Vanguard LifeStrategy

[Testaburger]

selmahoose said:

Well if you're a landlord, and your property isn't in a SIPP, just trouser £100 from the next rent. And if you need it to buy something propertyish, don't forget to get a voucher.

Ah yes. Of course BTL liquidity is equal to VLS.

[selmahoose]

Testaburger said:

I know you don’t understand pensions, nor do you have the gumption to look beyond your nose, but 12% yield at a 40% marginal tax rate, while sounding good, is a poor return compared to having the government top up 20k by 8k, providing tax free growth, and significant tax-breaks on the way out.

Eh?? 12%? On a property 100% funded by RBS and repaid 100% by it's tenancies?? LOL! You need a better calculator. (not to mention a rather less naive insight into btl tax accountancy )

After 10 years at an annualised 7%, the 20k (+8k higher rate tax relief - think of this as a tax refund) put into a pension by a higher rate tax payer is worth 56k. After 30 years, it’s worth 220k. All free of tax.

Without challenging the ultra naive growth assumption, have you any idea what £20k alternatively invested in 1989 (in Apple, Amazon, Facebook, a zillion other things might be worth today)? And, over that 30 years how much of this (fairly tame) pension growth is available to actually spend on something? Oh dear!

Your slums, demonstrably, do not attract capital growth. They’re worth Jack st now, and they’ll be worth Jack st in the future. The yield is all you have, the growth of which will be continually hamstrung by lack of low-end wage growth and local government finances; single digit percentage yield on an asset worth Jack st will be a small AND continually-eroded (in real terms) income on which you’ll pay lots and lots of tax.

Ah well, you haven't spotted this UK fascination with property/property development/improvement/gentrification etc etc which has so many individuals not to mention industry professionals buying up anything that moves that us poor portfolio collectors have to resort to sourcers for our BMVs..... Just can't get the stock! I mean Haghill G31. Flippin £8k for a 1 bed in 1989. SIXTY now. And try and flamin' find one? I thought that evil government was supposed to be driving people OUT of btl. And its turning out just the damn opposite!
Mind you, "sell" isn't in the vocabulary of the dyed-in-the-wool dedicated landlord, so prices really aren't of any interest. The hint's in the name. btL. The income's the ONLY thing of interest. Remind me again how much your pension provided towards paying your bills this year

Take that flippin' Athens. One minute (early '18) a humble 1 bed is easily buyable at €15-20k. Now the same st is €40k!! And the only thing at even approaching €20k is the much less desirable (to tenants) basement or sub-basement.

Or that dam' Berlin! One minute (2007) they're queuing up to sell a bundle of happy humble 1 bedders at €10k apiece. Now the
pesky currywurst scoffing scoundrels are turning their noses up at €100k!!!

As to rents, hmmmm, well I'm sure I heard tell that they actually DID go down somewhere y-o-y once upon a time. But no-one's really sure that that wasn't just a fantasy. And of course with LHA rates periodically rising and minimum/living/whatever wages constantly moving upwards it seems the fantasy of reducing rents is likely to remain just that. A fantasy.

And that’s before the government puts its finger in you a little further. Which it will.

Ooooh! Matron!!.....but what happens when silly Mr Govt does silly things which damage the property industry? 2007 again anyone? lol!

Oh and by the way, there's another of those just around the corner. And how does recession affect the letting game? he he he!!

Lost your job? Your shirt? Your HOUSE? O don't worry, I've one for you....I'll even help you fill in the forms to get the taxpayer to pay for it!! (well where the fk do you think the tax I pay goes?)

Edited by Testaburger on Sunday 21st July 07:49[/footnote]

[footnote]Edited by selmahoose on Sunday 21st July 14:46

Edited by selmahoose on Sunday 21st July 14:49

[Testaburger]

selmahoose said:

Edited by selmahoose on Sunday 21st July 14:46

Another Sunday Buckfast breakfast, it seems.

On your first point; you do realise that leverage diminishes your yield? I appreciate numbers aren’t your thing, but if you need help, I can talk you through.

Actually, never mind. There are so many gaping holes and contradictions in your verb vomit, I really can’t be arsed responding further.

