How to boost your cashflow as an investor

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As a professional Buy-to-Let investor, you always want to find ways to maximise your profits you make from your property investment. There are some neat tricks you can employ to make the most out of your BTL portfolio and make your margins that much bigger every month. Here, I will detail some of the methods you can use to reduce your costs and increase profits on your properties.

Know the tax implications – and how to counter these

In recent years, the UK government has made an active effort to take even more money from landlords. An extra stamp duty cost and rises in tax has been just a couple of the ways the government is looking to take a bigger chunk of the profits. Despite all this, there are some tax breaks that a good accountant can help you take advantage of. These can include:

  • Purchasing property through a limited company- this means that your income gets taxed under the Corporation Tax rate instead of your total income tax. Corporation Tax rates are around half the rate of income tax that you would pay if you bought property in your own name. This can save you big money long term.
  • Purchasing a property through a non-working spouse- this means that you will be taxed less through income tax than you as a worker would if you bought a property in your name.
  • Know the stamp duty threshold and implications- Money Advice Service provide an easy stamp duty calculator so you know how much you stand to pay beforehand- ( This way, you know there are no surprises in terms of stamp duty.

By following these tips, you can set about maximising your income by circumventing some hefty tax hikes along the way.

Outsource your property to save on maintenance costs

Many people when buying property look to manage everything themselves. But when it comes to potential maintenance and repair issues on your property, it’s often better to use a professional managing company to take your house or apartment on. This not only saves a hell of a lot of time for the investor, as they don’t have to do anything with regards to property, it also cuts out any maintenance costs you might have had to pay out of your own pocket.

A hidden benefit of using an investment property manager is that you leverage its access to cost-effective tradespeople. These are professionals that have been vetted and tested. They are often hired on a retainer or similar contract by the property manager. Because this leads to volume work, the charges paid by the property manager to such tradespeople are often lower and those cost savings are passed to you.

Don’t jump the gun when it comes to buying furniture

After buying a property, the developers may offer a furniture pack for an additional fee. If your property is off-plan, I would wait until you have a tenant lined up before paying anything just yet. The reason being is that your prospective tenant may have several items of furniture to move in themselves, and the last thing you want is to shell out thousands of pounds for furnishings only to discover your tenant has everything they need already.

If your tenant does need furniture, then you can either pay for the furniture offered by the developers or look for something more cost-effective elsewhere. This is sometimes the better option to take as many high cost pieces of equipment or furniture can be just as liable to damage as a reasonably priced version of the same furniture.

Increase your rents – without overcharging

An obvious method to boost your cash flow is to simply charge a higher rent for your property. You must be careful when doing this however as you need to be able to justify why you are increasing your rents without overcharging. If your tenant feels your increase is unwarranted, they may leave your property and you are left with a void period you could have done without.

Check the average rental prices your properties in your area using Rightmove or Zoopla and compare them to what you are charging. Take location, bed space and pricing into consideration when adjusting your rents and you can keep on board a good tenant willing to pay a slightly higher price every month to increase your cash flow that much more.

Pay attention to your BTL mortgage costs

As you grow your property portfolio, you’ll be using new mortgages to finance your investments. The buy-to-let mortgage market is highly competitive. Every extra 1% on a mortgage of £100,000 costs £1,000 more per year. That’s £25,000 over a 25-year term. On even the most modest property portfolio, paying more interest than is necessary will cost tens of thousands of pounds.

By following the tips here, you can hit back against the niggling fees and costs associated with being a landlord and ensure that your cash flow is as high as it possibly can be.

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