Retirement funded by BTL - Reality after 1 year.
Discussion
Ozzie Osmond said:
No, you can't go on holiday! Who will the tenants call round to unblock a drain while you're away?
Picture the scene: Man who self-manages btl portfolio is sitting poolside in Bali with wife enjoying long cool drink as they sunbathe.Phone rings: It's a tenant! A drain needs unblocked!!
Btl man takes call. Then makes another call. To Dynorod (or plumber). Tells them whats needed. Gives them tenants phone number.
Returns to doing nothing.
Stressful , eh?
Edited by drainbrain on Monday 7th November 12:29
NickCQ said:
Ginge R said:
The most successful retirees I know, retire to something, not from something. I know a retiree who has just taken himself off to Oz for three months minimum winter sun and hammering the gym. I know some too, who age prematurely because they retire at an inopportune time and spend their lives, well, festering and pottering in turgid obscurity. Brain Drain is kicking retirement's ass. Let's not link advancing age to declining activity.
Let's not forget either, retirement was once a device to get aged workers out of employment against their wishes - it only became this idealised, halcyon image of golf and cruises about forty or fifty years ago. I fear we're moving on to its third iteration.
Yeah, all said and done I am quite jealous of someone enjoying what they do for a living enough that they want to do it in retirement.Let's not forget either, retirement was once a device to get aged workers out of employment against their wishes - it only became this idealised, halcyon image of golf and cruises about forty or fifty years ago. I fear we're moving on to its third iteration.
Many many people do things they DON'T enjoy and only do them because it makes them an income. They wish for the day they can stop and do the things they DO enjoy, not that they can tell whether they'll still be around then or still enjoy those things. And, worse, they also deny themselves the immediate enjoyment of the fruits (of the labour they don't enjoy) by using the fruits to save up for that far off day when they have saved enough to stop doing the things they don't enjoy. Isn't that just simply crazy? And isn't encouraging it even crazier?
The current concern for the future of older people and how they'll survive isn't going to be answered by creating complicated financial strategies and trying to force everybody to enact them. It IS going to be sorted by altering the perception of how older people can FUNCTION in society in a way which ensures their survival. Because Ginger's right. Fewer and fewer people are interested in 'traditional' retirement. And more and more - whether through choice or necessity - are finding that a very worthwhile and fulfilling life can be led without any much more income than the state provides. Personally, a squanderer all my life, I now find it difficult to work up much enthusiasm for anything to go squandering on. So building up assets to support old age is a bit of a waste of time in my case. I knew it would be like this. So I never sacrificed enjoying life today for survival tomorrow. And I wouldn't recommend anyone else to do so either, other than in the most basic and minimum way.
Ozzie Osmond said:
I have no intention of setting out my finances on an internet forum, so you'll have to draw your own conclusions. My objective on here is to assist others who may be baffled by financial smoke and mirrors whilst at the same time learning from what other people post. In my opinion it's no help when someone turn up shouting "My BTL is working well in retirement" when that person is still pursuing their lifetime career as a letting agent and landlord. Similarly it's not helpful to recommend high risk, unregulated investments to people with modest savings.
So you're saying that you're in a position to "assist others" but aren't willing to give the boys a tip or two? Or is John right and you don't have a tip or two to give? Well, he's 'called custard' on you Mr Buffet. Time to show that 9% investment we can get stuck into.As to your poke at me ( something which even someone as bitter as you should see is getting you increasingly less and less applause from the gallery) can I clarify something you seem too stupid to understand ?
The owner of let property is called "landlord". Some manage their lets some don't. I don't. I have done. And I have let and managed other peoples' too. I am very good at the letting agent function. And I have owned 2 agencies as majority shareholder, within a portfolio of sole trader, partnership and Ltd Coy businesses in which I played a variety of roles. I also stopped working IN the business and started working ON it when I assumed the directorial function. I'm good at that too. I then stepped aside and let others direct it and became what's probably best described as an overseer with increasingly less involvement as others began operating as well or better than I had done. And earlier this year I sold my shares in the last letting agency I owned to a minority shareholder who then liquidated the Ltd Coy and transferred its assets to a new Ltd Coy with a new name in which I am neither letting agent, director, shareholder, overseer or even consultant. What I AM is one of its customers. And it manages my properties. With zero input from me. Unless it is my will to participate in any way or in any function I choose -which it is occasionally but very rarely - and entirely in an unpaid capacity.
