How I'm Building a Stronger Buy-To-Let Portfolio

[@KharmaComa123]

Hi Justin, my approach is to eventually mortgage the properties up to 100% of the original purchase price in order to get all my initial investment out, and then roll the mortgages untill the repayments/princical become peppercorn. This allows for the loan principals on the mortgages to be inflated away over the years, building equity, and increased profitability. At some point I will sell off lower performing properties and use that equity to either buy more properties in cash or reduce overall portfolio LTV's to a level I am more comfortable with. Hope this helps and look forward to your comments!

[@JustinWilkins]

Interesting to hear. Leveraging up to 100% of original purchase price is ok if you’ve added value to make them worth more! Obviously going to 100% of the new value isn’t possible with lenders, and also would put you at risk. Like the plan and very similar to mine! 💪

[@KharmaComa123]

@@JustinWilkins Hi Justin, agreed with your observation. To clarify - getting to 100% is achieved either by a) getting a very good deal and /or adding value and/or b) playing the buy and hold game to eventually achieve this goal via long term property appreciation.

[@500res]

​​​@@KharmaComa123in one case I have purchased a property gave it a lick of paint waited 3 years remortgaged and pulled out 100% of the equity that was put in didn't even buy a distressed asset. As time goes the rent rises and you're able to again a big leverage And pull every penny out, In another 10 years all that will happen is you'll Keep taking out loads of money tax free , I think the key here is managing your exposure so from 75% to 50% but going all unencumbered would probably mean you are losing more than you're gaining, there'll be no risk right areas right insurance etc I don't think defaulting will really be a worry

[@UltraJamZHD]

most realistic video iv seen in a while

[@JustinWilkins]

Appreciate that 🤝

[@PropertyToolkit-Lottie]

'Movement not perfection' is an amazing mantra we can all live by. 100% agree to not wait until the 'perfect' type of property comes along because you'll be waiting . RIGHT NOW is the time! Your work is inspirational Justin and we always enjoy your content.

[@voiceoverguyharris]

I love your plan for the future. I think I’m on the second stage of your plan. Some great food for thought here. Thank you.

[@JustinWilkins]

Glad to hear as always Guy! 👏

[@Thai.Farang]

Great video. I've got six properties myself, all fully paid off. Low stress, maximum rent. I can retire when I want.

[@JustinWilkins]

Great to hear and credit to you for achieving that!

[@Thai.Farang]

@@JustinWilkins Credit to yourself also, as I've learnt so much down the years from your content

[@ayres6727]

wow! how comes they are all fully paid?

[@AmaiEthoRaate]

@Thai.Farang are you currently living in Thailand now and living off the Rent? Great Plan , my friend just paid off his £6 million portfolio of ex council semis and has moved to Thailand like yourself and enjoys the local Thai street walkers and lives in a Villa with a pool

[@Thai.Farang]

@@ayres6727 By working fucking hard!!

[@areyoutryingtosay]

Being low geared is a wise move but really depends on personal choice and goals whether you want to pay off all debt completely. I'd like to have much more debt than I have in order to buy more, but dealing with banks is just such a hassle, I've been too busy with my day job and life in general. As to owning fewer properties I also agree, it's good if you can make the same amount with fewer management issues, however I'd prefer to have more because I tend to get a lot of tenants that don't like to pay their rent!

[@tipswithmoruf6503]

Amazing content as always. Nice one, Justin.

[@JustinWilkins]

Appreciate it, thanks! 👊

[@tm-worldwide]

This is awesome. Thanks for the insightful videos - I'm just about ready to press go on starting my journey so consuming everything I can

[@JustinWilkins]

Glad to hear it, best of luck! 💪

[@tm-worldwide]

​@@JustinWilkins Thank you! I did fill out an interest sheet on your website. I created my Limited Company today and will have the funds released by December so it's a daunting but really exciting time.

[@dondesdondes]

Amazing content, Justin. I can honestly say I haven't heard one person talking about those points. Well said! 👌

[@JustinWilkins]

Thanks! Glad you enjoyed it :)

[@ameenr9129]

1:05 - You look like you're dressed for the London Stock Exchange 😂😂 Great video Justin ❤️‍🔥

[@JustinWilkins]

Haha thank you 💪

[@esnvlogs4489]

Great points made and a solid plan. Something I've been thinking about alot recently is converting interest only over to repayment. Great to be able to watch your progresssion!

