Baechel Posted October 19, 2016 Share Posted October 19, 2016 For a 2/3 bed semi/terrace in my area your looking around 75-100k. Clearly house prices depend on what area you live it, its common sense. ye ok m8. shit yeah sorry i gues in toronto ( where i live ) houses are like 700k+ CAD ( 350k+ pounds ) and like i live in a decent house and its 6m l0l Quote Link to comment Share on other sites More sharing options...
Chuckle Posted October 19, 2016 Author Share Posted October 19, 2016 (edited) Quality of life br0 sure you do :| shit yeah sorry i gues in toronto ( where i live ) houses are like 700k+ CAD ( 350k+ pounds ) and like i live in a decent house and its 6m l0l yeah the getting on the market part would not work/be harder in London/Toronto or any major trade city where prices are crazy expensive although rent prices are crazy expensive in them places so the end plan would still work Edited October 19, 2016 by Chuckle Quote Link to comment Share on other sites More sharing options...
Botre Posted October 19, 2016 Share Posted October 19, 2016 (edited) Sorry but this is a bit naive. 1. If the area is highly desirable and you can rent out the property easily for 500/month, you can forget about the 80K pricetag. 2. You're completely ignoring rental income tax. You must normally pay income tax on any profit from renting out property you own. Put simply, your profit is the sum left once you’ve added together your rental income and deducted any allowable expenses or allowances. Your rental profits are taxed at the same rates as income you receive from your business or employment – 20%, 40% or 45%, depending on which tax band the income falls into. Btw: you can't deduct your mortgage as an expense, only the interest on it. You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You pay 40% taxes on your collected rent (higher rate tax band) = 19584. Congratulations you make 408 per month ((48960 - 24480 - 19584) / 12). So even if your house prices and renting numbers were right (and trust me, they are not), you would be living in absolute poverty for at least the next 25 years. 3. If you think managing 8 properties is "retirement", think again. Finding tenants, collecting rent and property maintenance is a huge pain in the ass. Your numbers are off, you are ignoring important costs and underestimating the actual work involved. Edited October 19, 2016 by Botre Quote Link to comment Share on other sites More sharing options...
Saiyan Posted October 19, 2016 Share Posted October 19, 2016 bob left school at 16 and Started working in a shitty job while still living at home 2 years later bob has saved £8k to put down a 10% deposit on a house Bob is now 18 and because his job pays minimum wage hes in the lowest possible tax bracket Bob works 36 hours a week bob earns £190 per week £763.2 per month £9158 per year Bob pays 0% tax Mortgages are 40%+ cheaper than renting in the UK Bob now has 40% more money than his other friends who moved out of home and rented a house RENTAL PRICES IN THE SAME AREA ARE £500-600 Bob lives on £500 per month for 3 years Bob is now 21 he gets a pay increase from £5.30 to £6.70 bob now earns £241 per week £964 per month £11500 per year Bob now pays 20% tax on his wage above £11001 bob pays £99 tax per year but has alot more money The bank likes this bob remortgages his first house to buy a 2nd he rents his first house out for £500 per month This pays the full mortgage on the first house and gives him £245 extra per month Bob spends £80 of this on repairs and land lord insurance. bob repeats this process remortgaging his properties every 2-3 years Bob loses some money when some of his houses are vacant but the area is desirable and 80% of the time they all have tenants Bob hits 40+ and his first few mortgages are paid off bob now quits his job and hires a handy man to manage his properties he gets paid £2000-4000 per month for doing very little Bob retires at 45 bob is smart. be like bob Niall back at it again with dem dank calcs Did Kaii pay u 2 do dis Quote Link to comment Share on other sites More sharing options...
Acerd Posted October 19, 2016 Share Posted October 19, 2016 Sorry but this is a bit naive. 1. If the area is highly desirable and you can rent out the property easily for 500/month, you can forget about the 80K pricetag. 2. You're completely ignoring rental income tax. You must normally pay income tax on any profit from renting out property you own. Put simply, your profit is the sum left once you’ve added together your rental income and deducted any allowable expenses or allowances. Your rental profits are taxed at the same rates as income you receive from your business or employment – 20%, 40% or 45%, depending on which tax band the income falls into. Btw: you can't deduct your mortgage as an expense, only the interest on it. You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You pay 40% taxes on your collected rent (higher rate tax band) = 19584. Congratulations you make 408 per month ((48960 - 24480 - 19584) / 12). So even if your house prices and renting numbers were right (and trust me, they are not), you would be living in absolute poverty for at least the next 25 years. 3. If you think managing 8 properties is "retirement", think again. Finding tenants, collecting rent and property maintenance is a huge pain in the ass. Your numbers are off, you are ignoring important costs and underestimating the actual work involved. boooooooooooooooooooo Quote Link to comment Share on other sites More sharing options...
