Buy-to-Let investment is still beneficial

A detached houseWith potential changes to how landlords conduct business - for example the removal of the wear and tear allowance - having a serious impact on their profit margins, purchasing a buy-to-let property can seem more of a burden than a sound investment

That doesn't mean people aren't finding success as landlords despite these potential financial hardships. One example of this is Ryan Windsor, who at 26 owns a portfolio of 11 properties.

A landlord success story

Ryan Windsor bought his first property in 2007, during a period when house prices on his street dropped by 50%. Windsor, who lives and is a landlord in Thetford, Norfolk used £6,259, which he saved during his time at university, to put a deposit down on his first property, a repossessed, 3-bed terrace house, which cost £62,500.

Windsor says he has been able to amass such an impressive property portfolio by buying properties when prices were low, and putting the portfolio through an extensive stress-test.

Unhappy with the condition of his first property, Windsor spent £8,000 from an inheritance in order to refurbish the property. In fact, all of his earliest properties needed to be refurbished, costing Windsor between £8-15,000 per house.

The properties that Windsor lets are usually occupied by migrant families, who found themselves in homes that were in poor condition, by refurbishing his properties, Windsor hoped to offer a better standard of living for his tenants.

The average rent for one of these properties is £600-650 p/m, and during the 8-year period that Windsor has been a landlord, his properties have only had a single two-week void period, and the average tenancy is around 4 years. He also rarely experiences late or missed payments. This success has meant that Windsor does not need to re-mortgage his properties when buying a new one.

Extensive stress-testing

Since Windsor has begun refurbishing the properties on his street under his ownership, the average price for the houses he owns is now £140,000, an incredible sum considering he has never spent more than £110,000 on a property purchase and refurbishment.

His success does not solely come from buying low priced properties, but rather by being extremely extensive when he stress-tests his portfolio. Windsor guards against rising mortgage costs by ensuring he can turn a profit should his mortgage be charged at a 9% rate.

Not only that, he also assumes that no tax relief is available to him, meaning he can turn a profit despite government intervention as we are seeing now.

Top tips

Windsor spends 10 hours per week working as a landlord, but in the 8 years that he has been one, he has amassed a few top tips to help him through:

  • Know the target area well;
  • Familiarise yourself with local legislation (for example, the new landlord accreditation scheme, Rent Smart Wales);
  • Build a relationship with the local council;
  • Find a good services team for repairs and cleaning.

If you’re a landlord in Cardiff, by allowing CPS Homes to manage your property we will be able to take care of all the top tips mentioned above!

Despite recent news, Buy-to-Let properties are still a sound investment, so whether you want a BTL or a residential property, contact us now, or view our properties for sale online. You can also visit us in our Roath and Cardiff Bay branches for more information.

27 January 2016


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