Early Retirement Passive Income - Property Rental

April 29, 2018

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

 

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

 

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.

 

 

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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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