Financial Planning
Discussion
Current situation;
Thirties (right side of 35), married
Working abroad for past 2 years in a less aggressive tax regime so paying around 15% tax, have managed to save equivalent of £150k in cash savings since working abroad.
Assets, wife house £140k with £105k mortgage outstanding.
Have been promoted recently so gross income is now equivalent to £275k less 15% tax, cost of living reasonably high however I will be in a position to save minimum £100k per annum potentially up to £150k pa.
I have a SIPP worth £93k spread across some UK equities
Also have ISA and other share accounts again, UK equities (racier kind some biotech, some O+G, yes I know need to be patient on these ones given the oil price slump! :-) )
We are planning to reduce UK mortgage to £70k and at a rate of 2.5% we're paying roughly £250 repayment - House rents for £650.
Plan is to save £300 per month from rental profit (keep £100 per month for unexpected bills, bolder blow ups) into FTSE index tracker, not decided yet whether FTSE100 or 250.
I have a SIPP worth £93k spread across some UK equities
Also have ISA and other share accounts again, UK equities (racier kind some biotech, some O+G, yes I know need to be patient on these ones given the oil price slump! :-) )
We are planning to reduce UK mortgage to £70k and at a rate of 2.5% we're paying roughly £250 repayment - House rents for £650.
Plan is to save £300 per month from rental profit into FTSE index tracker, not decided yet whether FTSE100 or 250.
We were looking for a larger family home before we left the UK but have put that on hold, current thinking is do we buy another UK property to rent out, possibly somewhere in London as in the right areas there is stronger capital appreciation potential vs rest of country.
Do i spread some of the savings across global index trackers re-invest dividends, let it compound slowly over time + buy another rental property?
Or focus more on building a property portfolio for income and if over next 20 years capital appreciation happens so be it.
The only landlord experience we have is renting out the wife place, so we're not exactly BTL guru's!
My question is what would the smart folks of PH do on this situation to build passive income and plan well for the future (retirement income)?
Thirties (right side of 35), married
Working abroad for past 2 years in a less aggressive tax regime so paying around 15% tax, have managed to save equivalent of £150k in cash savings since working abroad.
Assets, wife house £140k with £105k mortgage outstanding.
Have been promoted recently so gross income is now equivalent to £275k less 15% tax, cost of living reasonably high however I will be in a position to save minimum £100k per annum potentially up to £150k pa.
I have a SIPP worth £93k spread across some UK equities
Also have ISA and other share accounts again, UK equities (racier kind some biotech, some O+G, yes I know need to be patient on these ones given the oil price slump! :-) )
We are planning to reduce UK mortgage to £70k and at a rate of 2.5% we're paying roughly £250 repayment - House rents for £650.
Plan is to save £300 per month from rental profit (keep £100 per month for unexpected bills, bolder blow ups) into FTSE index tracker, not decided yet whether FTSE100 or 250.
I have a SIPP worth £93k spread across some UK equities
Also have ISA and other share accounts again, UK equities (racier kind some biotech, some O+G, yes I know need to be patient on these ones given the oil price slump! :-) )
We are planning to reduce UK mortgage to £70k and at a rate of 2.5% we're paying roughly £250 repayment - House rents for £650.
Plan is to save £300 per month from rental profit into FTSE index tracker, not decided yet whether FTSE100 or 250.
We were looking for a larger family home before we left the UK but have put that on hold, current thinking is do we buy another UK property to rent out, possibly somewhere in London as in the right areas there is stronger capital appreciation potential vs rest of country.
Do i spread some of the savings across global index trackers re-invest dividends, let it compound slowly over time + buy another rental property?
Or focus more on building a property portfolio for income and if over next 20 years capital appreciation happens so be it.
The only landlord experience we have is renting out the wife place, so we're not exactly BTL guru's!
My question is what would the smart folks of PH do on this situation to build passive income and plan well for the future (retirement income)?
Merger,
Clearly, big stakes. Anything you'll get off here will be subjective - meet with some decent advisers and hold a beauty parade. Get an insight from professional specialists who will take into account your circumstances and not charge you anything for some initial thinking. Whether or not you retain one is then up to you of course, but at least you'll have the basis for a decent start.
Clearly, big stakes. Anything you'll get off here will be subjective - meet with some decent advisers and hold a beauty parade. Get an insight from professional specialists who will take into account your circumstances and not charge you anything for some initial thinking. Whether or not you retain one is then up to you of course, but at least you'll have the basis for a decent start.