I’ll be sure to advise retirement savers to leverage war zone studios for future financial security from here on.

As for my pension (as you asked); I’m close to half your age, so I’m some way off yet. However, when it comes to retirement - and by that I mean retirement, rather than ‘selmahoose retirement’ I suspect my provisions will provide very nicely for me. Thanks for your concern.

Edited by Testaburger on Sunday 21st July 14:59

[selmahoose]

Testaburger said:

selmahoose said:

Edited by selmahoose on Sunday 21st July 14:46

Another Sunday Buckfast breakfast, it seems.

Naaa Buckfast's for poor retired Dave whose £3kpa retirement's funded by his hard earned £100k pot (inc "tax allowances")

The breakfast tipple of choice for the retired btl'er remains BucksFizz, which sounds similar, but really isn't.

[Testaburger]

selmahoose said:

Naaa Buckfast's for poor retired Dave whose £3kpa retirement's funded by his hard earned £100k pot (inc "tax allowances")

The breakfast tipple of choice for the retired btl'er remains BucksFizz, which sounds similar, but really isn't.

Is it? I didn’t know.

[JulianPH]

Groat, why can't you just accept that there are different solutions for different people.

I have BTL and whilst I have done well out of it I have to say that this is my least profitable and least tax efficient element of my investment portfolio.

It is also the most hassle and lowest yielding.

I own land that has increased in value by 1,500% over the last 12 years and has also given me a yield of 20% per year on my original net acquisition cost.

No hassle (other than repairing some estate fencing) and all completely tax free (as it is in my SIPP).

The OP is questioning what to do with the cash within his SIPP. He already has commercial property within this and cannot access BTL, so BTL is irrelevant in this matter.

Vanguard is a perfectly good option, but paying an adviser 2% initial and 0.5% a year to hold this makes no sense whatsoever.

Given the OP will also be paying expensive SIPP commercial property fees on top of any other fees I did invite him to get in touch about alternatives (including what wee can offer) that may (or may not) be more preferable.

Probably best if we let the tread return to the OP's question.

You have my email address if you would like to discuss this further, or you can start your own thread about this. But let's get this one back on track.

[Pistonheads2019]

JulianPH said:

Groat, why can't you just accept that there are different solutions for different people.

I have BTL and whilst I have done well out of it I have to say that this is my least profitable and least tax efficient element of my investment portfolio.

It is also the most hassle and lowest yielding.

I own land that has increased in value by 1,500% over the last 12 years and has also given me a yield of 20% per year on my original net acquisition cost.

No hassle (other than repairing some estate fencing) and all completely tax free (as it is in my SIPP).

The OP is questioning what to do with the cash within his SIPP. He already has commercial property within this and cannot access BTL, so BTL is irrelevant in this matter.

Vanguard is a perfectly good option, but paying an adviser 2% initial and 0.5% a year to hold this makes no sense whatsoever.

Given the OP will also be paying expensive SIPP commercial property fees on top of any other fees I did invite him to get in touch about alternatives (including what wee can offer) that may (or may not) be more preferable.

Probably best if we let the tread return to the OP's question.

You have my email address if you would like to discuss this further, or you can start your own thread about this. But let's get this one back on track.

Good post.

[JulianPH]

selmahoose said:

Testaburger said:

I know you don’t understand pensions, nor do you have the gumption to look beyond your nose, but 12% yield at a 40% marginal tax rate, while sounding good, is a poor return compared to having the government top up 20k by 8k, providing tax free growth, and significant tax-breaks on the way out.

Eh?? 12%? On a property 100% funded by RBS and repaid 100% by it's tenancies?? LOL! You need a better calculator. (not to mention a rather less naive insight into btl tax accountancy )

After 10 years at an annualised 7%, the 20k (+8k higher rate tax relief - think of this as a tax refund) put into a pension by a higher rate tax payer is worth 56k. After 30 years, it’s worth 220k. All free of tax.

Without challenging the ultra naive growth assumption, have you any idea what £20k alternatively invested in 1989 (in Apple, Amazon, Facebook, a zillion other things might be worth today)? And, over that 30 years how much of this (fairly tame) pension growth is available to actually spend on something? Oh dear!

