Property as a pension?
Discussion
Decent Pension of say £20,000 a year?
You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
FredClogs said:
Decent Pension of say £20,000 a year?
You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
Working on your above figure that would give you a property yield of around 3.3%, surely it should be at least double that, i.e. 300k portfolio returning 20k pa? You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
Houses are high-cost, high-maintenance, low-liquidity products. They are really not ideal vehicles for pensions. Given there is a ~90% chance of having a minor or major illness by 70, the last thing you'll wanna be doing is spending your days repairing overflow pipes, replacing the broken domestic robot, arguing with couldn't-care-less tenants, or panicking because the nice young solicitor has sent you a virtual bill for £10k that you don't understand.
If you must do it, as others have said, you'll need a house worth around the equivalent of £500k today (to rent or sellup) to make retirement comfortable(ish).
If you must do it, as others have said, you'll need a house worth around the equivalent of £500k today (to rent or sellup) to make retirement comfortable(ish).
Darranu said:
FredClogs said:
Decent Pension of say £20,000 a year?
You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
Working on your above figure that would give you a property yield of around 3.3%, surely it should be at least double that, i.e. 300k portfolio returning 20k pa? You would need to nett about £1500 a month, round my way that's rental on two 3 bed houses and 2 2 bed flats, that would guarantee you about £1500month averaged over a year after all your charges, upkeep and taxes were taken into account, roughly.
The purchase price of that would be around £500 to £600k.
Obviously you'd still have to be handy with a phone/hammer/spreadsheet well into your 70s and 80s which is the bit I'd worry about.
A £600k pension pot would currently buy you an annuity of around around £24k a year.
I'd say the >6% yields in the real world are uncommon outside of high demand areas.
My parents just moved into rent a property that was on the market for £210k, they're paying £800pcm, they'll be out into their new place by the late spring at which time the house will be empty again, probably for many months, the landlord spent a small fortune getting the boiler fixed as well.
FredClogs said:
I don't think property yields are above 5% in my area and then you've got all the associated fees, up keep and general costs associated with renting, taxes, stamp duties etc...
I'd say the >6% yields in the real world are uncommon outside of high demand areas.
My parents just moved into rent a property that was on the market for £210k, they're paying £800pcm, they'll be out into their new place by the late spring at which time the house will be empty again, probably for many months, the landlord spent a small fortune getting the boiler fixed as well.
Fair comment, I'd say the >6% yields in the real world are uncommon outside of high demand areas.
My parents just moved into rent a property that was on the market for £210k, they're paying £800pcm, they'll be out into their new place by the late spring at which time the house will be empty again, probably for many months, the landlord spent a small fortune getting the boiler fixed as well.
I'm from Hull and all of mine yield around the 7-8% mark, more on the mixed commercial / residential but property is very cheap up.
Roughly, 3 bed 500pcm will be around 80k give or take / 7.5% top line yield. Void periods are short and as long as you stay away from the bottom of the market tenants are fairly pleasant.
Darranu said:
FredClogs said:
I don't think property yields are above 5% in my area and then you've got all the associated fees, up keep and general costs associated with renting, taxes, stamp duties etc...
I'd say the >6% yields in the real world are uncommon outside of high demand areas.
My parents just moved into rent a property that was on the market for £210k, they're paying £800pcm, they'll be out into their new place by the late spring at which time the house will be empty again, probably for many months, the landlord spent a small fortune getting the boiler fixed as well.
Fair comment, I'd say the >6% yields in the real world are uncommon outside of high demand areas.
My parents just moved into rent a property that was on the market for £210k, they're paying £800pcm, they'll be out into their new place by the late spring at which time the house will be empty again, probably for many months, the landlord spent a small fortune getting the boiler fixed as well.
I'm from Hull and all of mine yield around the 7-8% mark, more on the mixed commercial / residential but property is very cheap up.
Roughly, 3 bed 500pcm will be around 80k give or take / 7.5% top line yield. Void periods are short and as long as you stay away from the bottom of the market tenants are fairly pleasant.
That rental income gives a gross income yield of 4.5% but there is also capital appreciation. Over the long term property has generally tracked income so is essentially index linked. Yes there are maintenance costs but the little and often rule applies. Keep on top of if and it is not such a drain on the resources.
The one point I would take issue with is the reference to the property being empty "probably for many months". Really? We have two BTL's and the only time they are ever empty (and I really mean "ever" as in 14 years for one of them and most lettings have been back to back) is when we are attending to maintenance. Lettings are very price sensitive but get the price right and there is usually someone ready to move in almost immediately.
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