Just typed out a big reply and pressed post and my IE crashed WTF.
It went along the lines of:
ISA @ 6% = 27k over 5 years.
£100k house at £400pcm = 24k over 5 years but excluding any house price growth.
Looks close, if my maths is correct. That's assuming I put 40+40+20 in the ISA.
Also 400pcm is low but would easily cover tax and voids at that rate.
What are peoples thoughts on VLS80 and the vanguard ISA platform?
I think you're looking at this a little simplistically.
What assumptions have you made in terms of void periods, maintenance (repairs), mortgage fees and tax rates?
You need a gas safety certificate, landlord insurance, EPC, legionnaires disease (if it has a boiler tank), electrical safety certificate (optional currently, probably not forever), letting agents fee (or advertising money if you're finding tenants yourself), deposit protection fee, emergency fund for repairs and then a contingency for voids and decorating between tenancies.
Realistically if you're buying a £100k house with £50k down, the figures are going to be more like this.
£550 PCM rent is about £6,600 annually. That would be a good yielding property IMHO.
£660 agent fees (10% is fairly standard for a managed property, expect to pay a months rent if you just want them to find and vet tenants).
£1,500 mortgage (£50k @ 3% interest only is £125 per month).
£220 landlords insurance
£60 gas safety certificate
£60 electrical safety certificate
£60 energy performance certificate
£30 legionnaires disease risk assessment (rollseyes, government red tape)
£20 tenant deposit protection
The above can be set against your tax (mortgage interest only to 20%), so your tax would be about £800. Unless you're higher rate, then it's £1,600.
Oh and if you've got a student loan, that's another £360 too.
Then you want to put away another 10% for repairs and 10% for void periods (to pay the mortgage).
Of your £6,600 rent, you've got £2,500 left each year if you are a basic rate taxpayer with no student loans. After 5 years, you've got £12.5k not £27k.
I'd also add that stocks and shares don't ring you in the middle of the night because a radiator valve has sprung a leak, tenants do.
I've only used the vanguard platform briefly while setting a co-worker up. I found it very simple to use.
Likewise the lifestrategy funds are about as easy as it gets, I use them myself and I've set up several friends and family members with them too.
I just re-read the OPYou've already got one property, so you should know about all these costs already?