Your slums, demonstrably, do not attract capital growth. They’re worth Jack st now, and they’ll be worth Jack st in the future. The yield is all you have, the growth of which will be continually hamstrung by lack of low-end wage growth and local government finances; single digit percentage yield on an asset worth Jack st will be a small AND continually-eroded (in real terms) income on which you’ll pay lots and lots of tax.

Ah well, you haven't spotted this UK fascination with property/property development/improvement/gentrification etc etc which has so many individuals not to mention industry professionals buying up anything that moves that us poor portfolio collectors have to resort to sourcers for our BMVs..... Just can't get the stock! I mean Haghill G31. Flippin £8k for a 1 bed in 1989. SIXTY now. And try and flamin' find one? I thought that evil government was supposed to be driving people OUT of btl. And its turning out just the damn opposite!
Mind you, "sell" isn't in the vocabulary of the dyed-in-the-wool dedicated landlord, so prices really aren't of any interest. The hint's in the name. btL. The income's the ONLY thing of interest. Remind me again how much your pension provided towards paying your bills this year

Take that flippin' Athens. One minute (early '18) a humble 1 bed is easily buyable at €15-20k. Now the same st is €40k!! And the only thing at even approaching €20k is the much less desirable (to tenants) basement or sub-basement.

Or that dam' Berlin! One minute (2007) they're queuing up to sell a bundle of happy humble 1 bedders at €10k apiece. Now the
pesky currywurst scoffing scoundrels are turning their noses up at €100k!!!

As to rents, hmmmm, well I'm sure I heard tell that they actually DID go down somewhere y-o-y once upon a time. But no-one's really sure that that wasn't just a fantasy. And of course with LHA rates periodically rising and minimum/living/whatever wages constantly moving upwards it seems the fantasy of reducing rents is likely to remain just that. A fantasy.

And that’s before the government puts its finger in you a little further. Which it will.

Ooooh! Matron!!.....but what happens when silly Mr Govt does silly things which damage the property industry? 2007 again anyone? lol!

Oh and by the way, there's another of those just around the corner. And how does recession affect the letting game? he he he!!

Lost your job? Your shirt? Your HOUSE? O don't worry, I've one for you....I'll even help you fill in the forms to get the taxpayer to pay for it!! (well where the fk do you think the tax I pay goes?)

Edited by Testaburger on Sunday 21st July 07:49[/footnote]

[footnote]Edited by selmahoose on Sunday 21st July 14:46

Edited by selmahoose on Sunday 21st July 14:49

Sorry, but I have to call you out on this.

First thing - if you have borrowed 100% of the purchase price then the only yield you are getting is the scraps remaining after property management fees, bank repayment, bank interest, and all other general property costs. This means that you own nothing (the bank does) and are left with a tiny slice of any yield.

The second thing - do you really want to be financially in bed with the Royal Bank of st? I would not trust them with a penny. They have bankrupted many good businesses and without a taxpayer bailout would be bankrupt themselves.

Next - your figures are hopelessly wrong.

Finally - I really can't make any sense of the rest of your post.

It is ironic that when we chat off PH you are a very informed and straight taking person, but here you stick with your persona.

You could be really helpful to others if you dropped the whole Groat/Joyless Lobotomised Parrot/Selmahoose attitude.

Cheers

[JulianPH]

Pistonheads2019 said:

Good post.

Thank you!

[selmahoose]

JulianPH said:

selmahoose said:

'pension' and 'simples' don't really fit in the same sentence given that no-one in the world appears to know just exactly how they work (when they DO work which seems a gatheringly rare event).

Pensions actually are very simple, it is just that many people confuse them with products historically sold by insurance companies (which is not surprising, to be honest).

At its basic level a pension is a tax allowance. It is as simple as that.

You can set aside up to 100% of your net relevant earnings (capped at £40,000 a year for most people) and not pay a penny of income tax on this money.

It then grows free of income tax and capital gains tax.

Once you are 55 (currently) you can then access this money with a quarter of it being completely free of tax and the rest taxed at your marginal rate.

There is no rule whatsoever that says you have to invest this money in equities (though most people do given they have always outperformed other asset classes over the long term).