If you do buy somewhere in london I'd suggest a purpose-built recent block in a good area,
That way you avoid having to arrange external maintenance (difficult from a distance) and need only get to know a handyman and a plumber to correctly issues.
The downside is that yield is lower - approx 4%. But capital appreciation is making up for it at the moment. Downtime on nice places is negligible too.
PM me and I'll telly which developments I BTL in.
Slightly more risky, but working well for a number of friends is buying good apartments and letting them out via AirBnB. This doubles or trebles the yield. Agencies exist which handle the check-in/ cleaning etc if you're not nearby.: https://www.airbnb.co.uk/users/show/9031605
That way you avoid having to arrange external maintenance (difficult from a distance) and need only get to know a handyman and a plumber to correctly issues.
The downside is that yield is lower - approx 4%. But capital appreciation is making up for it at the moment. Downtime on nice places is negligible too.
PM me and I'll telly which developments I BTL in.
Slightly more risky, but working well for a number of friends is buying good apartments and letting them out via AirBnB. This doubles or trebles the yield. Agencies exist which handle the check-in/ cleaning etc if you're not nearby.: https://www.airbnb.co.uk/users/show/9031605
Ginge R said:
Merger,
Clearly, big stakes. Anything you'll get off here will be subjective - meet with some decent advisers and hold a beauty parade. Get an insight from professional specialists who will take into account your circumstances and not charge you anything for some initial thinking. Whether or not you retain one is then up to you of course, but at least you'll have the basis for a decent start.
Thanks Ginge, hard to sort the wheat from the chaff here but will ask some friends/colleagues for recommendations of good advisers they've used and go from there. Clearly, big stakes. Anything you'll get off here will be subjective - meet with some decent advisers and hold a beauty parade. Get an insight from professional specialists who will take into account your circumstances and not charge you anything for some initial thinking. Whether or not you retain one is then up to you of course, but at least you'll have the basis for a decent start.
Subjective advice, I'm ok with people chipping in with their opinions, a good diverse crowd on PH and I'm interested to hear what others would do in this fortunate situation.
nyt said:
If you do buy somewhere in london I'd suggest a purpose-built recent block in a good area,
That way you avoid having to arrange external maintenance (difficult from a distance) and need only get to know a handyman and a plumber to correctly issues.
The downside is that yield is lower - approx 4%. But capital appreciation is making up for it at the moment. Downtime on nice places is negligible too.
PM me and I'll telly which developments I BTL in.
Slightly more risky, but working well for a number of friends is buying good apartments and letting them out via AirBnB. This doubles or trebles the yield. Agencies exist which handle the check-in/ cleaning etc if you're not nearby.: https://www.airbnb.co.uk/users/show/9031605
That way you avoid having to arrange external maintenance (difficult from a distance) and need only get to know a handyman and a plumber to correctly issues.
The downside is that yield is lower - approx 4%. But capital appreciation is making up for it at the moment. Downtime on nice places is negligible too.
PM me and I'll telly which developments I BTL in.
Slightly more risky, but working well for a number of friends is buying good apartments and letting them out via AirBnB. This doubles or trebles the yield. Agencies exist which handle the check-in/ cleaning etc if you're not nearby.: https://www.airbnb.co.uk/users/show/9031605
Thanks, will PM you. Yes we love Air BnB use it all the time when we visit different countries, I'm not sure we'd manage the hassle factor living abroad whilst having different guests every night/week - but agree it would be lucrative if you had a decent property in the right area.
Great situation to be in, our combined gross income is about what your annual saving target is 
Our longterm plan is just to ensure we have enough saving put away for the next house move. At the kind of numbers your talking about some of the risker financial products must look attractive, abut I suspect the returns your targeting are far beyond what most of us plebs can dream about....
Our longterm plan is just to ensure we have enough saving put away for the next house move. At the kind of numbers your talking about some of the risker financial products must look attractive, abut I suspect the returns your targeting are far beyond what most of us plebs can dream about....
What are peoples views on BTL's vs low cost index trackers? Hear lots of conjecture about BTL's being an obvious target for increased legislation and taxes + hassle factor but on the plus side property gives opportunity to leverage much more so than dumping it in an index tracker - spread betting far too racy for me.
Say you had £150k to invest which route would you go and why?
Say you had £150k to invest which route would you go and why?
wisbech said:
Are you in HK? 15% tax sounds like you may be. There's a tax treaty HK/ UK that means that a HK pension isn't taxed by the UK. Worth looking into
Not HK but not too far... thanks, useful to know if I ever end up there. So would people start to build a BTL portfolio (seems gov't see's this more and more as a tax boosting area) or stick it in Index trackers and let it compound slowly over time?
