1 November 2026 · The basics
What £50,000 actually buys you
How the numbers work on a North East buy-to-let, explained slowly, with two worked examples — one that pays you and one that costs you.
If you have £50,000 and you are thinking about property, the first thing to understand is that the money does not buy a house. It buys a share of one, and a loan for the rest. Everything that follows depends on two numbers: what the house costs, and what it lets for.
Here is how the arithmetic works, slowly, with a real example.
The two numbers that decide everything
What you pay is the first one. What it rents for is the second. Most people spend all their time on the first and almost none on the second, and the second is the one that pays you every month.
In the North East, a two-bedroom terrace can cost £40,000 and let for £750. It can also cost £60,000 and let for £520. The cheap one is the better investment, and not because it is cheap — because the rent is high relative to what it costs.
A quick test you can do in your head: divide the monthly rent by the finished value of the house. If it comes out below 0.7%, the numbers will not work at today's interest rates. Above 1.1% and it can. Between those two, it depends on the detail.
Where the money actually goes
Take a £40,000 house. You will not pay £40,000 for it. You will pay:
- £40,000 to the seller
- £2,000 stamp duty (5% on a second property at this price)
- £1,500 legal fees
- £1,000 for a survey and mortgage costs
- £3,500 sourcing fee, if you use someone like me
- £8,000 of work, if it needs a kitchen
That is £56,000 to get the keys. If you have £50,000, you are £6,000 short before you start — which is why the first thing to be honest about is what the house really costs you, not what it is advertised at.
What the bank does later
Once the house is finished and worth £48,000, you can refinance. A lender will typically give you 75% of that value: £36,000.
So of the £56,000 you spent, £36,000 comes back to you. Your money left in the deal is £20,000.
That is the number that matters, because it is the money actually at risk after the bank has taken its share.
What you get each month
Rent £750. From that:
- Management at 12%: £90 (they find the tenant, collect the rent, deal with the problems)
- Insurance and compliance: £40
- Running costs: £193
- Interest on the £36,000 at 6%: £180
£750 minus £503 is £247 a month. On the £20,000 you left in, that is a 14.8% return.
The same maths on a worse house
Now the £60,000 one that lets for £520 and needs £18,000 of work.
- Money needed to buy it and do it up: £87,000
- Refinance at 75% of £75,000: £56,250
- Money left in: £30,750
- Interest at 6%: £281 a month, against rent of £520
- Net: minus £55 a month
Two houses in the same county, similar prices, and one pays you £247 while the other costs you £55. The difference is not the discount and it is not the street. It is the rent against the finished value.
What this means if you are starting
Do not look at the asking price first. Look at what the house would let for, decide whether that is enough for the price, and only then go and see it. It will save you weekends.
Do not buy the cheapest house. The cheapest house usually needs the most work, and the work is what turns a good-looking deal into the £60,000 example above.
And get the work priced before you offer. Not guessed — priced. My builder's rates are in writing, which is why I can tell you what £8,000 of work buys and what £18,000 buys.
If you are a dentist, a driver, a shop owner, anyone with savings and no time, this is the whole of it. The rest is detail.
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Numbers like these go out every Thursday. Two or three a week, each checked against what the street actually sold for and what the house actually lets for. If you want them as they happen, put your email in at mikebells.co.uk/contact and say "the Thursday list". If it is not useful, say so and that is the end of it.
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Three things you can do with this
Know someone buying or selling in the North East? Introduce us. If a purchase or sale completes from that introduction, £500 comes off the fee — for them, or for you.
Want the full rent table? Every town we track, let-agreed rents, updated weekly. Reply with "numbers" and I'll send it.
Or just tell me your town and I'll send you what two and three-bed houses actually let for there, not what they are advertised at.
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