If you want to use this money to buy property then you can do (just not residential property).

Commercial property has the benefit of long term leases with repair clauses. Also, if converted into residential use the value is likely to rise considerably and you have no tax on this when your pension sells it. All rent also goes into your pension tax free.

Let's use some round numbers for a comparison:

BTL

• You buy a property for £100,000. Assuming you are a higher rate taxpayer you would have needed to earn £166,666 to have the £100,000 after tax

• Tax cost of purchase = £66,666

• You receive a rental yield of 5% (£5,000 a year)

• Tax cost in income = £2,000 a year

• You sell it 10 years later for twice what you paid for it.

• Tax cost on sale = £28,000

So you have made £102,000 profit over 10 years. But you have also paid £114,666 in tax to achieve this. So you have made the government more money out of this than you got out of it.


Commercial property in a SIPP

• Fund your SIPP with £100,000 to buy the property

• Tax saving = £66,000

• Receive a 5% rental yield (£5,000 a year)

• Tax saving = £2,000 a year

• Sell it 10 years later for twice what you paid for it

• Tax saving = £28,000

Your SIPP has made a £150,000 profit and you have saved £114,666 in tax.


Or more likely

• Fund your SIPP with the same gross £166,666 you would have needed to buy the £100,000 BTL

• This gives you an income tax saving of £111,111

• Your 5% rental yield is now £8,333 a year

• Income tax saving = £3,333 a year

• Sell in 10 years for twice what you paid for it

• CGT saving = £46,666

Your SIPP has made £249,996 profit tax free for exactly the same gross cost as your BTL using the exact same assumption for each.

Even if you took all this money out of your SIPP at the 40% rate you would still have £175,000 profit in your hands after tax (£73,000 more than your BTL profit) and in the more likely scenario of taking it out at the 20% rate of tax you would have £212,500 in your hands (£110,500 more than your BTL profit).

J: Hope this is the right post I've quoted.

Pensions actually are very simple, it is just that many people confuse them with products historically sold by insurance companies (which is not surprising, to be honest).

I came late to pension planning. 1989. Don't even remember why, although I think it was in response to a well known ad showing a guy at various stages of life from careless laughter about the very idea of a pension through to demented worry about impending retirement in poverty. "Don't leave it too late"!! Fear factor. Pressure. FOMO. Pure simple US inspired sales tactics from the insurance industry for, as you say, pensions were of course one of the main products supplied by insurance companies - often via their central weapon , The Dreaded Life Insurance Salesman.

Now, the life insurance salesman wasn't a bad guy. He was just a bloke making a living to feed his family from commissions he earned for getting signatures on documents. And the more signatures he got the more commission he earned. Kudos and promotion obtained to sales volumes. And the aim was to sell so much he was then given a position called 'branch manager' where he didn't have to sell any more but instead got 'override' for marshalling a gang of footsoldier salesmen. Consistently high performance from the team could see him as an Area Manager, then possibly Regional Manager and so on....what these days is called a sales pyramid.

This could, of course (given an expanding population and an increasingly affluent society) have gone on forever. After all it only required an endless supply of footsoldiers to get the signatures of an endlessly increasing fear-pressured citizenry.

Except for one thing.

The product was merde.

And poor old Roy discovers that his 13 years of unbroken monthly contributions plus their tax advantageous top-ups has defied all those future projections and is, in fact, worth almost exactly what he's contributed.

And the blame game starts. (Alongside a comparison with what money dumped into residential letting concerns has done in the same period).

The blame: Brits love 'the blame'. When st happens the solution is always secondary to----The Blame. The Blame sells papers, inspires emotions, and above all provides 'justice' and even justification and a whole raft of stuff like that. Pinning The Blame somehow provides closure to the victims. It doesn't solve but it at least ABsolves.

In the case of (especially unit-linked) life insurance products the blame, as always, was given to the footsoldiers. The problem was "mis-selling".

