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Early Retirement Passive Income - Property Rental


Early Retirement Passive Income - Property Rental

I've had some questions about our property rental portfolio, so thought it might be interesting to do a post on it.

We like property as an investment because we feel the risk profile suits us. After a bad experience with a financial advisor scared us away from investing in the stock markets, we had to find alternative investments. Property was what we chose.

We're now back in the stock market with some low cost index funds, but property still makes up the main part of our investments. It's where the passive income to fund my early retirement comes from, so it's kind of important!

Some time ago, I did a post on building a property rental portfolio to fund retirement so I'll try not to repeat too much of that here.

Location

Location of our rental properties

Our rental properties are all in England, but I feel that the principles will often be the same whichever country you live in.

In general, the south east of England has the highest priced housing due to it's proximity to London, and house prices reduce as you move north through the country.

The blue text boxes on the map point to the location of our rental properties, which are:

6 in St Neots in the county of Cambridgeshire. These are towards the edge of the south east region, but still within commuter distance of London.

1 in Newcastle-Under-Lyme in the county of Staffordshire. This is in the West Midlands of the country.

4 in Burnley in the county of Lancashire, in the north west of England. These are in a much lower cost housing area compared to the south east.

We're also in the process of buying an apartment in the French Alps, but I've left this out of this post as it won't be completed until later in the year and also because we may decide to live in it.

The figures

This is for the people who like numbers! I've included the information to answer the questions that I've been asked, plus a bit more. I guess it's a case of read the bits that you want, and ignore the bits that you're not so interested in.

Also, I've included the tables of figures in GBP and USD, so just pick the table with the currency your prefer, It's the same information, just the currencies which are different.

Figures in GBP

Rental property figures in GBP

Figures in USD

Rental property figures in USD

Observations & comments

Some of these may be a bit random, but coming to mind are:

  1. The returns on the properties in the Midlands and the North of England are better than those in the South East. There are pros and cons to it, but it can be worth looking beyond your local area to find locations that offer a higher return.

  2. The % returns for the rental profit range between not that great and OK, depending on the property. However, when capital gains are also taken into account, I feel the returns are pretty good.

  3. However, for us, the cash flow from the properties are sufficient to cover our early retirement costs, so we are not forced to chase higher returns.

  4. Our occupancy rates are very good, averaging almost 99% for the year. From memory, the historical average isn't much below this, perhaps 96% or 97% typically. Having the right type of property, well maintained, in the right location, priced sensibly, and being a good landlord makes a big difference.

  5. We use agents to manage our properties which costs quite a lot. For us this is necessary because we live remote from the properties. Others may choose to do this work themselves and increase their profit.

  6. Around 10% of our rental income goes on maintenance costs. Some years less, some more. This ranges from minor repairs right the way up to new bathroom, boiler or new double glazed windows for example.

  7. We pay for utilities, gas, electric, water, WiFi, on the property that we let to students. Elsewhere, these are the tenant's responsibility.

  8. The current value is an estimate from Zoopla. I used an average of the low and mid values.

I'm going to leave this post now, but if you have any questions, let me know in the comments and I will get back to you with an answer. Also, as mentioned earlier, I gave a bit more general information in my previous post building a property rental portfolio to fund retirement

Last thing, these are pictures of either the actual or similar properties that we have in our portfolio. The newer houses are the ones in St Neots, the larger detached property is the student house in Newcastle-Under-Lyme, and the older terraced (row) houses are in Burnley.

6 commentaires


David @iRetiredYoung
David @iRetiredYoung
02 févr. 2021

Hi CJ

Yes, feel free to contact me. If you have one of the weekly post notification email, you can reply to that and I'll get the email.

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David @iRetiredYoung
David @iRetiredYoung
02 févr. 2021

Hi Mr Firecrackers

I've just been looking at your blog and enjoyed reading about what you've achieved and your future goals. Like you, I particularly like reading real life experiences. And about real life experiences, wow! that's a big project that you're doing, it must be exciting and sometimes a little scary too!


Before I give any feedback against your question, I need to say that while I'm happy to share what we did, I'm definitely not an expert. I think we did a mixture of things - we had a mortgage for our first property and then we bought another property also with a mortgage. I think once we had those two properties we focused on trying to reduce…


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cjcorney
02 févr. 2021

Hi David,


Thanks for your excellent reply! We have finally made it to Dubai now and I am looking at options for investment both here and a first investment property back in the UK. If possible could I send an email to you directly? I am bit wary of posting details of my finances and plans online for now!

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mr
02 févr. 2021

Hi David,


Really happy to have discovered your blog! Last year i've sold my first rental unit and decided to take the gains and invest into a rental building with 3x1B + 1x4B (in the beginning i was thinking to use the attic as a 1B but the ceiling is too low). I'm now on the construction process (big first time project for me). My question would be regarding your journey and what you would recommend.


Did you pay off the morgage on the first one and then moved on to the second? Do you recommend that? Or you took the positive cashflow saved it then bought another one (with an additional morgage i imagine)?


I should have ~36k in…


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We started in property investment after some bad experiences with financial advisors, after which we didn't trust the stock market. Things have changed since and we're back in the stock market with low cost ETFs, but I don't regret the property investments, they've worked out well for us.

Although we have UK property, I don't know today's UK property market well enough to make a prediction, but I'm happy to share some general thoughts:

  1. Overall, I feel that the market for landlords in the UK has become more difficult. There are more regulations that cost money to comply with and it has become less tax efficient over the years. I suspect this theme may continue as buy to let landlords…


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About Me

I think I'm a normal kind of guy, although I've perhaps had a slightly non-typical life in some respects.  I'm from the UK, 47 years old, married to Sally and with two

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