[@JustinWilkins]

Thanks, and glad to hear you are considering the same 🤝

[@fivestars9285]

If your mortgage allows partial capital repayment without penalty or altering the terms, this might be a safer and cheaper bet

[@liszaf3976]

Once again great content thanks.

[@JustinWilkins]

Thanks! 😃

[@500res]

Just curious as to why you plan to pay your debt back, Is it for your beneficiaries? Because remaining in debt means you'll be more profitable in 20 years. As long as you don't over leverage I would say the plan would be ultimately to be about 50% leveraged generally. Paying it all back means you'll make less money because you'll have less money to invest in other properties, You couldn't just clarify please I would say if you're slowing down at an older age you want a portfolio which is super stress tested and I think 50% is spot on however you could go as low as maybe 30% but I think being unencumbered completely is most likely foolish Another issue about selling assets to pay down your debt you will trigger capital gains tax I truly think remaining in debt is more sensible but I would love to hear further

[@JustinWilkins]

All great points, but ultimately the idea of keeping your houses with debt until you die is a bit of a fallacy. You’ll reach an age where banks don’t want to lend to you anymore. So you’ll either be forced to sell, pay down debt, or go with unfavourable and expensive lending. The only possible away around this could be to set up a company that is past on to beneficaries. Overall the conversation needs to be had more! It’s an important one 🙂

[@500res]

@JustinWilkins Thanks for sharing your opinion Well it's an interesting one and the topic needs to be spoken about more The idea of paying it all back though early will cost you over the next 20 years So for example if you're 45 and you are unencumbered or if you're 50 and you're unencumbered you'll be making a substantial loss, If on the other hand maybe you time it where you start to pay down the debt perhaps from the age of 60 and then remain unencumbered maybe 15 years after that because most banks will actually lend until your 75th birthday or even 85. Obviously we don't know when our day is going to come.. essentially if you pass away and you are in debt and it's 50%, your beneficiaries will inherit the debt and inherit the equity. They may have to sell some assets to pay inheritance tax but that can be also planned way before, But ultimately if you avoided the debt for that massive duration of your life by the time you get to say the age of 80 and you've been avoiding debt from the age of 50 that is 30 years of capital extraction 30 years of not owning other properties at least on the scale you've been scaling up to. Cut a long story short, You've got a break that numbers down but they are very big numbers and figure out how much you'll lose by paying down the debt compared to remaining in debt at least a lot nearer to your retirement age and then maybe.. pull out a repayment mortgage until your 75th birthday I feel the beneficiaries will inherit more equity and a more cash flowing profitable portfolio compared to one which is 100% unencumbered on the other hand if you time it right I would say it wouldn't be a bad idea either but definitely not too early either. I think it's a balancing act perhaps aiming towards your 75th birthday, But other than that I believe the losses could definitely outweigh the pros. One of Britain's most wealthiest people Richard Branson once famously said when he dies he wants to be in billions of pounds worth of debt You just can't hit big numbers by not being in debt. Definitely an interesting topic and perhaps you should make a more in-depth video about paying debt off and actually run two scenarios across each other the one who aimed to be debt free purely by his 75th birthday The one who aim to be debt-free by 50 And the one who wants to remain in debt until he dies. It will be hard to calculate but you'll need to estimate how many properties the person in debt will be able to acquire and how much more money he'll make I think the number could be quite substantial keep in mind all the capital growth across all the new properties and all the rental income and profits. Also how about if you bring in one of your beneficiaries at 25% stake so they can also raise a mortgage, or more Interesting topic and good video though New sub

[@jayeezy7410]

Another great, transparent and honest video. Pragmatic and keeping it real as always. Buying more valuable property is key - quality over quantity!

[@JustinWilkins]

Thank you and glad to hear it 🤝🔥

[@jcumbes]

So good this mate

[@JustinWilkins]

Thanks 🤝

[@wicked-witch-of-the-west]

The worse part for me atm, is waiting for enough equity to build up, so it can be pulled out to get a third buy to let, but after the 40k deposit and 30k refurb, im having to wait 7 years

[@JustinWilkins]

Yes I bet, 7 years sounds high. do you think you’ll take a different approach with the next one?