Hmmmmm

Actually probably not 1 in a 1000 life insurance salesmen had even the slightest idea of what they were selling. They knew a bit - but only a bit - more than the customer. Knowing wasn't their job. Getting the customer signed up to a pension was their job. Once the paper was signed it went to their manager. Who had a look at it and passed it to the branch administrator. Who had a look at it and packaged it with the others and sent it off to head office for underwriting. Where it was again scrutinised before being passed to the underwriting team. Who scrutinised it and then underwrote it before passing it to whoever printed it up and sent the documents out to the customer. And Hey Presto! Another happy future pensioner on the way to Silver Fox Dreamland!

And of course the life insurance salesman could rest content that the paperwork had passed through 5 levels of scrutiny and therefore couldn't possibly be anything other than ....well.....right! Well really why SHOULD he worry about anything with the certainty all that checking and re-checking provided?

HOWEVER:

Your 2019 version of pension- the IM SIPP- is very very different from this. It's really only the word "pension" that gives it anything in common with mine. It appears to be just simply investment arranged to exploit the UK laws and regulations on pensions to best customer advantage. And its supply involves rather more than arranging someone to sign paper and tell the customer to put their contributions in the managed fund because then the fund manager (implied expert) will manage them for you and save you the trouble. Clients' engagement is encouraged. Technical explanation is accurate and available. And, importantly, the central aim of the entire exercise is to enhance the customers finances rather than the old school aim which was fairly obviously to boost the profits of life companies and their associates with client benefit coming a long way secondary.

Your financial model examples of commercial property in SIPP present inarguable advantages of the method as a way of handling things.

BUT: ......where do I begin......and it's very much from a position of technical ignorance....

Control? : Who actually owns this property? Is it the sipp trustees or the sipp holder? As in, whose name is on the title? And once it's in the SIPP how can it be extracted from it? Say you want to sell it and reinvest the funds in something unrelated, as people often do. For example I recently sold a business centre I no longer wanted to give the wife funds towards buying a posh flat. Can that be done with SIPP property or just as it benefits from pension law is it restricted by the same?

Quantity? Isn't there a value limit on what property a SIPP can contain? Numbers stack up pretty fast in property - especially commercial property - and if there's a value limit on what is Sippable, how can the sipp comm property investment be scaled up?

Investment "damage": If there IS a limit of about a million quid on what you can put in a SIPP, doesn't having a valuable comm property in it hugely impact on what ELSE you can put in it, especially with the theory of diversification in mind?

Income: Doesn't the income (rent presumably) from the SIPPed property have to go back to the SIPP and not the SIPP holder? Not exactly an ideal cashflow scenario is it?

And there are other things which for myself and others would have to be considered in the pro/con balance before indulging in a comm prop SIPP strategy.

So whilst it has obvious advantages, like everything else it also comes with disadvantages which mean that it's only a good'un for certain people, certain types of property, and certain wider business plans. Probably ideal for the business owner to use for his own business premises, other than having to continue to pay rent from cashflow which he can't access for potentially a very long time.

However (again) one thing's beyond doubt. It's rather better than the old skool pension arrangements which have caused so much disappointment for so many.

[Testaburger]

So what we can conclude, Groat, is that your knowledge of pensions was limited to insurance-linked annuity products of yesteryear.

That answers a lot.

Edited by Testaburger on Sunday 21st July 16:44

[selmahoose]

JulianPH said:

Sorry, but I have to call you out on this.

First thing - if you have borrowed 100% of the purchase price then the only yield you are getting is the scraps remaining after property management fees, bank repayment, bank interest, and all other general property costs. This means that you own nothing (the bank does) and are left with a tiny slice of any yield.

The second thing - do you really want to be financially in bed with the Royal Bank of st? I would not trust them with a penny. They have bankrupted many good businesses and without a taxpayer bailout would be bankrupt themselves.

First thing: O Julian! Seriously???

Y'know, in the 80's on even the most average properties we could repay the loan in full in 5 years from the rent, and as you say still make a tiny tiny slice.

Of course you only got the funding because the global value you owned (including of what you were buying with the 100% funding) was more than 70%...sometimes very very much more than 70% of the borrowing.

So, let's say you've £1M in valuation. You want £500k at valuation more. So at the bank you'll be asking to borrow £500k from £1.5M
which will take you 5 years to repay DURING WHICH TIME (60 months) you will get only a trickle back on the £500k stuff but because it is self servicing you won't get a penny less than you were previously getting from the original £1M worth.

