriateness of the model in the context of the individual’s circumstances need to be addressed and factored in.

For example, “Risk” is very rarely mentioned. All investments carry risks: Right all the way from walking into the Monte Carlo Casino and putting your entire worth on Black all the way to doing nothing and squirrelling your money away in the Bank which is also an inherent risk.
The ramifications of “risks” vary from individual to individual.

I’m 59 and retired, by the way. I think that’s significant and worth mentioning because I’m not young enough to take on massive risk whilst being prepared to lose it all and still have the time and energy to recover again.

I think what’s also probably worth mentioning is that IMHO the above model of risking buying multiple small properties, for multiple small profits with high borrowing (and attendant risks) is probably NOT a viable thing for people already in the ‘young family’ situation. From personal experience, having brought up three kids, it’s probably not appropriate to risk your children’s and partner’s security. This is often a time in peoples’ lives where you just don’t have ‘extra money’ to risk.

So, in that respect, I think it’s possibly more appropriate for the younger, dependent-free individual who essentially only has a responsibility to themselves and if they do ‘lose all’, no one else suffers and they still have time on their side to recover.

Doubtless, this has worked very well for some people who fit this profile in recent years whilst the cost of borrowing has been extremely low and I take nothing away from people like Samuel who have done this.

Add to this now the possibility of monetising one’s experience of doing this by making Youtube and other Social Media tutorial videos or even running courses on the subject as a parallel income stream and I think for some people this has all worked very well. Again, I think someone like Samuel deserve praise for his achievements in this regard.

All I question is whether it’s appropriate for everyone, especially now moving into a more uncertain future?

I’d also really appreciate any advice or suggestions from Samuel or others about what to do in my situation. Many thanks in advance.

[chrismachin]

The actual figures were 600 - 110-20-60-60=350 per month which is 4200 per year

[danalivingabroad]

at this point I don't know if I watch your channel for the great information or your energy. entertaining and informative!

[jeffjames]

Great video, very straightforward, consise. It's great to see how your thought process helps you find a property. Oh and I've viewed properties down that street in Stoke.

[marcof.]

Amazing. Great video. Learning alot. Thank you so much for this

[rudey-]

Great video thanks for making it easy to understand

[hayden]

Agreed. Just looking for my investing hot spot right now. I don’t want it close to me, as that could tempt me to manage it and that would be a bad use of my time

[veganmakeit]

that was amazing! may God bless you, because you just changed my life, ive got some money saved up and I work day and night to save so now I am planning to do this.

[mulukenbelete]

Wow no word you are so brilliant..Godbless you you have also positive sprit

[tazzali]

Love your videos Samuel, Very inspiring stuff and how you have helped people and it has motivated me so much i cannot stop watching your content and after many years I feel the hunger coming back to take on new challenges. I am in Scotland though, not came across any others to see if things work slightly different for us with the methods you teach. hope you can clarify and would be great if you could do a crash course in Glasgow as I would be first to sign up. I have family in Birmingham and could have attended that one but it's fully booked.

[wanistani]

Hi Samuel do you have any videos on commercial property investing - I heard lot of advantages of this? Thanks big fan

[MichaelJones-vftx]

Samuel u r one great fellow. The way u break down this things is amazing and quite easy to understand. Thank you man u r just a blessing

[peterpetram]

Thanks for the informative content. I am from Tanzania, I would like to know if I will be able to invest in such properties in UK.

[grantmail]

Is there any help with how to set up and find property management companies that are rated highly, reliable and trustworthy? Can you recommend who to choose?

[intuitivestudio]

Samuel, I'm addict of your videos, thank you!!! What is your opinion of my idea if I want to buy a flat for renting it on airbnb?

[lg.londoncrypto]

Hi thanks for your time but can you please help with a video about a lawyer fee, financial advisors in the UK? Rough prices thanks

[Drippy]

You forgot vacancy/void, council tax, and Intrest rates are not 2.5 even when you made this vid 9 months ago they were at 4%

[charliesharp]

I love the videos Samuel, only criticism is you never include the necessity to pay tax when calculating final returns. At a rent of £7200 a year, your tax burden if in the higher rate tax bracket is £2880. Factor in void period, certificates and agent fees, your profit would be around £1500 IMO. Excellent proof of concept however.

[mjlobban]

So, what management comp would you recommend??

[chopperprime]

Hi mate love your videos, have you got property in herringswell Suffolk at all. ?