I neither have nor have had a 'lifetime career' as a letting agent. I certainly have been a landlord for 4 decades and will probably be one till I die and be known as one well beyond that event as well.
Now…..custard's been called, so rather than 'smoke and mirrors' or any other unusable theoretical bulls
t, give us that expert tip, or disappear in the time honoured manner. You really don't have anything - and certainly nothing positive or pleasant to say on this thread. So it really would be better if you said nothing. Goodbye.
DonkeyApple said:
The general logic is to diversify, even if other investments offer a lower return for the same risk as it leaves you less exposed to market conditions. Plus, to take into consideration how long you are likely to have left to live versus how long it takes certain markets to typically recover etc. Plus, weight diversification to take account of how quickly you can crystallise them. And in terms of risk for each market it is very fair to include your personal ability to manage that risk. So in Groak's example what he invests in would be much higher risk for me as I have no direct experience or ability to buy and manage the types of investments that he does for example.
In very crude terms, the amount you can diversify does correlate to how much wealth you have. In principle, cash is still king at the lowest end of the spectrum followed by blue chip equities and then property but once you are into the realms of having the wealth to buy property you are almost certainly into the zone where you'd want to logically start diversifying. At a certain point more esoteric investments come into play such as underwriting, cars, wine, art or guns but arguably the more esoteric you head the more direct education and experience you need as relying on advisors is a sure fire means to getting rinsed.
Where the argument oftern falls down beteeen equity portfolios versus property portfolios is the failure to fully comprehend the risk between the two or the leverage that distorts those risks.
Now I have to say that most of this goes over my head, but there's something about it that's slightly concerning. It says: In very crude terms, the amount you can diversify does correlate to how much wealth you have. In principle, cash is still king at the lowest end of the spectrum followed by blue chip equities and then property but once you are into the realms of having the wealth to buy property you are almost certainly into the zone where you'd want to logically start diversifying. At a certain point more esoteric investments come into play such as underwriting, cars, wine, art or guns but arguably the more esoteric you head the more direct education and experience you need as relying on advisors is a sure fire means to getting rinsed.
Where the argument oftern falls down beteeen equity portfolios versus property portfolios is the failure to fully comprehend the risk between the two or the leverage that distorts those risks.
"So in Groak's example what he invests in would be much higher risk for me as I have no direct experience or ability to buy and manage the types of investments that he does for example".
What appears to be being said is that he can't use Rightmove and/or phone a letting agent cum property manager of whom there is no shortage.
I don't believe this or that he doesn't have the ability to do it. And how much experience you need to be able to find a property to btl on rightmove or phone a letting agent is, well, not really very much at all.
To me, one of the selling points of btl over financial product investment is its relative simplicity and lack of complexity for those who decide to jump in.
DoubleSix said:
Agree, anyone can buy a property hand it over to an agent and make a little money .
….and believe it or not, anyone can do this again and again until they make a little money many times over which is called making a lot of money. And believe it or not, when you have a shedload of these little mushrooms, especially if you have something lucrative to do that's providing the money to buy them, you can't do it without a managing agent unless you're bored with that other earner. Even then, get enough of them and you need help anyway. Then you've started an agency. Then…..da da da da da……. as you said, not rocket science. Anybody can do it. And many a body has, to one extent or another.There's an English bloke who btls in Germany. 40000 (forty thousand) units. That'd be hard to self manage. Bet he's diversified into a few different property related earners. How many could you think of? And how far do you think he'd be well advised to diversify his investments. I mean, if you had a portfolio of 40000 units, and probably at least 10 other ancillary interests which are required by the core property portfolio, how important would it be to have an ISA or a few crates of wine or a few quid in a bank never mind a portfolio of shares with all the complexity and specialist knowledge that apparently requires?
