Is getting a BTL property worth it over pension?

[solo2]

Pretty much as said really?

I have 3 pensions totally not a huge amount but enough to put down a 25% deposit against a buy to let property.

I'm 18 years off pensionable age at 47 currently so would my money really work better for me if I became a landlord? I just see so many costs that landlords have to pay and wonder how many of them you have to pay over things you don't have to if you wish to manage it all yourself.

I guess pitfalls are tenants to paying and/or trashing the place so really want to make my money work for me better but I'm not into taking a massive risk.

[gibbon]

solo2 said:

Pretty much as said really?

I have 3 pensions totally not a huge amount but enough to put down a 25% deposit against a buy to let property.

I'm 18 years off pensionable age at 47 currently so would my money really work better for me if I became a landlord? I just see so many costs that landlords have to pay and wonder how many of them you have to pay over things you don't have to if you wish to manage it all yourself.

I guess pitfalls are tenants to paying and/or trashing the place so really want to make my money work for me better but I'm not into taking a massive risk.

This reads like you are thinking of taking all your pension pot out in cash at 47.

Irrelevant of whether this plan is good or not, you cant do it.

[Muzzer79]

There's an awful lot of people jumping on the BTL train at the moment, convinced that property is a fail-safe investment route.

You have to think long term. In 18 years time, will your property investment yield what your pension yields?

What if interest rates go up?
What if BTL tax regulations change?
What if the market falls when you want to get out of it?

On the face of it, property is a good idea, but it's not easy and far from the print-your-own-money utopia that a lot of people imagine.

If you're very risk-averse, consider the above.

[Simpo Two]

Being a landlord is certainly aggro, and you will have to become familiar with the relevant bits of the law, and take a loss every time some slimebag runs away without paying. But you will get income, and probably capital appreciation as well (though I think if you sell a second property you get nailed for CGT). Unless the rules change of course, which they do every budget.

By contrast a pension is no aggro, someone will take your money and play with it, keep some for themselves, and eventually give you some back if you live long enough. Unless the rules change of course, which they do every budget.

Basicially, do the maths as things stand now and hope

[BoRED S2upid]

Unclear if your considering BTL as well as your pension pots or instead of?

As well as then IMO yes 15-20 years time the property could be mortgage free and giving you a small income to add to what your pension(s) provide.

Instead of then your going to have to go into BTL in a big way to give you enough to retire on.

[trowelhead]

solo2 said:

Pretty much as said really?

I have 3 pensions totally not a huge amount but enough to put down a 25% deposit against a buy to let property.

I'm 18 years off pensionable age at 47 currently so would my money really work better for me if I became a landlord? I just see so many costs that landlords have to pay and wonder how many of them you have to pay over things you don't have to if you wish to manage it all yourself.

I guess pitfalls are tenants to paying and/or trashing the place so really want to make my money work for me better but I'm not into taking a massive risk.

Pretty sure if you use the funds before 55 you get taxed 50%?!

You can buy commercial property using a SIPP though.

Assuming you can access the funds - and you wanted to be very active / hands on - then i don't see why you could not make your money work harder, buying refurbing then remortgageing etc.

However of course it is a higher risk strategy - like moving from bluechip shares to AIM... Chance of higher reward but chance of total loss!

[timbo999]

trowelhead said:

Pretty sure if you use the funds before 55 you get taxed 50%?!

And after at your marginal rate...

Plus profits from BTLs are taxed (both income and capital), whilst in a pension they aren't.

Not saying don't do it, just saying its a quite complex spreadsheet to write!

[nickfrog]

Just do both and edge your bets. CGT can be mitigated or even avoided by selling just when you're likely to reach the annual CGT allowance threshold for starters.

Personally, it's 1 third ISA, 1 third BTL and 1 third pension contributions.

[solo2]

Thank you for all your input, most helpful.