| It has been our experience that many investors get shown one or two bedroom houses or flats when property investors ask them for possible investment property to buy.
It has already been mentioned that the System teaches you how to buy the right kind of property. In our course we don’t teach people to buy one or two bedroom houses and flats. In fact, we discourage it.
On the Property Investment Workshop you’ll learn how to buy property that makes at least £500.00 passive income, per property, each month
Many delegates even push this to £800, £900 or even £1000+ in passive income, per property, per month. |
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The below is an example of why we discourage investment in one or two bedroom flats
Let’s say that you decide on buying a two bedroom flat for £150,000, the following would then happen:
Firstly there is the capital outlay - say 15% deposit - which works out to £22,500 (£150,000 x 15%) and then stamp duty (1%= £1,500) and closing costs say another £1,000 - so all in all £25,000.
So you would have to borrow 85% from the bank, which works out to £127,500 (let’s assume that the bank is charging 5.5% interest)
How much could you get for this flat in rent? Well looking at “yield” as most investors do – You would be really lucky if they could get a yield of
6.5%
| Income per month would be |
|
£813.00 |
| Minus their mortgage payment |
£585.00 |
|
| Minus management fees (@10%) |
£81.00 |
|
| Minus Insurance |
£20.00 |
|
| Minus maintenance reserve |
£30.00 |
|
| Minus service charge |
£20.00 |
|
| Minus mortgage reserve (assume flats let only 11 months of the year) |
£50.00 |
|
| Total Expenses |
£786.00 |
|
| Monthly Profit |
|
£27.00 |
Just £27 per month profit...If you were to do your own property management and don’t build a maintenance reserve for repairs, you could if you are lucky make a profit of £138.00
That’s a 6.62% return on investment
That’s a 6.62% return on investment
£138.00 x 12 months = £1,656 profit for a £25,000 investment
How many of these investments would you need before you become financially free?
20?
Well, let’s suppose you did manage to come up with the £500,000 pounds you would need for the 20 investment properties - you’ll end up with 20 properties each making you £138 a month resulting in a passive income of £2,760 per month.
In a sense you might be financially free but you would have a full time job managing all the properties and, to invest in a letting agent to do it for you would cost you a total of £1000 pounds per month at a cost of £50 per investment property. |