[@wicked-witch-of-the-west]

@@JustinWilkins Well I pulled out the equity from the first house that i lived in for 5 years, and put a buy to let on that and rented it out, and then used the rest as a deposit for my residential home thats needed loads of work. I'm at the point now where i need the equity to grow, and cant move forward until i do

[@wicked-witch-of-the-west]

So i will need like 80k. 40k deposit, 30k refurb, 10k fee's. And its become next to impossible doing flips in my home town now, there's just no profit anymore. It feels like the good old days are over.

[@outere2044]

It wouldnt make sense to retain the property if cash was a issue. Flip build or capital then maybe keep hold of 1 out of 2 an keep going .@property by liam

[@wicked-witch-of-the-west]

@@outere2044 I haven't a clue what you're talking about.

[@hdun1489]

If we payoff our debts,what about all the equity left in the property that we are not utilising?

[@JustinWilkins]

In early years, you want to utilise debt to grow more and make more money. But in later years (maybe retirement), you’ll care a lot less about underutilised equity, and want to just enjoy the income and lifestyle

[@davearcher]

@@JustinWilkins This is the crux of it. "paying down debt" I think is actually the "how", whereas switching to an income focus is the "why". Great video

[@sebastiancooke3103]

American here, still pretty new to the Buy-to-Let strat, but seems like you take a route similar to BRRRR. When you were on point 1, you mentioned "interest only" mortgages. Does that term mean 0 down, or is it something else? I don't have a grasp of UK mortgage products yet so I'm curious about that. Over here, it's popular to use hard-money lenders to fund a deal, which makes fast-paced portfolio growth much more viable. Wonder how that would work for you there? Cheers!

[@MrGuardcaptain]

An Interest Only or IO mortgage here in the UK is one where the owner borrows an amount from the lender and makes repayments each month, but only on the interest accrued on the debt- it does not reduce the debt. For example, I have just borrowed £140,000 for a property with a 5 year fixed rate mortgage. I am making payments of about £650 a month, but that is only the interest and at the end of the 5 years I will still owe the £140,000. This is due to high interest rates here in the UK right now. My strategy is to wait until our rates are back in the 3% range and then transfer back to a repayment mortgage where I pay off the interest and the debt. I believe in the US you don't tend to have the same sort of variable rates we have in the UK. Normally a lender or bank will incentivise a buyer with a lower rate, perhaps 1 to 2% over the Bank of England base rate for a set period of time, usually 2 to 5 years after which the rate will increase to the lenders variable rate, usually 4 to 6% above Bank of England. Thats why in the UK most people with a mortgage switch their product every few years whereas in the States most are locked in for that 30ish year period. I promise its not as complex as it sounds, but in short, IO means you don't reduce the debt whilst you have that product. In terms of money down, you still need between 15 and 25% depending on how you structure your deal. James

[@JustinWilkins]

Hello 🙋🏻‍♂️. So in short, the most common thing to do In the UK as a property investor is to borrow 75% of the property value. We then service this as interest only payments each month - so just paying interest on the debt, and not paying down the debt. But we still have to put down a 25% deposit on properties that we buy / own as investments. Hope that answers the question. There’s a good response below which is helpful too.

[@fivestars9285]

No, you still need to put down at least 20% and cover all upfront costs but when comes to servicing the mortgage every month, to keep costs down, you only pay interest, keeping the capital unchanged. Vast majority of people want to move after 5-10 years and repay the capital from the proceeds.

[@philipwright3370]

How do you swap from interest only to repayment mortgage? Can you do that on a rental property? (Quite new to all this, just learning what I can!)

[@fivestars9285]

@@philipwright3370 "Can you do that on a rental property?" Yes, subject to lending criteria. "How do you swap from interest only to repayment mortgage?" Fixed rate products in the UK typically have a 2-5 years fixed period and when over, they automatically switch to variable interest (still interest only). You have to pay another arrangement fee and fix the interest for another set period or you change product to repayment with the same lender with typically no fees. You often find another lender offers better terms and may remortgage elsewhere, again involving a brokers fee, an arrangement fee, a survey fee and legal fees plus some costs settling it with your first lender.... It's a gravy train for those selling picks and shovels :) One more thing, a buy-to-let mortgage is more expensive than a personal home mortgage (both fees involved and typically 1% higher interest rate) and buying through your limited liability company is more expensive than buying in your own name, but due to tax changes (Section 24) a few years ago, buy-to-let in your own name only makes sense if you're paying cash - no mortgage! Final thoughts: Vast majority if not all landlords in the UK stick to interest only mortgages to improve cash flow. In fact most properties don't generate enough yield to make repayments after all costs are taken into consideration. Buy-to-let in the UK essentially relies on capital gains. You buy today for 100 with interest only, tenants cover the mortgage interest and costs leaving you a small positive cash flow..... you sell one day for 300 and repay the mortgage, pay CGT and keep the rest as profit. Thinking about it logically: 100 today has the buying power of 50 or 30 in 25 years, why would you pay 100 now when you can delay it and pay less in the future?

