How Off-Plan Properties can Damage Wealth

CAN I really own a £1 Million property portfolio?

Offcourse, but you also own the £ 850,000 debt!

Lets do some maths. If the portfolio yields 6% (which you’d be lucky to get!) then your Monthly Profit & Loss would be:

Rent	£ 5000.00
Letting Agent Fees (10%+VAT)	£ 587.00
Mortgage Interest Only @ 5.5%APR	£ 3896.00
Service Charges for flats 4 x £80	£ 320.00
Repairs a modest £50 per flat per month	£ 200.00
Total Profit Every Month	£ 3.00

So at best, with the portfolio fully let at the market rent as stated by the developer you would basically break even. Great.

The likely scenario would be that the property yields at 5% with 2 months void period per property and repairs at £75 per month. This equates to a loss every month of £1,451. Ouch!

The worst case scenario is that it yields at 4.5% (due to a glut of rental properties that come on to the market just like yours) with 4 months void and £100 repairs. This equates to a loss every month of £2410.

So you need to decide how long you want to hold on to this pretty riverside portfolio. Well this will be dependent on how big your bank balance is because this hungry portfolio is going to eat it all up and probably your life savings too. That’s assuming you’ve got any life savings left over after deducting these property company’s extortionate finders fees!