Pension advise please

Status
Not open for further replies.
TheWanderer said:
But the fact remains, you’re going from 25% equity to 100% equity over that period of time. Unless the property drops by 75% in value, which is highly unlikely, and you’ve basically used other people’s money to achieve it.

If the property price doesn’t change, given the flat I mention above it’s the equivalent of investing £13,000 and getting 19% interest over 6 years and ending up with £40,000. What other investment would get you that?
Click to expand...

None of this is guaranteed. You're discounting costs too.

I get that it's great (for some) to see tax payers money to generate them some wealth. I'll give being a slumlord a miss though.
 


TheWanderer said:
Here's a flat with a guide price of £40k: Check out this property for sale on Rightmove!

And you could get £395 per month rent: Check out this property for rent on Rightmove!

£27,000 mortgage paying £395 off per month (to keep it simple) would mean you have paid off the mortgage in 6 years and are then left with a £40k property for your £13k investment. Obviously you need to take self assessment, tax, maintenance, costs etc into account.

It is pretty straight forward to be honest, and if you can get a 25% deposit, in my opinion its a sound long term investment.
Click to expand...
Maybe a bit overoptimistic. You're imagining buying at the lowest price and getting the same rent as another property in the area is asking for. You might well have to pay more and you might also struggle to get tenants at the rent being asked for. Why would I pay 400 a month to live in a flat in Town End Farm when I could live 5 minutes from the City Centre for less?

www.rightmove.co.uk

Check out this student property on Rightmove!

3 bedroom terraced house to rent in Rosedale Street, Sunderland, Tyne And Wear, SR1 £65 pw. Marketed by Select Accommodation, Sunderland
www.rightmove.co.uk www.rightmove.co.uk
 
AndrewP said:
I doubt they're borrowing to do it.
Click to expand...
Maybes not, but a large property portfolio can be achieved by initial investment, regardless of value and if properties grow in value, or the equity increases by paying off the debt then remortgaging to release funds and buy more.
AndrewP said:
None of this is guaranteed. You're discounting costs too.

I get that it's great (for some) to see tax payers money to generate them some wealth. I'll give being a slumlord a miss though.
Click to expand...
I mentioned earlier I’d left out costs to keep it simple.

People often see it as hassle, and is probably the reason why many don’t use property as an investment.
 
Last edited:
zwartekat said:
Maybe a bit overoptimistic. You're imagining buying at the lowest price and getting the same rent as another property in the area is asking for. You might well have to pay more and you might also struggle to get tenants at the rent being asked for. Why would I pay 400 a month to live in a flat in Town End Farm when I could live 5 minutes from the City Centre for less?
Click to expand...
He's ignoring loads of factors. If it was that easy all the money men would own the poor areas of Sunderland. 19 percent returns would see them flocking.

In reality, they'll consider everything.
 
TheWanderer said:
I mentioned earlier I’d left out costs to keep it simple.

People often see it as hassle, and is probably the reason why many don’t use property as an investment.
Click to expand...
It's an almighty hassle and/or cost. If not big corporations would be slumlords.
 
TheWanderer said:
But the fact remains, you’re going from 25% equity to 100% equity over that period of time. Unless the property drops by 75% in value, which is highly unlikely, and you’ve basically used other people’s money to achieve it.

If the property price doesn’t change, given the flat I mention above it’s the equivalent of investing £13,000 and getting 19% interest over 6 years and ending up with £40,000. What other investment would get you that?
Click to expand...
You have to pay tax on the rental income.
 
AndrewP said:
He's ignoring loads of factors. If it was that easy all the money men would own the poor areas of Sunderland. 19 percent returns would see them flocking.

In reality, they'll consider everything.
Click to expand...
Ignoring costs doesn't make sense. And people don't just 'see it as a hassle'. If you've ever rented anywhere out then you'll often know (not always) that it can be more than just hassle. Truth be told, a lot of buy to lets are in areas where people don't really want to invest in a house to live in and therefore you're still faced with that issue if you ever want to offload the property.
 
zwartekat said:
Ignoring costs doesn't make sense. And people don't just 'see it as a hassle'. If you've ever rented anywhere out then you'll often know (not always) that it can be more than just hassle. Truth be told, a lot of buy to lets are in areas where people don't really want to invest in a house to live in and therefore you're still faced with that issue if you ever want to offload the property.
Click to expand...

Yep. Nobody wants to live in these areas unless they've got no choice.
 
Joe Public said:
You have to pay tax on the rental income.
Click to expand...
Indeed you do, and you would have to take that into consideration but there is ways to reduce that, declaration of trust for example to someone on low income.
Although I’ve simplified the process dramatically, it’s still a worthwhile option imo. But everyone is different and hassle and risk levels come into it.
 
zwartekat said:
Ignoring costs doesn't make sense. And people don't just 'see it as a hassle'. If you've ever rented anywhere out then you'll often know (not always) that it can be more than just hassle. Truth be told, a lot of buy to lets are in areas where people don't really want to invest in a house to live in and therefore you're still faced with that issue if you ever want to offload the property.
Click to expand...

Just trying to keep it simple, of course you need to take into account all costs, but I’m sitting at work and not in a position to go into the far end of a fart with the figures. Tax, insurance, gas cert, underletting, maintenance, groundrent costs all need calculation.

I’m not forcing anyone to do our FFS, but it is a viable investment given property prices and low interest rates.

Having one property myself, and if I ever get the chance of a windfall I know where my money is going, it’s not for everyone that’s for sure.
 
TheWanderer said:
Just trying to keep it simple, of course you need to take into account all costs, but I’m sitting at work and not in a position to go into the far end of a fart with the figures. Tax, insurance, gas cert, underletting, maintenance, groundrent costs all need calculation.

I’m not forcing anyone to do our FFS, but it is a viable investment given property prices and low interest rates.

Having one property myself, and if I ever get the chance of a windfall I know where my money is going, it’s not for everyone that’s for sure.
Click to expand...
Yeah, sorry mate, didn't mean it come across as having a go.
 
zwartekat said:
Yeah, sorry mate, didn't mean it come across as having a go.
Click to expand...
no worries mate, probably have underplayed it a bit.

I became an accidental landlord myself and yeah it’s a bit of hassle, but long term should be worthwhile. On current course I’ll have another £77500 pot when I retire to cash in at current prices. Admittedly it’s in a slightly better area than what I used as an example so easier to let and it attracts a better standard of tenant.
 
TheWanderer said:
Just trying to keep it simple, of course you need to take into account all costs, but I’m sitting at work and not in a position to go into the far end of a fart with the figures. Tax, insurance, gas cert, underletting, maintenance, groundrent costs all need calculation.

I’m not forcing anyone to do our FFS, but it is a viable investment given property prices and low interest rates.

Having one property myself, and if I ever get the chance of a windfall I know where my money is going, it’s not for everyone that’s for sure.
Click to expand...

Well my retirement is coming up and it’s an option I certainly will be looking at.
Certainly don’t want to have a few , just one paid off and bring in additional taxable income.
 
Status
Not open for further replies.

Back
Top