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Once you have invested in your first buy to let property and started your journey as a landlord, you may consider developing your portfolio with an additional property.

Financing & Budget

Many landlords choose to purchase more than one property if they have cash funds available to purchase one. This is done by splitting the cash into multiple piles and using them as deposits for buy to let mortgages. This term is called GEARING. See example below:

Option 1 - (£80,000 Cash Purchase)

Rent Received - £500 per calendar month = £6000 per annum.

Gross Rental Yield - £6000 / £80,000 = 7.5%

Option 2 - £80,000 Cash Deposit (to be split 4 ways)

Property 1 - Rent Received - £500 per calendar month = £6000 per annum.

                  - Gross Rental Yield - £6000 / £80,000 = 7.5%

Property 2 - Rent Received - £500 per calendar month = £6000 per annum.

                  - Gross Rental Yield - £6000 / £80,000 = 7.5%

Property 3 - Rent Received - £500 per calendar month = £6000 per annum.

                  - Gross Rental Yield - £6000 / £80,000 = 7.5%

Property 4 - Rent Received - £500 per calendar month = £6000 per annum.

                  - Gross Rental Yield - £6000 / £80,000 = 7.5%

Option 2 Total Rent Received - £2000 per calendar month = £24000 per year.

Gearing will spread the risk of your investments. For example if you have a void period in a property, the income from the other properties would cover any utility payments. 

Remember to budget your mortgage payments. Many landlords who use gearing, take out interest only mortgages. If you do not meet your mortgage payments your property will be repossessed.

Portfolio Mix

Experienced landlords invest in a different selection of property types. A variety of terraced houses with 2 and 3 bedrooms for example means than if a tenant needed to upsize, they could potentially move into one of your properties and you benefit from retaining a good tenant.

For further advice on buying your next property, contact Roebucks to discuss your personal circumstances.

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Call us on 01226 447277 or use the contact form below