Swayy Posted October 19, 2016 Share Posted October 19, 2016 yeah they have dodgy rules after the crash you should watch the big short really good movie about it I will Quote Link to comment Share on other sites More sharing options...
Mistys Posted October 19, 2016 Share Posted October 19, 2016 (edited) Sorry but this is a bit naive. 1. If the area is highly desirable and you can rent out the property easily for 500/month, you can forget about the 80K pricetag. 2. You're completely ignoring rental income tax. You must normally pay income tax on any profit from renting out property you own. Put simply, your profit is the sum left once you’ve added together your rental income and deducted any allowable expenses or allowances. Your rental profits are taxed at the same rates as income you receive from your business or employment – 20%, 40% or 45%, depending on which tax band the income falls into. Btw: you can't deduct your mortgage as an expense, only the interest on it. You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You pay 40% taxes on your collected rent (higher rate tax band) = 19584. - this is completely wrong, you have not took into consideration like the statement says "any expenses" any expenses would lower the profit made on the properties mean there is less tax to pay. But lets say that you do make £48,960 a year on rent, no expenses at all. £48,960 less the personal allowance for the 16/17 tax year of £11,000 (You will be entitled to the full amount as the total income does not exceed £100,000) is £37,960. Now, the basic rate band in the UK for 16/17 is income up to £32,000. £37,960 - £32,000 = £5,960 £32,000 x 20% = £6,400 £5,960 x 40% = £2,384 Total Tax Due: £8,784 48,960-24480-8,784 = 15,696/12 = £1,308. Plus then there is also the fact that there is 8 properties in the portfolio which can easily be sold at say what? Purchase value? 80,000 x 8 = £640,000?? Which could then be re invested as you please. Congratulations you make 408 per month ((48960 - 24480 - 19584) / 12). So even if your house prices and renting numbers were right (and trust me, they are not), you would be living in absolute poverty for at least the next 25 years. 3. If you think managing 8 properties is "retirement", think again. Finding tenants, collecting rent and property maintenance is a huge pain in the ass. - bob now quits his job and hires a handy man to manage his properties - property management company. Every month you get an invoice with the gross rent minus any fees deducted, depend on what company you use some even include maintenance and repair work. Your numbers are off, you are ignoring important costs and underestimating the actual work involved. Edited October 19, 2016 by Mxttie 1 Quote Link to comment Share on other sites More sharing options...
Botre Posted October 20, 2016 Share Posted October 20, 2016 Sorry but this is a bit naive. 1. If the area is highly desirable and you can rent out the property easily for 500/month, you can forget about the 80K pricetag. 2. You're completely ignoring rental income tax. You must normally pay income tax on any profit from renting out property you own. Put simply, your profit is the sum left once you’ve added together your rental income and deducted any allowable expenses or allowances. Your rental profits are taxed at the same rates as income you receive from your business or employment – 20%, 40% or 45%, depending on which tax band the income falls into. Btw: you can't deduct your mortgage as an expense, only the interest on it. You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You pay 40% taxes on your collected rent (higher rate tax band) = 19584. - this is completely wrong, you have not took into consideration like the statement says "any expenses" any expenses would lower the profit made on the properties mean there is less tax to pay. But lets say that you do make £48,960 a year on rent, no expenses at all. £48,960 less the personal allowance for the 16/17 tax year of £11,000 (You will be entitled to the full amount as the total income does not exceed £100,000) is £37,960. Now, the basic rate band in the UK for 16/17 is income up to £32,000. £37,960 - £32,000 = £5,960 £32,000 x 20% = £6,400 £5,960 x 40% = £2,384 Total Tax Due: £8,784 48,960-24480-8,784 = 15,696/12 = £1,308. Plus then there is also the fact that there is 8 properties in the portfolio which can easily be sold at say what? Purchase value? 80,000 x 8 = £640,000?? Which could then be re invested as you please. Congratulations you make 408 per month ((48960 - 24480 - 19584) / 12). So even if your house prices and renting numbers were right (and trust me, they are not), you would be living in absolute poverty for at least the next 25 years. 