Mezger said:
Not HK but not too far... thanks, useful to know if I ever end up there.
So would people start to build a BTL portfolio (seems gov't see's this more and more as a tax boosting area) or stick it in Index trackers and let it compound slowly over time?
Thing with BTL is what happens when it goes wrong? Even fully managed if a sSo would people start to build a BTL portfolio (seems gov't see's this more and more as a tax boosting area) or stick it in Index trackers and let it compound slowly over time?
t tenant trashes the place it's worthwhile being around to check out the damage before authorising repairs etc... Sounds like your doing most things right do you want the extra hassle of more property for very little return. BoRED S2upid said:
Thing with BTL is what happens when it goes wrong? Even fully managed if a st tenant trashes the place it's worthwhile being around to check out the damage before authorising repairs etc... Sounds like your doing most things right do you want the extra hassle of more property for very little return.
Very true, super important to pick the best tenants you can to mitigate that risk as much as possible. "do you want the extra hassle of more property for very little return", the attraction of property is that it does offer a degree of leverage (depending on deposit size) which is not available with other options - I'm never going to attempt spread-betting. It's that leverage if its at a sensible level that is attractive. t tenant trashes the place it's worthwhile being around to check out the damage before authorising repairs etc... Sounds like your doing most things right do you want the extra hassle of more property for very little return. What are people planning to do to generate (reasonably) passive income (obvioulsy nothing is completely passive and you get out what you put in)?
Given interest rates will start to rise next year, presumably there will be a lot of money moved out of equities into fixed interest and UK Gov is intent on squeezing BTL Landlords?
Given interest rates will start to rise next year, presumably there will be a lot of money moved out of equities into fixed interest and UK Gov is intent on squeezing BTL Landlords?
OP, you sound like you want exposure to UK property, but without the hassle of managing it.
Why not just buy shares in UK Property Companies, or REITs?
There are plenty that buy properties (retail, office, residential etc), rent them, manage them, and pay most of the rental income out as dividends. Job done.
Why not just buy shares in UK Property Companies, or REITs?
There are plenty that buy properties (retail, office, residential etc), rent them, manage them, and pay most of the rental income out as dividends. Job done.
sideways sid said:
OP, you sound like you want exposure to UK property, but without the hassle of managing it.
Why not just buy shares in UK Property Companies, or REITs?
There are plenty that buy properties (retail, office, residential etc), rent them, manage them, and pay most of the rental income out as dividends. Job done.
Thanks Sid, not something I had considered, will take a look. Why not just buy shares in UK Property Companies, or REITs?
There are plenty that buy properties (retail, office, residential etc), rent them, manage them, and pay most of the rental income out as dividends. Job done.
Happy to take on the "hassle" where there is a decent return for the right property.
Do people expect the interest rate rise (which will start at some point next year) to have a major impact on house prices ie a severe decline or just cool off the growth rate?
Mezger said:
Thanks Sid, not something I had considered, will take a look.
Happy to take on the "hassle" where there is a decent return for the right property.
Do people expect the interest rate rise (which will start at some point next year) to have a major impact on house prices ie a severe decline or just cool off the growth rate?
Just cool the growth rate the rate rise will IMO be very, very slow. Happy to take on the "hassle" where there is a decent return for the right property.
Do people expect the interest rate rise (which will start at some point next year) to have a major impact on house prices ie a severe decline or just cool off the growth rate?
Mezger said:
Thanks Sid, not something I had considered, will take a look.
Happy to take on the "hassle" where there is a decent return for the right property.
Do people expect the interest rate rise (which will start at some point next year) to have a major impact on house prices ie a severe decline or just cool off the growth rate?
If anyone here could answer that question with 100% accuracy, they would be rather silly to share it with the world.Happy to take on the "hassle" where there is a decent return for the right property.
Do people expect the interest rate rise (which will start at some point next year) to have a major impact on house prices ie a severe decline or just cool off the growth rate?
Just on 'feel', the housing market seems to be very much like it was when I bought my first house back in 2008...as in 'prices going up every minute, buy now, just do it'. The difference is this time if a crash happens, interest rates are as low as they can go, and goverments around the world have been printing fake money to support the banks for a good few years now. BUT getting a mortgage now is a hell lot harder than back in 2008, so you would think there weren't be too many bad debts around....providing rates stay low.
Given the way the markets are tumbling at the moment, I think you have to be either very brave or a genuis to be able to second guess any financial product that is going to perform well over the next few years.
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