DoubleSix said:
I may have lost the essence of your point in that but yes, diversification would be wise.
The further you diversify the thinner you spread. So it might be theoretically safer, but not necessarily wiser than specialisation.Analogy: If you qualify as a doctor, would you be wiser to up your medical skillset to become a medical specialist, or train as a lawyer as well instead, with a finite amount of time available.
DonkeyApple said:
'What you invest in' as in the type of property and the experience you have from it being your career. Not BTL itself. The two BTLs that I have are in a different market to one you operate in plus it's not my career. To do the type of BTL that you do requires a different perspective and experience to what I have.
Well I have all kinds of btl properties very few of which have required any ability either to buy or hand to an agent. And they're the investment from the product of my career rather than the career itself. To 'do' the type of btl you think I do requires no experience or perspective of any kind. Beyond, of course, sourcing from Rightmove (or similar). This whiffs of bovine product. The type of BTL EVERYBODY does has the same 'perspective'. What you want out of your btl is the same as me. You want the best bottom line. Every landlord I have ever met from absolute giants to the owners of a single small humble unit want the best bottom line. The rest, my friend, is in your imagination.
The unfortunate thing about 'risk' is that even with the best 'understanding' ( = opinion) nothing finite is actually ever understood. If anyone understood risk it wouldn't be long till everyone understood it and by applying this understanding there would be no risk anymore other than deliberate risk.
Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
DonkeyApple said:
Except it isn't. My choice is corporate lets where I live. That's the area I find to be lowest risk for me and cheapest to maintain so offers me the most suitable return. I couldn't and wouldn't be remotely prepared to deal with the types of property you speak of on PH. They would be too far away and I really don't have the time, inclination or need to learn the nuances for a bit more yield that in reality would be higher risk for me. You're continual error is in trying to insist that what is right for you is catagorically right for others when it obviously is not.
….and you feel these somehow require a different ability and experience to buy and give to an agent to manage than cheaper properties in other areas do? What do you think that difference is? And what is this 'risk' you speak of? Surely not the only one I see. That the investment becomes unprofitable? The 'bottom line' risk as you could call it. The universal one everyone wants to avoid.
And just as interestingly, what 'time, inclination or need to learn the nuances' are you on about? I mean I'm talking about getting hold of a letting agent in an area. Phoning and asking if they think they could handle such-and-such a property whether posh or dungeon. Having a short chat about it. Coming off the call with an idea there's no reason not to do it. Phoning an estate agent and buying the property. Getting the letting agent to collect the keys when it settles. Nothing else if you don't want to do anything else. Like loads of people do.
Ozzie Osmond said:
Nonsense - you are completely ignoring the concept and value of "quality". Earlier in the thread you demonstrated your lack of comprehension by stating, "Many an ignoramus wants to bring growth into the picture, but BTL portfolios are for income not growth" and "Great BTL properties make the most income for the least expenditure". There are many BTL landlords for whom rent pays the bills while they look for "money" to come from capital growth.
It's clear you're happy operating at the very bottom of the market. That's not the only way to play the game and it doesn't mean everybody else wants to join in.
So what happened to the custard test?It's clear you're happy operating at the very bottom of the market. That's not the only way to play the game and it doesn't mean everybody else wants to join in.
What do you think the L stands for in btl ? It stands for 'let'. Bought to….LET.
Of course people buy- to- sell too. And it's going to be a lot of fun here once the 3 Ugly Sisters start spouting their 'expertise' about how THAT one's done!
bOZo don't be so silly. BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
NRS said:
The point is that there isn't without risk. And whatever you say you are taking a certain risk on BTL. Just takes a big recession to hit (which in normal economic time cycles might happen around now) and a number of your tenants to lose their jobs and not be able to pay. Then depending on how much you are relying on rent to pay off all the mortgages you could be in trouble.
