UK Landlord Forum / Life

Hi Everyone, a quick introduction and some background as I am new here and then onto my question! Thank you for taking the time to read my post.

I have worked in estate agency since 2009 and saved up all my wages to get my first buy to let in 2014 becoming a landlord. I now own four properties with a combined value of £540,000ish - I had a fifth BTL but sold this and used the capital to help clear the mortgage on the family home we live in which is worth around £250,000.

So on paper I have around £790,000 in equity minus My outstanding mortgage debt which is £175,000 (leaving £615,000 in real terms) and my BTL income is roughly £2601pcm after mortgage payments (but pre-tax).

My question is this... would you buy more? Or focus on clearing the mortgages?

I meet tons of people in my line of work with 15 houses but 1.5m in mortgage debt to go with it and no idea how or when they will clear that debt. I want cash flow but in the end all the mortgages gone.

I feel like I am at a cross road where I need to make a choice and I can't workout what the right one is.

Pay them off or buy more? What would you do / Have you done?

Thank you in advance once again. 

This is a no-brainer for me.  I bought 6 modest BTL's within a shortish period around 25 years ago.  I sold one after a year or so,  and used the profit to buy another. I had interest-  only mortgages, which were the only kind available for BTL at that time. I would have opted for them anyway. I took no personal money from the rents and gave priority to clearing the mortgages.

There was a point when I had the opportunity to double the portfolio, but the risk and complexity was too much for my nervous system to cope with. I still have the original five, mortgages all paid and am happy with the choice I made.  A lot depends on your age and circumstances, and temperament. I don't push my luck or take gambles, but you may be made of sterner stuff. You have worked hard and done very well, I hope you continue to thrive.   

It's all personal.

I know because I - repeatedly - have the same dilemma, and often come out thinking differently. Obviously bad debt should be paid-down - if you have any loans or credit cards, it goes without saying they should be hit over the head. But, generally speaking, mortgage debt can be classed as "good debt". Of course, it's still debt. If every property you buy has a rental scenario where the incoming rent and expenses cover the mortgage and then some... you should always be able to make inroads (not sure what people are doing who "have no idea how or when they will clear that debt").

Personally, speaking, I think ten properties let out will see you right for life... with a bit of reduction in risk if you space them out a little and have different types. The problem with houses is that they're one of the more illiquid assets but the great thing about them is the more you have the more liquidity you get. That's what I would do - get to ten. I'm also going to consider another project - bigger renovation type thing - as I'm totally bored (unchallenged?) by the day job. Just being a Landlord doesn't create enough activity - and I can't go to spas and "do lunch with the girls" every day like HK (not that I don't want to - they don't let me).

But there is no "right" choice. Your home is safe, that's yours to, er, take home... so you've covered the main issue for me. We would not give you financial advice because we're - probably - not financial advisors.

Now, saying that, have you considered crypto.? I have and it's amazing... instead of working hard each month for my wages that get slowly eaten-away by Inflation, imagine earning £2,600 each month and see how I can lose that in five minutes, and all from the comfort of my living room - you can't beat that convenience.

Crypto is the digital equivalent of setting fire to £20 notes in the hope that someone will walk past wanting to buy some smoke.

I have never been to a spa, but I seem to recall that you have your own at home.  Why not invite a few friends to come round and chill in it Hippogriff?