Your friend is going to get wrecked by the Renters Reform Bill (goes online May 1st in UK)
Wait till those maintenance costs start adding up.
My friend is claiming they already comply with the standards.
They’re at 3 at the moment. If they paid off the houses, it seems like the rental income would cover their living costs.
BTLs are pretty much dead in the UK as the rental yield is sub 5% in many areas. Parking the money in Gilts gets you 4-5% risk free with no hassle.
Too many people in the UK fancy themselves property investment gurus and it pretty much always ends badly when they do not have a good income from a normal job (Boiler breaks? Toast. Need to improve energy efficiency? Toast. Etc).
BTLs require higher deposits and you get worse rates. So it looks like they want to extract equity from the house value growth relative to deposit paid (given its interest only).
What your friend is attempting used to be popular pre-GFC. I will leave it as an exercise to the reader to imagine what happened to those people when occupancy rates tanked during GFC and/or the person behind the BTLs lost their main job
They were commenting on their new tenants where rent is £900 and if any of the three tenants leave, they can’t afford rent. Also took them longer than expected to get new tenants after the prior tenants abandoned the rental.
and it works great as long as everything always increases. not checking notes, but things always increase, right? right?
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House prices never go down. /s
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March 2026 is now my worst all-time month by investment dollars lost. At a glance, June 2022 was worse as an overall percentage, but few were worse.
It hasn’t finished yet.
It’s also TACO Tuesday! Things are looking up this week. I was hoping to make a few trades Monday to realize a few losses, but that opportunity has passed for the moment.
My boss told me about Fidelity Charitable the other day. Basically you can put money in this account (and you get tax credit for the year you deposit it), invest it, and then donate to non-profits through the fund (no tax credit the year you make the distribution, if different).
I have a few donations I make and if I could increase my giving through some better investment options, that would be pretty neat. I don’t want to deal with a brokerage account with my personal savings, so this would give me the advantages of a brokerage without all the tax annoyance.
Cons are that the fees are not zero. But I did the math and given the growth, it’s a net positive. And if the yields are down, I can wait out the market before donating.
Vanguard and my financial advisor have each suggested that, but so far we have not done it, mainly because we are not currently itemizing and can currently handle 1 year’s donations via Qualified Charitable Donations from my traditional IRA. Might make sense if putting multiple year’s donations into the year of contribution and itemizing that year, especially since (certainly true with arrangements we considered, likely with Fidelity) we could contribute appreciated stock and get a deduction for the full value, without ever paying any tax on the unrealized gains. Still, not clear whether it will ever make sense. (Would surely make sense for us if they start taxing unrealized gains, which I think would be good tax policy but seems unlikely to happen.)(I’m assuming we would have sufficient notice and good still make the donation first.)
One possibly important caveat, that my wife worries about but I think is a nothing: in the ones we saw (not sure if that applies to Fidelity), we cannot have any legal control that the eventual donations are distributed in accordance with our wishes. I believe that’s a legal technicality only, and that the distributions would be completely done when and to whom we request - as long as we request tax-exempt charitable organizations, but we have no recourse if they are not.
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You don’t have one now?
Nope. I make great money as an individual, but not exceptional for a household.
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I suspect you will be looking at one in another year or two with your new role, if it keeps going well!
It’s really just another form at tax time, along with understanding how different things/ decisions get taxed. My only advice is to get comfortable with it using a little bit of savings now before you find yourself sitting on a year or two of bonus money and not knowing what to do then.
I’m currently putting a lot into my 401k via mega backdoor Roth. I have enough liquidity right now and haven’t maxed out mega backdoor yet. I can only contribute 12% of my pay to that, so maybe once I hit that limit I’ll look to other sources of savings, but that feels a ways off. Especially since my kids will be starting college in another four (yikes) years!
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We have non qualified options, but just like the retirement accounts, come with rules. I ultimately decided just to take it into a taxable brokerage rather than trying to decide which set of rules or decision may or may not work out.
I rolled over around half of mine to a brokerage. It seems I couldn’t touch the company contributions