So the risk is that the tenants don't pay rent because of recession. I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
But, hey, you're the risk expert so it would seem rude to get you to have to explain why your example is nonsensical.
But aren't you exemplifying one situation which could lead to the btl venture being UNPROFITABLE?
Come on, give me a REAL btl risk as you see risk. Tenants not paying isn't a risk. It's a certainty. Or is the flat needing expenditure at some point a…risk??
Tresco said:
The OP reminds me of the Rambolambo guy, anyone who posts in the car forums looking for advice on a new car gets Rambo banging on about McLaren's and carbon tubs ad nauseam.
Seems to me that the OP has a formula which works for him but it's clearly not right for many others, if he'd have pointed that out it might have saved 15 pages of dissection.
I have a portfolio of commercial and residential property in the South East yields are double digit on the commercial and 6-7% on resi, more importantly for me is significant capital growth since purchase.
A friend has student lets in Leeds, they work for him. A colleague has HMO's - loves collecting cash every week so he's happy. Buying £20K Flats and letting them to DSS tenants would not be my choice but good luck if it's yours.
Obvious point I'm making is that there are many ways to make a good living from property, there are too many variables to say that what works for one is right for all.
Hi Tresco: Here's a quote from the 4th post up from the bottom of page 8 of this thread.Seems to me that the OP has a formula which works for him but it's clearly not right for many others, if he'd have pointed that out it might have saved 15 pages of dissection.
I have a portfolio of commercial and residential property in the South East yields are double digit on the commercial and 6-7% on resi, more importantly for me is significant capital growth since purchase.
A friend has student lets in Leeds, they work for him. A colleague has HMO's - loves collecting cash every week so he's happy. Buying £20K Flats and letting them to DSS tenants would not be my choice but good luck if it's yours.
Obvious point I'm making is that there are many ways to make a good living from property, there are too many variables to say that what works for one is right for all.
Quote: "Tony like me you are probably aware of how many different permutations of the property business can provide successful returns. And it is wholly pointless trying to prove that one of these is 'superior' to another. You have your expensive properties (not for me) and use rent guarantee cover (not in a million years thanks). And I have my multiple 'dungeons' and commercial stuff which cost less than you would believe possible and let using a lease called a 'nod and a handshake'. Yet down at HR Owen the proceeds from our albeit different business plans spends exactly the same. There isn't a right way and a wrong way there are just different ways".
How do you feel that quote sits alongside your post?
By the way, I prefer the cheap stuff because it makes a better return. But it doesn't mean it's the only property I buy. Nor do I mind buying something which increases in value, and often have, including buying BMV deliberately which in theory brings an instant (albeit unrealised) capital gain. PERSONALLY - not to be confused with some dogma (see quote above) I've always deliberately separated btl and bt sell. Including during debt-funded days using different types of loan.
The point of the thread is to explain how it is perfectly possible to fund retirement via a btl portfolio to the exclusion of any other diversification or investment. And, secondarily, it is dammed easy for anyone to do it.
BlackLabel said:
@drainbrain, given you have so many tenants on housing benefit what happens when they start pocketing the cash and then refuse to leave?
Court action for eviction in Scotland is not a swift process so 2-3 months without rent + legal fees would eat into a significant proportion of your profits.
If you read PH regularly you might discover that many people encounter rent-stealing or non-paying according to the threads they start on that very topic. But I don't understand why you think it's any more prevalent amongst HB clients? If anything their rent-paying potential is more secure. However, the process of ensuring or safeguarding or protecting LHA payments (HB) is interesting but would be very lengthy to detail here. Court action for eviction in Scotland is not a swift process so 2-3 months without rent + legal fees would eat into a significant proportion of your profits.
It is very rare in my experience to be forced to legally evict tenants. Like divorce in a way. Mostly settled without and well before court proceedings.