[@MrJeffHead]

Do you cash flow more from your properties or your brand/business? I'm not against BTL for certain people and its ok as a first step into investment but its not for an entrepreneur

[@JustinWilkins]

Cashflow more from sourcing / PropertyX. Which is very natural - make fast pounds with business, and invest them into slow pounds with property (or another asset class that suits you).

[@alanbuckingham8788]

Justin, what are you going to do when Labout introduce: 1. Rent caps 2. Tenant right to buy?

[@ty194]

This is what I want to know.

[@distilledgogilba]

What will you do when they don’t do either of the above?

[@Ferrari458-u8u]

Even if they do the above it won't work simply because landlords have mortgages to pay and expenses to cover such as where and tear. All good for them to put caps in place why,why don't they build more houses ???

[@ty194]

@@Ferrari458-u8u I don't even think it's the government's job to build houses. The problem we have is the rapid influx of people. Take care of that and most other things will eventually take care of themselves.

[@delboy4life]

This is a great video

[@JustinWilkins]

Thanks ✌️

[@Andy5c]

My exit plan is the same sell half of what I have and pay the other half off. Will be 4k a month pure cash flow and less hassel as less property. Win win

[@JustinWilkins]

Like it 👏👏

[@MrGuardcaptain]

@@JustinWilkins yep considering the same. The equity in 50% in 20 years time will go a long way to paying off the debt on the other 50%- Justin as my properties are all in my Ltd do you know if I would have to pay CGT on the sales before using the profits to pay down the debt if its all inside the one company? James

[@immers2410]

@@MrGuardcaptainyes, cgt is due

[@Dannyboi669]

If you had the initial money, would you go straight into more valuable houses? im in the position and just wondering 🤔

[@JustinWilkins]

Hi Danny. No I’d still start like I did, or in between cheaper and more expensive. You learn a lot from cheaper / mid sized properties. Any mistakes are also cheaper 😂

[@zanyzoo6767]

Your gonna have to re do your sums now after the budget.

[@ghengiskhan340]

My beast is growing watching this video

[@JustinWilkins]

Wow

[@ghengiskhan340]

@@JustinWilkins just joking, great video. Delivering good value as always. How about buying larger properties with more units in them that way you spread your risk and can benefit from the higher potential capital appreciation from the higher purchase price.

[@JustinWilkins]

@@ghengiskhan340 hahaha. I'm glad to hear it has that effect. Yes very good suggestion - multi unit properties are of interest to me.

[@ghengiskhan340]

@@JustinWilkins May I ask, are there any networking events you would recommend for young people who want to get started in property? Any guidance would be much appreciated.

[@WilliamBrown-e3t]

10 years too late for buy-to-let. It's very difficult to make money from it in this climate. Governments are increasingly hostile to amateur and small-time property investors and have just slapped another 3% on SDLT for additional properties in their budget. It only really made sense in a rising market where you could borrow cheaply and use leverage to scale up. The days of cheap money are over.

[@VainerToast]

I think you should wear a nice shirt more often it made the vid a bit more professional

[@JustinWilkins]

Thank you! Although being honest I most likely won’t, i worked hard to leave a corporate job and live by my own rules 😂

[@pimm3]

What an absolute load of shite

[@matthewcox6490]

Why?

[@JustinWilkins]

What is? Talking logical property investment 😂

[@TheOllie1700]

Hi Justin, thanks so much for all this great educational content. Im looking at your BRR course on your PropertyX site and wondering if its all still relevant and in-date? I appreciate things will be different a few years on but as long as it's not completely obsolete. Cheers mate! (I also sent you an email about sourcing software if it's of any interest).