This year is going so fast! Or is that just because I’m in my 30s now? Life does seem to speed by more and more the older I get! I thought it might be a good idea to take stock of my first 6 months as a landlord. I got my first rent income in January 2018 although my first mortgage payment wasn’t until February.
The property is split into two flats. One already had a long term tenant in but the other one had a new tenant moving in just as I took over in January. This new tenant has turned out to be a mixed blessing; he is a keen gardener and asked if he could make some improvements to both the front and back gardens which has been brilliant. But he also had some banking issues and struggled to set up a standing order to pay his rent directly. He always paid on time by cash or cheque but as I don’t live in the area it was a bit of a hassle! Thankfully, that is all sorted now so all the rent from both flats goes straight into my bank either weekly or monthly.
Overall, between January and June I received just under £5,000 in rental income. Mortgage payments were just under £1,700 paying off the interest only. This was so that I could build up an emergency fund before I start paying off the capital. I also had other expenditure of £1,400 on insurance, water rates and small repairs and maintenance. This gives me a surplus of £1,900 or just over £300 per month. I will need to pay tax on this, first for the 3 months January 2018 to March 2018 and then for the current tax year 2018/2019. I’ve made sure to account for this in my cash flow.
My emergency fund is now up to £1,600 which at 15% of annual rent I think is a reasonable level and so now I have made arrangements to make regular payments off the mortgage capital. Hopefully, this will start to show in my net worth over the next few months and years. Watching my net worth increase even slightly each month keeps me motivated to save and invest and I’m looking forward to the time when the growth starts to ramp up.