60 months later, you have the full yield from the £500k. From considerably now more valuable stock.

Or as property appreciates (especially cannily bought and maintained) you have refinanced it and added even more to the chain.

Or you have taken that bank bought stock and bought and sold and bought and sold and bought and sold and ....etc

And what has this "cost"? Well the bank lent the purchase money. And the tenancies kept the project self servicing......so, nothing really.

And even the tiny slice you started with has increased before the final redemption because rent just keeps going north......

Tell me, has anyone ever benefitted from a generous pension into which they contributed........ NOT A PENNY?

Second thing: been there, read the book, saw the film, bought the T shirt, and not only survived, but prospered from their stupidity ineptitude and greed.

[selmahoose]

Pistonheads2019 said:

Good post.

If you're who I think you might be, that'll be the first time ever that I've spotted you on the first post.

And that's pretty spectacular!

Time will tell!

[JulianPH]

selmahoose said:

J: Hope this is the right post I've quoted.

Yep, you are getting it!

The insurance industry is what gave pension a (deservedly) bad name, by wrapping up their terrible investments into pensions (and Endowment Policies)and selling these as complete and inclusive finished products.

This led to the general acceptance that a pension was a product, rather than a tax allowance.

It is not. It is tax allowance.

Remove the word "pension" and replace it with "tax free saving and investment account" and you are in the right ballpark.

What your chose to invest any money you place in this is up to you (within HMRC limits).

HMRC does indeed limit this, as the tax breaks are so good.

You are right about the lifetime allowance too. It is stupid. Sure, limit what people can put in, but it is absolute madness to limit what it can grow by.

With regard to ownership, your SIPP owns it (not you). However you own your SIPP!

Title is in both names and the Trustee has legal ownership, but this is always on behalf of the beneficiary (you). Unless you request something that is unlawful (or just plain stupid) then your wish is your command.

All income goes straight back into your SIPP (tax free). After the age of 55 you can draw what you like out of your SIPP (one quarter of it also being tax free).

I think there are improvements that can be made regarding this tax allowance (not product), but as it now stands it is the best that is available (most certainly to higher rate taxpayers).

Cheers

[Groat]

Vanguard LifeStrategy chit chat is considerably more boooooring than this.

(other opinions welcome)

[JulianPH]

selmahoose said:

JulianPH said:

Sorry, but I have to call you out on this.

First thing - if you have borrowed 100% of the purchase price then the only yield you are getting is the scraps remaining after property management fees, bank repayment, bank interest, and all other general property costs. This means that you own nothing (the bank does) and are left with a tiny slice of any yield.

The second thing - do you really want to be financially in bed with the Royal Bank of st? I would not trust them with a penny. They have bankrupted many good businesses and without a taxpayer bailout would be bankrupt themselves.

First thing: O Julian! Seriously???

Y'know, in the 80's on even the most average properties we could repay the loan in full in 5 years from the rent, and as you say still make a tiny tiny slice.

Of course you only got the funding because the global value you owned (including of what you were buying with the 100% funding) was more than 70%...sometimes very very much more than 70% of the borrowing.

So, let's say you've £1M in valuation. You want £500k at valuation more. So at the bank you'll be asking to borrow £500k from £1.5M
which will take you 5 years to repay DURING WHICH TIME (60 months) you will get only a trickle back on the £500k stuff but because it is self servicing you won't get a penny less than you were previously getting from the original £1M worth.

60 months later, you have the full yield from the £500k. From considerably now more valuable stock.

Or as property appreciates (especially cannily bought and maintained) you have refinanced it and added even more to the chain.

Or you have taken that bank bought stock and bought and sold and bought and sold and bought and sold and ....etc

And what has this "cost"? Well the bank lent the purchase money. And the tenancies kept the project self servicing......so, nothing really.

And even the tiny slice you started with has increased before the final redemption because rent just keeps going north......

Tell me, has anyone ever benefitted from a generous pension into which they contributed........ NOT A PENNY?

Second thing: been there, read the book, saw the film, bought the T shirt, and not only survived, but prospered from their stupidity ineptitude and greed.