3. If you think managing 8 properties is "retirement", think again. Finding tenants, collecting rent and property maintenance is a huge pain in the ass. - bob now quits his job and hires a handy man to manage his properties - property management company. Every month you get an invoice with the gross rent minus any fees deducted, depend on what company you use some even include maintenance and repair work. Your numbers are off, you are ignoring important costs and underestimating the actual work involved. Sorry, I'm not from the UK, far from a tax-expert :p So indeed its: You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You get a personal allowance = 11000 Taxable income = 3796000 Income tax = 8784 Total income = (48960 - 24480 - 8784) / 12 = 1308 / month. Ok so this could work IF he can find 8 properties with the absurd mortage/rental value ratio (it IS absurd, I talked about this with a realter) , which was my first point addressed. Keep in mind also that it takes 8 houses to make a decent living of 1308 / month. Let's take a look at what you'll be making half way (4 houses). You pay 4 * 255 * 12 / year on mortgages = 12240. You collect 4 * 500 * 12 / year in rents = 24480. You get a personal allowance = 11000 Taxable income = 13480 Income tax = 2696 Total income = (24480- 12240- 2696) / 12 = 795 / month. On top of this he would be remortgaging and remortgaging and remortgaging his properties to buy new ones because he has 0 capital (at 4 houses he makes 795 and at 8 he makes 1308, he still needs a place for himself to stay and does need food and water :p), this was also somehow completely absent from the calculations. Quote Link to comment Share on other sites More sharing options...
Chuckle Posted October 20, 2016 Author Share Posted October 20, 2016 Sorry but this is a bit naive. 1. If the area is highly desirable and you can rent out the property easily for 500/month, you can forget about the 80K pricetag. 2. You're completely ignoring rental income tax. You must normally pay income tax on any profit from renting out property you own. Put simply, your profit is the sum left once you’ve added together your rental income and deducted any allowable expenses or allowances. Your rental profits are taxed at the same rates as income you receive from your business or employment – 20%, 40% or 45%, depending on which tax band the income falls into. Btw: you can't deduct your mortgage as an expense, only the interest on it. You pay 8 * 255 * 12 / year on mortgages = 24480. You collect 8 * 500 * 12 / year in rents = 48960. You pay 40% taxes on your collected rent (higher rate tax band) = 19584. Congratulations you make 408 per month ((48960 - 24480 - 19584) / 12). So even if your house prices and renting numbers were right (and trust me, they are not), you would be living in absolute poverty for at least the next 25 years. 3. If you think managing 8 properties is "retirement", think again. Finding tenants, collecting rent and property maintenance is a huge pain in the ass. Your numbers are off, you are ignoring important costs and underestimating the actual work involved. Varies per area , but around Newcastle they are much much higher. I have checked a few other city's and same thing (London etc are not the same). You can always get around paying that much tax by opening a ltd company put all the profits into the business then pay yourself a 15-25k per year wage the remaining is the business profits you pay a low tax amount on your wage the business pays a low tax rate on the remaining profits lowering your tax from 40% to 20% you can then buy anything business related you like on the business account and use it as tax write offs cars, premises, travel, hotels etc... feel free to google this as there is a lot of info on it. I know a few people doing the same as bob so your argument that its not possible is a bit flawed Quote Link to comment Share on other sites More sharing options...
Krys Posted October 20, 2016 Share Posted October 20, 2016 and its 6m l0l sure Quote Link to comment Share on other sites More sharing options...
milanotje Posted October 20, 2016 Share Posted October 20, 2016 what if ur 46? Quote Link to comment Share on other sites More sharing options...
Krys Posted October 20, 2016 Share Posted October 20, 2016 what if ur 46? then it doesn't work you have to be 45 Quote Link to comment Share on other sites More sharing options...
milanotje Posted October 20, 2016 Share Posted October 20, 2016 then it doesn't work you have to be 45 what if born on leap day Quote Link to comment Share on other sites More sharing options...
Prolax Posted October 20, 2016 Share Posted October 20, 2016 what if born on leap day Then you should quit life already. To answer this thread. The best years of your life are before 45. Would you waste those years by just saving money? Quote Link to comment Share on other sites More sharing options...
Chuckle Posted October 20, 2016 Author Share Posted October 20, 2016 Then you should quit life already. To answer this thread. The best years of your life are before 45. Would you waste those years by just saving money? What are you talking about xD he would have more money than most of his frends who are spending £500-600 per month renting its not like hes just existing till 45 Quote Link to comment Share on other sites More sharing options...
