First Choice Matrices

You can play with some of the figures yourself by downloading one or more of our Matrices.

Investment Matrix & Investment Matrix Professional , are multi page Excel spreadsheet for planning and forecasting purposes.

Offer Price Matrix is designed to calculate the 'cash cost' of any single property prior to making an offer.

Auction Analyser Matrix shows the detail to which we go in assessing properties coming up at auction.

Bridging Finance Matrix shows the benefit of building a portfolio using bridging finance, which will normally be the case when buying at auction.

Fully enabled versions of all Matrices can be purchased online.

For any further information please email firstchoice@buy-to-let.com

The Financial Dynamics of Buy-To-Let

The following is a summary of one aspect of one of the most complex forms of investment open to most people and can only be fully appreciated by attending our Master Class in Buy-To-Let .

The principle reason for the complexity is the ability to borrow and the resultant effect of gearing and compound growth on the borrowed money, given that property prices will continue to rise over any 10-15 year cycle.

As is demonstrated by many of the Matrices that we have designed, the principle return/profit in buy-to-let is Capital Gain, which outstrips Yield/Rent by a factor of up to 10 dependent on the level of gearing.

We specialise in buying distressed property because there is a serious tax advantage, which can knock on into any other property that an investor may buy, including New-Build, resulting in potentially positive tax free cash flow of many thousands of pounds for many years.

When a distressed property is purchased and refitted, the refit costs are split between "Revenue" and "Capital" costs.

Subsequently the revenue costs are set of against any rental profit until such time as they have been fully absorbed and the capital costs are set off against any Capital Gain that is realised when the property is sold.

Typically a complete refit of a distressed property in a low property value location is around 10 -15k. See Refit Standards .

This sum generally splits between revenue and capital on a 70/30% basis.

On the assumption that the rental profit is £ 1k after all operating costs and interest have been deducted, if the spend on the refit was £ 10k then £ 7k would be revenue costs, which means that, disregarding any rent increases, it would take 7 years before any tax was due to be paid on the rental profit.

Rental properties should be refitted every 5 years to maintain standards.

If a further say £ 3k was spent on the 5 year refit, which would be a 100% revenue cost, this 3k would be added to the original 7k further extending the tax free period.

If during the 1^st 5 years additional properties were bought and the decision was taken to sell a property to take advantage of the CGT exception, any revenue losses still outstanding on the property that is sold can be set off against the remaining properties in the portfolio further extending the tax free period.

By introducing distressed property into a portfolio, non-distressed and even new build that produce a rental profit can be bought and that rental profit remains tax free until such time as all the revenue costs of refitting the distressed properties have been absorbed.

We can demonstrate how an investor with say 50k could develop a portfolio over 10 years that would result in a positive cash flow rising to £ 18k+ in the 10^th year, tax free, and equity in excess of £ 600k assuming a 5% annual increase in property values without investing any additional cash.

By sticking to distressed only, no tax would be payable on the positive cash flow until 2-4 years after the investor ceased buying.