Why are BTLs still popular?
Discussion
Is there a safer alternative for providing for retirement?
A lot of btl investors, like myself, are only in it so as to have some sort of life in old age.
Buggered if i would go through the hastle and aggro otherwise.
The alternatives such as stocks and shares, etc are just sheer gamblng.
So...for many people it is out of neccesity.
Of course we could just spend any free cash now on beer, fags and holidays and then stack shelves at asda in old age.
Btl investors get painted as near evil, and to be eradicated, quite unfairly.
A lot of btl investors, like myself, are only in it so as to have some sort of life in old age.
Buggered if i would go through the hastle and aggro otherwise.
The alternatives such as stocks and shares, etc are just sheer gamblng.
So...for many people it is out of neccesity.
Of course we could just spend any free cash now on beer, fags and holidays and then stack shelves at asda in old age.
Btl investors get painted as near evil, and to be eradicated, quite unfairly.
UpTheIron said:
Because it can still be a good investment.
This. 4 or 5% return plus whatever capital appreciation which over 10 years tends to be positive. People just don’t trust fund managers personally I see it as part of the mix: pension, S&S isa, bit of cash etc.. I find the BTL to be a consistent safe investment it’s done me well over 15 years a bit of extra tax to pay doesn’t make it a bad thing. philv said:
The alternatives such as stocks and shares, etc are just sheer gambling.
Not true. Have a look at what major pension funds are invested in.......BTL is taxed to the end of the earth and back again. Remains worthwhile for "full time landlords" but for everyone else it's just a good way to pay some extra voluntary tax into the government's coffers. Makes very little sense now, unless as part of a broader portfolio.
See also - Premium Bonds. A truly hopeless investment. Stick your money in the bank and buy one lottery ticket every month.
Gold? Even worse. No income and you have to pay someone else to look after/insure it.
Mark300zx said:
It still seems to be popular depsite all the new legislation and taxes, can someone explain?
Varies regionally, I suppose.It probably still is a decent investment up North or in slum / DSS locations, as groak of this parish can tell you. Yields are high even after adjusting for tax and prices aren't crazy compared to local owner occupier affordability. But the hassle factor is high.
In London / the SE you are hanging your hat on capital value appreciation as the vast majority of the rental income will be sucked up with the mortgage, maintenance, fees and taxes. The only reasons I can see to buy or hold onto a BTL (and it's ultimately the same investment decision) in these regions today is if you haven't bothered to engage with other asset classes or if you get some kind of kick out of owning multiple properties.
Wilmslowboy said:
Perhaps because they are a leveraged investment ?
You get 5% yield on the whole value (i.e. 20% on your 25% investment)
same goes for any capital gains.....
You can leverage any investment you like.You get 5% yield on the whole value (i.e. 20% on your 25% investment)
same goes for any capital gains.....
The average company in the FTSE 100 is 50% leveraged, (excluding banks and insurers which are more like 90% leveraged).
The difference is that the embedded leverage there has no personal recourse.
Anyone that has a mortgage and an investment portfolio is leveraging themselves to invest.
Sir Bagalot said:
In fact if you class RY on what was paid for the property and not current worth then RY is a lot higher!
This is a fallacy. It only really makes sense to compare yields between different assets at current market value - if you sold your BTLs to buy something else the amount you would be reinvesting is the market value.Wilmslowboy said:
Perhaps because they are a leveraged investment ?
You get 5% yield on the whole value (i.e. 20% on your 25% investment)
same goes for any capital gains.....
This is key. There are not many assets that a bank manager will lend you money to invest in. A BTL he will. You get 5% yield on the whole value (i.e. 20% on your 25% investment)
same goes for any capital gains.....
The other reason it is more tangible than a remote managed fund that you cannot slap the walls of.
Not saying they are good reasons to go into BTL but they are the main reasons.
Property is one of the easiest "investments" to understand for the man on the street, as everyone plays Monopoly when they are a kid 
....shares, bonds, funds and markets in general are often seen as mysterious and risky, especially to a generation that may have been oversold pensions, endowments etc in the 80s and 90s.
....shares, bonds, funds and markets in general are often seen as mysterious and risky, especially to a generation that may have been oversold pensions, endowments etc in the 80s and 90s.
bogie said:
Property is one of the easiest "investments" to understand for the man on the street, as everyone plays Monopoly when they are a kid
....shares, bonds, funds and markets in general are often seen as mysterious and risky, especially to a generation that may have been oversold pensions, endowments etc in the 80s and 90s.
I think this is really the reason they remain popular as objectively there are ‘better’ places to put money, and I say that as someone who has BTLs and manages investments for a living.....shares, bonds, funds and markets in general are often seen as mysterious and risky, especially to a generation that may have been oversold pensions, endowments etc in the 80s and 90s.
I can put all the facts and figures I like in front of some people but at the end of the day if they don’t truly understand something they can’t be 100% confident in it.... irony is these folk don’t truly understand the property market either, but they feel they do.
joyless lobotomised parrot said:
Mark300zx said:
UpTheIron said:
Because it can still be a good investment.
Do you mind explaining some more with some figures?If you can get better please let me know.
For me its about financial balance, and also about life flexibility.
In terms of life options, if i decide to move from london as my full time base then i would sell my house, and keep the btl flat, and can use that as a city center crash pad / hedge to still have some uk/london housing exposure.
I can also use it to house any future kids i may have, should they want to study or live in London.
As its close to my house, should my parents in old age need support they could live there and be closer to me, i could also stick a carer in there to help them, better than a home imho.
Lastly in terms of flexibility, frankly if i have to have a life reshuffle for any reason, then its somewhere i can downsize to and keep my life in control, i find that quite comforting.
In terms of investment, it ticks over ok, but isnt going to make me rich.
The point is it isn't instead of a pension, its a supplement to my pension. With government caps on how much you can put in your pension I am maxed out in what i can put in (which i actually max out via the rent from my btl, so in effect my btl currently pays my pension contributions), and I also max out my ISA (some invested, some cash), thus the argument isn't pension versus btl, its just about spreading risk and offering options for later life.
In terms of life options, if i decide to move from london as my full time base then i would sell my house, and keep the btl flat, and can use that as a city center crash pad / hedge to still have some uk/london housing exposure.
I can also use it to house any future kids i may have, should they want to study or live in London.
As its close to my house, should my parents in old age need support they could live there and be closer to me, i could also stick a carer in there to help them, better than a home imho.
Lastly in terms of flexibility, frankly if i have to have a life reshuffle for any reason, then its somewhere i can downsize to and keep my life in control, i find that quite comforting.
In terms of investment, it ticks over ok, but isnt going to make me rich.
The point is it isn't instead of a pension, its a supplement to my pension. With government caps on how much you can put in your pension I am maxed out in what i can put in (which i actually max out via the rent from my btl, so in effect my btl currently pays my pension contributions), and I also max out my ISA (some invested, some cash), thus the argument isn't pension versus btl, its just about spreading risk and offering options for later life.
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