I don't think we need to have an online argument about this!!!

I remember leaving primary school in the 80's, so wasn't up to date with properties back then

My "pension" is completely maxed out now. You certainly have a point with regards to the limitations (thought these are due to the huge tax breaks on offer - not the products themselves).

Just give me a bell mate!

[Countdown]

Testaburger said:

I’m not suggesting there isn’t demand for Glasgow Gulags, but to insinuate that the share of the population aiming to get shacked up in one than is greater than those that aren’t, is hysterical. It’s also irrelevant to the point I’m making about normal yields.

For these average scenarios, the average returns from the average tenant in an average house are, well, average. Net of taxes and expenditure, they are low single digits. I’m not talking about your niche empire. I’m talking about industry average.

I have to say, that ^^^^ is my experience as well. Here (East Lancs/North Manchester) the cheapest properties which aren’t on Council Estates tend to be IRO £100k. Ex-RTB tend to be £60-£70k. Gross yields tend to be £500pcm, maybe £600pcm tops. If you aim for the higher end of the market a small 2/3 bed semi will cost you £180k minimum and you’d get £700pcm. That’’s roughly 6% gross, then take out your running costs such as 8% agency fees, maybe budget 5-10% repairs and maintenance, interest fees if you took out a loan, and very soon you’re looking at net returns of 3-4%. Then factor in void periods and non-payers. It only takes one person not paying and £1200 in court fees to put a dent in returns.

[Groat]

JulianPH said:

I don't think we need to have an online argument about this!!!

I remember leaving primary school in the 80's, so wasn't up to date with properties back then

My "pension" is completely maxed out now. You certainly have a point with regards to the limitations (thought these are due to the huge tax breaks on offer - not the products themselves).

Just give me a bell mate!

1) who's arguing? Don't worry, you'll know when it's arguing. When the family argues, out come the uzis....
2) tax manipulating is considered most non-U these days.....unethical almost. How do you expect to have good public services/NHS/schools etc with all this tax-dodging going on? Disgraceful!
3)A bell! A bell! I know what you're after and I know a cold call when I hear one! Scary!
4) Very rarely drink beer. Mine's a wine. Currently (well a bit later) a Chateau Batailley Pauillac 2009. Preferably without food.

5) Due to a huge change in immediate financial circumstances which required a brief return to what I laughably refer to as "work", it is now likely, said circumstances having been turned around, that before the end of the year (possibly earlier) all "investing" aka wasting money on property having been banned by 'er indoors, a certain amount of groats may require safe management. The question is, with a close relative who is the ned board chairman of not one but two of the world's biggest investment companies and with whom I am on the best of terms, should I place this very un-hard earned pile with these multi-trillion dollar institutions, or with a Nottingham backstreet outfit run by a geezer I met on t'internet. No brainer really. So unless something seriously wayward happens (which, in fairness, is about once a week on Planet Groat) you (or, more likely, whichever accomplice actually mans the gaff) may expect a call. Though, I emphasise, not for a while. And, of course, not without dilemma and drama though hopefully avoiding trauma.

[Testaburger]

Indeed, and don’t forget income tax, recognising that loan interest won’t be deductible going forward.

[Groat]

Countdown said:

I have to say, that ^^^^ is my experience as well. Here (East Lancs/North Manchester) the cheapest properties which aren’t on Council Estates tend to be IRO £100k. Ex-RTB tend to be £60-£70k. Gross yields tend to be £500pcm, maybe £600pcm tops. If you aim for the higher end of the market a small 2/3 bed semi will cost you £180k minimum and you’d get £700pcm. That’’s roughly 6% gross, then take out your running costs such as 8% agency fees, maybe budget 5-10% repairs and maintenance, interest fees if you took out a loan, and very soon you’re looking at net returns of 3-4%. Then factor in void periods and non-payers. It only takes one person not paying and £1200 in court fees to put a dent in returns.

https
https://www.rightmove.co.uk/property-for-sale/prop...

That took 30 seconds to find on the open market. Seems to have an in situ longterm tenant at £420 a month. You know the area. What's the problem with stuff like that?