Vanguard LifeStrategy

[Mr Pointy]

selmahoose said:

The other really hard thing to understand for the hard of thinking is what I came in business to call the "endless doctrine of self-replacement". Which is why you see the day to day management of property and tenancy as some time-consuming chore. It isn't. You replace yourself as landlord with a managing agent. Then, if you wish, your only connection to the property is as a name on a title deed and a bank account.

So, the stupid equate cheap property with slum property and then believe that somehow their desire to succeed at renting it profitably somehow provides them with the ability to do so. And that's when the common-or-garden lower end of renting comes unstuck. Of course, it dawns on SOME people that their cheap properties might be best operated by agents with a lengthy provable history of having the ability to operate such property very profitably. So they replace themselves as landlords with such agents and of course the agent just adds their properties to a roster of already successfully operating properties which is exactly what the newcomers properties become.

None of this is really much more than common sense. No special tools or knowhow or ability or acumen. Just common sense. Which, of course, is not something most people have.

Genuine question: If I had £100k (& I do) is there a reputable company who would source the properties & do the managing you describe above? If so, what annual return could I expect to get for my investment?

[selmahoose]

EddieSteadyGo said:

Realistically a person on an average salary will find it very difficult to save £500k (on current values) into a pension. But many of those people probably also don't have the wherewithal, attitude to risk or commercial nous to setup large scale BTL business either.

One downside I would mention of large BTL portfolios is how they are treated from an IHT perspective. The government regards them in a similar way to shares and so don't offer any relief. The reality though is large scale BTLs are often proper businesses requiring a lot of care and effort to ensure they achieve the expected returns on a long term basis. So in this regard, there are some IHT benefits to pension savings.

Yeah well, a person on an average salary (£25k?) has had a lifetime to accustom themselves to lower expectations and is highly unlikely to manage to gather a £500k pot or even a £100k pot., given they've also got to cope with all the other costs and expenses ordinary life requires.

My opinion is that if the best you can expect is a pot which provides a meaningless retirement income then you'd be as well not bothering. These 'workplace pensions' for the lower waged are just a meaningless waste of time. Their victims would have a better quality of life spending their contributions on enhancing their day to day lives. OTOH many of them have talents which could materially better them if they exploited them as self-employed. As some do, of course.

BTL portfolios are no more difficult to IHT plan for than any other asset. My personal plan is to leave mine to the wife, and our plan is for her to subsequently leave them to a charity. This plan may change but right now Im in a bad mood with HMRC so fk them. They're getting nothing. And on the very odd occasion it's ever been mentioned (last time about a decade ago) my son just laughs and shakes his head and tells me not to be so stupid.

Yeah a sizeable portfolio (like any business) these days requires active and able management, but that just opens doors to more opportunity if you want it to. I was at the letting agents place this morning. He's my good friend of 20 years working together standing. He makes great coffee and we had a good chat. Neither of my pensions has so much as poured me a glass of water in all the time Ive had them and Ive yet to hear either of them utter a word. Miserable lonely little fkers.

Edited by selmahoose on Saturday 20th July 18:43

[selmahoose]

Mr Pointy said:

Genuine question: If I had £100k (& I do) is there a reputable company who would source the properties & do the managing you describe above? If so, what annual return could I expect to get for my investment?

Hahaha! Back in the day I used to invite PHers to vist and see how everything works hands on, and invite them to join in anything they fancied. Not any more I'm afraid, sorry. If you need investment advice there's a sticky at the top of the page. And if you want specific property investment advice, contact cerberaperv if he's still about. He is one of very very few people whose property posts on PH have ever made much sense to me.

As regards returns, many people use many different methods of calculating returns. Often enough a buyer will look at the cost price of the property and the reasonably achievable full 12 month occupancy rent, and express one as a percentage of another. 10% used to be a great favourite for them to 'benchmark'. