The Reality of Building a UK Property Portfolio with Rod Turner

Expat Property Story

#165
Is property still the best way to build wealth?
Is it still worth all the effort and aggravation.
How long does it take to build a portfolio to see you through your later years or pass onto your children or grandchildren.
How much money will it take.
These are just some of the questions we’re looking at in this week’s show, which will definitely get you thinking about your long term goal and how to achieve it.
And we have just the man to do that for you.
Rod Turner, host of The Rodcast Podcast first appeared on this podcast in Episode 42 and delivered my favourite four words out of the nearly 888,000 odd words spoken on this podcast so far. And the four words were:

Don’t talk, just do!
But in this episode, Rod adds some caveats by looking at the realities of building a residential property portfolio and cites a hypothetical UK property portfolio builder

Rod’s imaginary investor starts his/her property investing story with a pot of 250K

After 7 years, with profits reinvested, the portfolio is worth £5 Million

Portfolio Value: £5 Million

Equity at 25%: £1.5 Million

Mortgage at 75% LTV: £3.5 Million

Rent Roll per year (assuming 7% yield): 350K

Mortgage Costs per year (assuming 5%): 187.5K

Maintenance: 35K

Management Fees: 42K

Other Portfolio Costs (accountancy, insurance etc.): 15K

Voids & Arrears: 17.5K

Profit: 53K

Corporation Tax: 10K+

Dividend tax £2610 (assuming no other personal income)
Net income for the shareholder £40,290
During this episode, we discuss:
Investment strategies and opportunities in the UK property market

- Whether property is still the best way to build wealth

- Importance of taking action and proving oneself as a reliable buyer in the property market

- Learning from mistakes and continuously seeking deals and capital

- Analyzing investments against tax-free ISAs and considering the effort required

- The underestimated factor of time in property investment

- Buy-to-let properties and potential total returns over a longer period

- Cash flow and capital growth not being mutually exclusive

- Consideration of affordability and potential for disproportionate increases in household incomes

- Importance of the internal rate of return (IRR) in building wealth through investments

- Investment focus on retirement and private equity shift to a fixed income model

- Challenges of achieving a true fixed income model in property due to idiosyncratic risks

- The significance of annualizing investment metrics and forecasting

- Potential limitations of investing in high-end, renovated properties

- Importance of adaptable property models to maximize returns

- Consideration of management team and investor's unique skills

- The need to start small and scale up

- Potential opportunities in catering to the UK's aging population

- Importance of wealth in providing opportunities for retirement and investment

- Subjective nature of retirement planning and individual needs

- Opportunities presented by an aging population in the UK

Keywords:
property investment, income, infrastructure investment, affordability, wealth dynamics, London, UK, expat property, tax-free ISAs, aging population, retirement income, buy-to-let properties, interest rates, capital growth, internal rate of return, retirement planning, investment options, cash flow, total returns, property development, market changes, management team, investment metric, scaling up, long-term goals, taking action, mistakes, lessons learned, property