And non-payment certainly doesn't arise as an issue of any profit-impacting significance although it certainly does happen. Occasional non-payment isn't a risk. In a long term btl it's a certainty. In relation to HB it's usually for administrative rather than dishonest reasons tho. IMHO of course.
sidicks said:
And yet:
1. You've only done it for one year - hardly conclusive = Very true. I'll upgrade again every 6 months which will obviously account for any changes in market conditions over that period.
2. You haven't explained how to obtain funds to acquire properties in the first place. = If I said "there are a million stories in the Naked City" would that make sense as an answer?
3. It clearly requires specialist knowledge, despite what you claim = Honestly, it can, and it can help, but it really isn't essential as so many who only own 1 or 2 can vouch.
4. the risk profile is quite different to some of the alternatives. = Let's not digress into deep water. You know my "Theory of Business Risk" which is that ultimately there's only ONE risk and it's common to all enterprises and investments.
5. Income is certainly not guaranteed! = Not like death is, but I have very rarely if ever failed to extract some income return from a btl and I doubt many people have unless only owned for a short period.
Further to 3) above. This popped into my email box today. What specialist knowledge of letting would you need to phone him and buy them and phone a local letting agent to manage them?1. You've only done it for one year - hardly conclusive = Very true. I'll upgrade again every 6 months which will obviously account for any changes in market conditions over that period.
2. You haven't explained how to obtain funds to acquire properties in the first place. = If I said "there are a million stories in the Naked City" would that make sense as an answer?
3. It clearly requires specialist knowledge, despite what you claim = Honestly, it can, and it can help, but it really isn't essential as so many who only own 1 or 2 can vouch.
4. the risk profile is quite different to some of the alternatives. = Let's not digress into deep water. You know my "Theory of Business Risk" which is that ultimately there's only ONE risk and it's common to all enterprises and investments.
5. Income is certainly not guaranteed! = Not like death is, but I have very rarely if ever failed to extract some income return from a btl and I doubt many people have unless only owned for a short period.
Please find below details of 11 flats available in Bowling, an excellent investment opportunity on a first come first serve basis
Home Reports attached.
· 2bedroom Valuation = £110k – potentially now £115k
· 1bedroom Valuation = £90k – potentially now £95k
1. Flat 0/1, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
2. Flat 0/2, 2 littlemill Court, Bowling Glasgow G60 5BP – 1 bedroom = £75,000
3. Flat 0/3, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
4. Flat 0/4, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
5. Flat 1/1, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
6. Flat 1/2, 2 littlemill Court, Bowling Glasgow G60 5BP – 1 bedroom = £75,000
7. Flat 1/4, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
8. Flat 2/1, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
9. Flat 2/3, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
10. Flat 2/4, 2 littlemill Court, Bowling Glasgow G60 5BP – 2 bedroom = £93,000
11. Flat 3/2, 2 littlemill Court, Bowling Glasgow G60 5BP – 1 bedroom = £75,000
1% market finder’s fee applied on concluded missives.
All Currently tenanted at £550 for 2 bedroom & £450 for 1 bedroom
Please contact me should you require further information on the properties
Regards
Hugh Mulgrew
Eldo House, Monkton Road, Prestwick,KA9 2PB
T: 01292 435206
M: 07795437720
Drainbrain Ps: As your btl adviser I wouldn't. We can get much more bang for the buck!
Revisitph said:
This thread is in danger of dropping off the bottom of the page as the finance forum gladiators -vs- OP seem to be on a timeout... 
OP; thinking of "Performance" and others of its era - did/do you have a Jack Carter or a Chas to help smooth out problems with difficult tenants?
The proper response to that dreadful insinuation is: "on legal advice I offer 'no comment' ". OP; thinking of "Performance" and others of its era - did/do you have a Jack Carter or a Chas to help smooth out problems with difficult tenants?
The reality is, no, not once, not ever, and never will. I know 'the streets' and there's no respect from being a bully, just fear. Don't really need fear. Better business from being kind. Better rep, better life. Obviously at the lower end of the tenancy chain there's more needs. Knowing that and reacting to it the right way's a good part of making it work…..
https://uk.video.search.yahoo.com/search/video?fr=...
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