Savings? How to Create a Positive Cash Flow11 Jun 2021
Savings of £25,000 – what should you buy if you need a mortgage to fund your buy to let property?
If you have £25k and are looking to create a positive monthly income, what should you be buying and realistically what is your £25,000 going to stretch to?
People talk a lot about making your money work harder and it can definitely do more in property than it will be sitting in the bank. Important costs to remember are the buying costs, so that’s the solicitor costs, ADT (Additional Dwelling Tax if you own another property) and the cost to get the property ready to let – its fair to assume that your mortgage options will come in at around 75% LTV so you need to be holding back at least £5,000 for those costs. That means you have £20,000 to put down as a deposit, which means we need to be buying something with a purchase price sub £80,000.
What can we buy for £80,000?
You could buy this off-market property on Wardlaw Street in Rutherglen Glasgow – Available to purchase at £73,500 – with a sitting tenant so no upfront cost – and with a current rent at £475pm, with scope to increase to £500pm. Your mortgage payments would be around £320 per month, creating a positive cash flow of £180 per month – with a new bathroom installed and fresh kitchen there should be little in the way of cost over the next couple of years.
Or this 1-bed tenement in Whiteinch on Dumbarton Rd – Home Report £80,000 – needs a little TLC but no big costs- and it will rent for £575pcm. Your mortgage payment will be around £370 per month, so you create a positive cash flow of £200 per month. And watch your investment increase in value while you pay down the mortgage.
Interested in these or looking for advice? Get in touch!