How I Recession Proof My Portfolio

This week in the Property Investment Mastery Facebook Group I was asked the following question:

Heres a Q: For every house you BTL (with 60k down on a 190k house, at say £340pcm mortgage cost and 800pcm income) how much capital should you reserve as cash in the bank per house?

Currently we have a year’s worth of living expenses in premium bonds as our contingency. For each of my properties I have two month’s worth of costs put aside then all my other net rental income goes into a stocks and shares ISA until the time that I want to buy the next property or invest elsewhere.

In terms of recession proof, I know that worst case scenario I could accept a rental income of my mortgage payment + 10% maintenance (plus service charge) so there’s a minimum figure I could accept and to do that I could put in the AST the full price rent and then discount it with a rent free period, so that I wasn’t shooting myself in the foot when the market starts to rise again… usually in a boom period and that would be a good time to sell if I really didn’t want the property anymore. Also keeping the rent at market levels means my mortgage lender doesn’t panic if they ask to see the AST.

You should also save a pot for any renovations / larger costs. I transfer out all of my excess net profit into an ISA so I’ve got a pot building there as well!

Finally, interest rate rises. I have a policy of only remortgaging a property to take out £’s once. After that as the property price rises over time, at the end of my fixed term I’m usually able to reduce the LTV and get a better interest rate, and also pay less on the interest!

It’s about being smart with the money that you’ve got so that you always have a back up! If you want you could also get renters insurance to help out if anything goes wrong.

What do you do to recession proof your property portfolio?


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