What sort of a return can I get on £650k?

What sort of a return can I get on £650k?

Author
Discussion

Grandad Gaz

Original Poster:

5,090 posts

245 months

Wednesday 16th May 2018
quotequote all
The wife and I will be retiring and moving up to our place in norfolk either late this year or early next year.

We can't decide whether to sell our current home, probably worth about £650k, or rent it out.

Renting would give us about £23k a year after deducting agents fees, landlords insurance, etc.
Can we do better than that by other means?

Whatever we decide on, we will need a monthly income from it to live on. smile

Thanks

Vocal Minority

8,582 posts

151 months

Wednesday 16th May 2018
quotequote all
Surely the obvious answer is whatever return you like, depending on your appetite for risk.....


A pertinent question may be how much do you need as well, what would a target return be?

XJ75

436 posts

139 months

Wednesday 16th May 2018
quotequote all
That's a yield of 3.5% on the property which isn't brilliant.

I would imagine you could beat that without doing anything overly high risk, and you have the added benefit of not having to deal with a property and associated headaches.

As per the poster above, it depends on your risk appetite.

Grandad Gaz

Original Poster:

5,090 posts

245 months

Wednesday 16th May 2018
quotequote all
Sorry, should have said. Low risk. We need the return to live off.

I've been self employed for about 35 years. My private pension is not worth a lot, so the income must be pretty much guaranteed.

Thanks

XMT

3,779 posts

146 months

Wednesday 16th May 2018
quotequote all
Surely buying a few smaller properties would yield greater returns?
say 3 x 200k properties or
or 2 x 225k properies and 200k across a few vanguard funds?

bogie

16,342 posts

271 months

Wednesday 16th May 2018
quotequote all
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month.....do the maths on that. If you can cope with the hassle of being a landlord and managing say 10-15 properties, you should be able to get £60-70k a year coming in

Grandad Gaz

Original Poster:

5,090 posts

245 months

Wednesday 16th May 2018
quotequote all
Thanks for the replies.

I guess I need to speak to an IFA nearer the time.

I was just after a ball park figure at this stage. smile

Mr Pointy

11,147 posts

158 months

Wednesday 16th May 2018
quotequote all
Grandad Gaz said:
Thanks for the replies.

I guess I need to speak to an IFA nearer the time.

I was just after a ball park figure at this stage. smile
well using the 4% rule you should get about £26k a year on average without depleting the capital.

Hoofy

76,253 posts

281 months

Wednesday 16th May 2018
quotequote all
bogie said:
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month.....do the maths on that. If you can cope with the hassle of being a landlord and managing say 10-15 properties, you should be able to get £60-70k a year coming in
That sounds pretty impressive. I guess the ratio of house price to rent is much lower up north!

mike74

3,687 posts

131 months

Wednesday 16th May 2018
quotequote all
bogie said:
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month....
Yeah, you can't.

And even if you could, the kind of tenants willing to live in a £40k property would be the stuff of nightmares.

Mr Pointy

11,147 posts

158 months

Wednesday 16th May 2018
quotequote all
Hoofy said:
bogie said:
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month.....do the maths on that. If you can cope with the hassle of being a landlord and managing say 10-15 properties, you should be able to get £60-70k a year coming in
That sounds pretty impressive. I guess the ratio of house price to rent is much lower up north!
Are the companies who will do the hard work for you? Basically you just put up the money & own the properties, they find them & manage the tenants, for a fee of course.

Phooey

12,575 posts

168 months

Wednesday 16th May 2018
quotequote all
Mr Pointy said:
well using the 4% rule you should get about £26k a year on average without depleting the capital.
4% Risk free? Out of interest where?

xeny

4,271 posts

77 months

Wednesday 16th May 2018
quotequote all
Phooey said:
4% Risk free? Out of interest where?
Not risk free - I'm pretty sure they're referring to this concept https://www.mrmoneymustache.com/2012/05/29/how-muc...

Phooey

12,575 posts

168 months

Wednesday 16th May 2018
quotequote all
xeny said:
Not risk free - I'm pretty sure they're referring to this concept https://www.mrmoneymustache.com/2012/05/29/how-muc...
Ah ok, I thought I'd heard the "4% rule" mentioned somewhere... I didn't want to be missing out on something hehe

I'll have read of that later, thanks

Mr Pointy

11,147 posts

158 months

Wednesday 16th May 2018
quotequote all
Phooey said:
Mr Pointy said:
well using the 4% rule you should get about £26k a year on average without depleting the capital.
4% Risk free? Out of interest where?
The OP didn't say risk-free, he said low risk.

Grandad Gaz

Original Poster:

5,090 posts

245 months

Wednesday 16th May 2018
quotequote all
Phooey said:
xeny said:
Not risk free - I'm pretty sure they're referring to this concept https://www.mrmoneymustache.com/2012/05/29/how-muc...
Ah ok, I thought I'd heard the "4% rule" mentioned somewhere... I didn't want to be missing out on something hehe

I'll have read of that later, thanks
Thanks, just the sort of info I was after. smile

moonigan

2,127 posts

240 months

Wednesday 16th May 2018
quotequote all
bogie said:
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month.....do the maths on that. If you can cope with the hassle of being a landlord and managing say 10-15 properties, you should be able to get £60-70k a year coming in
I live "up north" and those 40K properties are actually 60-75K and are filled with the kind of people who are not very house proud. A lot of the properties come up for sale then go to let and then come up for sale again. I'm guessing bought buy people thinking its easy money and then realising they have bitten off more than they can chew.

bogie

16,342 posts

271 months

Thursday 17th May 2018
quotequote all
moonigan said:
bogie said:
Up North you can buy 2 bed houses for £40k ish which rent for £500 a month.....do the maths on that. If you can cope with the hassle of being a landlord and managing say 10-15 properties, you should be able to get £60-70k a year coming in
I live "up north" and those 40K properties are actually 60-75K and are filled with the kind of people who are not very house proud. A lot of the properties come up for sale then go to let and then come up for sale again. I'm guessing bought buy people thinking its easy money and then realising they have bitten off more than they can chew.
I guess you are further "up North", in Lincs you can find run down houses starting at £25k - say in Grimsby or Gainsborough....not that you would want to live in them yourself ...but someone has been .....likely with the council paying the rent.

Though I cant imagine it being a passive investment managing these places wink

XJSJohn

15,959 posts

218 months

Thursday 17th May 2018
quotequote all
its an interesting topic though -

out of interest for those who are alot more financially savvy than myself, what sort of things would you be looking at doing with your 650k on these 3 scenario's and how would you manage this?


Low risk (lets say 3%) (19,500pa)
Medium risk (lets say 7%) (45,000pa) <-- also is 7% considered medium risk?
High risk - sky is your limits

tescorank

1,985 posts

230 months

Thursday 17th May 2018
quotequote all
low risk-property
med risk-bit coin as they have stabilised
high risk-Brighton to win the premiership next season.