BTL, Property Moose, et al or something completely different

You will no doubt get differing opinions on BTL. However there should be general agreement that whatever you think of BTL it is not as good going forward as it was. With only £100k I would definitely recommend crowdfunding over direct ownership as even with leverage you will not be able to acquire a large enough portfolio to be confident. Of course you might be lucky with a small portfolio, but if you are feeling lucky or relying on luck then I suggest Premium Bonds.

Don't forget that levers work both ways, they can accentuate losses as well as gains.

I have not crunched the numbers but at first sight the proposition looks flimsy to me. If you could manage to get BTL mortgages at 66.6% LTV you could buy properties for £300,000 using the £100,000 mortgage extension. That makes total mortgages of £400,000 which have to be paid from the rent on the BTL properties. Plug in the rates and see what you get.

In the unlikely (IMO) event that the numbers worked it would be your equity doing the work not yourself, so it would not replace your employment. You could save a bit by managing the properties yourself but this would not be a full time job and would not replace your salary unless you are on the minimum wage. The only scenario in which it might just be workable would be in an extremely low cost area with social tenants. Best of luck with that.

If I understand you correctly, you suggest extending your mortgage by £100k and using that to get BTL loans. So you will actually be borrowing 100% of the cost of your properties one way or another. A quick fag packet calculation:  What rate are you paying your mortgage at, and what rate can you get BTL loans at? Say overall it works out at 5% (I have no idea if that is realistic). If you buy a property for say £200k, interest payments at 5% are going to be £10,000. That's £833 a month. How much can you rent this house out at? Is it significantly more than £833? There will be other costs: insurance, maintenance, letting agent fees unless you are going to find your own tenants. So you are in to maybe needing to rent this £200k property at £1000 a month just to stand still. Is that likely? (I don't know. Depends on the area maybe.) No money for you to live on until you rent for more than that. If my 5% interest is wrong, what figure do you reckon is right?

(Also in any calculations bear in mind you will not have 100% occupancy. Not occupied = no income. However the loan charges will keep coming.)

Alternatively, work backwards. How much do you need to take out of the business (for that is what it is) every month to live on? How much rent can you get, how much does that leave to pay your loans? Is it realistic to expect to borrow money at that rate?

When people talk of leveraging, they usually start out with some of their own cash. Essentially you seem to be trying to leverage £zero, which I don't think works!

With P2P you can get 1% a month from MoneyThing, 12% a year from SavingStream, 10-14% from Ablrate, 10-11% from a range of others. You must diverify between platforms to protect yourself. Say you get 11% average. that's £11,000 a year of taxable income. Assuming you put it into ISA it's less and some of it is tax free anyway. You can get 30% of purchase price back (capped at income tax actually paid in the tax year of purchase) and 10-11% tax free for 90% or 50% secured money from some of the Albion VCTs.

So with minimal attention you can get say £11,000 a year of tax free income from your £100,000.

While you still have your job you can do stoozing on credit cards to get more money for P2P. Virgin money transfer credit card for 4% initial charge then 0% for 40 months, say.

With BTL you have the outgoings for purchase and fees and maintenance. You also in a few years wil start to have to pay some of the interest as it gradually becomes not a deductible business expense. Even leveraged 3:1, in many parts of the country you're going to struggle to match what P2P delivers with BTL. You can help that if you don't mind refurbishing properties to cut your purchase cost.

If you're 55 or over you can today pay into a pension up to your level of earned income and get tax relief on the way in. You can then immediately take out 25% tax free lump sum and at some sensible rate take out the remaining 75% taxable income. I assume you are or soon will be 55 since you're retiring.

So for 55 or older a route would be something like this:

1. Money into pension.
2. 25% out of pension. Watch for the recycling rules, ask about them if you wil take more than £7500 tax free lump sum, unless increase in pension contributions over the last two years plus this year plus next two will not exceed 30% of the lump sum (increase in , not total amount of).
3. P2P as you take out the 75%.
4. VCT to eliminate your income tax bill and provide some tax free income.

Between that lot you should do quite nicely on the tax breaks and investment returns.

If it is retiring you can also draw on capital at some rate since you will get an income top up from the state pension at 66-68 depending on your age now. Maybe you'll also have some work defined benefit pension on top. Personal pension is probably better invested but you can draw on that for income. the investment can be inside a pension or you can take some out to use for P2P or there are a limited number of SIPPs that will let you use some P2P platforms.

IMO George Osborne has killed highly leveraged BTL with the change to mortgage interest tax relief.

Even without that, based on my limited personal experience, the hassles, costs, and loss of liquidity can soon outweigh any (potential) profits - stamp duty, flooding, landlord insurance, gas certificate, voids, letting agent fees (plus VAT).

Some folk have made good money out of well timed, well placed conversions to HMO, but you better have a good team and know what you are doing.

The forthcoming Property Investor show at London Excel exhibition centre (Docklands) Fri 9th and Sat 10th October, free admission if you register online might be worth a wander around as a sortof brain storming exercise of things to consider.

The exhibitor list contains just two alternative finance platforms (LendInvest and Crowd Property) from a quick glance.

It seems like far too much hassle for the potential return.   Think of the non paying tenants still clinging on 2 years later and then trashing the place when finally evicted.   Also the outbreak of dry rot in a place where the surveyor was unable to reach so not his responsibility.   Repairs decorating replacements insurance claims, it goes on and on.......

I considered it 20 years ago but invested in Equity Income Investment Trusts instead, paying me an income of over 4% and still doing that now they are worth 3 time the amount, with no input from me at all.

Have researched/considered seriously for 3 years & got so close that I put in offers for 2 props 2 years ago but both oweners decided to stay put in the end! (just my luck). In the end, I decided I am too nice a person to get into it. You need to be a certain character to manage props yourself. To give you an example, I look after one rented house for a relative of mine who is not able to doit  herself & her only income is derived from this (zero pension & not much in way of savings). The current tenants (circa 3 yrs on) have decided to move out earlier than their contract stipulates (6 months), we thought OK, I have had 2 conversations already with them & despite both parties being nice, they are trying to take the proverbial with excessive wear & tear & pretending some damage was already there when they moved in 3 yrs ago! I have actually found it a lot easier to be tougher with them than if it was my own place. The matter is still unresolved.

This is just a superficial example of the emotional & time perspective of property letting management with one property. Account for fact that you need to pay council tax now even when property vacant & I think you can coclude, as most have already eluded, that btl is not for everyone. You can easily get 0.5-1.5% on p2p with quickish access to your money. If that reduces with time, then btl maybe worth having a look at again in future. imho. Best of luck in what you decide to do beastie.