Letting the tenants know.

Letting the Tenants know (09/01/2018)

This was quite hard, as while its easy to put the plan on paper, putting it into action is another thing. A letter was written last week explaining that i plan to sell this year and would they like to discuss before i put it on the open market. I was hoping they would of come back to me as they are really nice people and we could discuss if they wanted to buy at a reduction, or to give them maximum stay at the house. Alas i have heard nothing from "them". But i have heard from somewhere else :)

Social media can help sometimes and their plan is this: Keep quiet , keep their heads down and find a place fast. They don't want to be around while the house is up for sale.  So as you can probably guess i'm a little disappointed as it harder to sell an empty house and they might leave it in a mess.
My Plan: Ok so now i know their score (they don't know i know) i have this morning already phoned the estate agent and it should be on the market any day now.

 General chit chat.

Where I live I have noticed the exact same feelings as I had / saw back in the early years of the 2000's. Like then as now everyone was in work, money was becoming more abundant, people eating out more. Credit loans are now advertised again on the tv and more property is on the markets. 

More confirmation the economy is picking up is that this morning I had a letter from my credit card company. I never max my card and will spend about 1k a month on it; and always paying it if every month. Anyway my limit without asking ( just like they did around 13 years ago) have raised my limit to well over 10k. I now reckon if I maxed out all my credit cards , I could spend 50k. 50k on credit cards.....now that's insane.

Buying a property

I'm thinking to buy a property.

From my previous post I am going to free up some cash and my reasons for doing so. One of the calculations I'm also taking on board is that this current property is giving me  a 30% profit from the rental to mortgage costs. If a property starts to hit a profit margin of less than 50% then i start to take notice and need to justify why I'm holding. The house I'm selling makes  £151.85 month profit. I could raise the rent but the house is aging with bigger costs to come.

Current calculations : Rent =£510 month                                                                                                                             Mortgage =£385.15  month   TOTAL = £151.85 profit a month

Selling this property will free up the 50K equity it currently holds

My plan is for my next rental will be to make more than £151.85 a month and a lower mortgage.

Example:

 From the chart and using 30K deposit i can buy a property of lower value but with a lower mortgage and crucially higher rental value. This would give me an extra income of  £128.15 (total £280 instead of the £151.85). The mortgage will be fixed for as long as possible on interest only.

Why interest only?

My aim is to make a fixed monthly income with a bonus of the property price rising. The main goal is the fixed monthly income. To achieve this then interest only gives the maximum returns in where i have free liquidity cash. Secondly why pay it off when inflation eats away at the debt anyway? I bought my first house 16 years ago and its gone up in value by 300%. This makes the original debt look like peanuts now, so why stress trying to pay it off?

The magic number for rental is 30% deposit or more and then no income proof is required. Just as long as the rental value will cover the mortgage.  

Bonus 

This should leave me with 20K left and to decide what to invest this into. That will be in a future post.

Please note this is just my current thought and I've only just told the tenants that I'm selling. I've got all the selling hassle to come.Would be nice to have this sorted for the end of the summer.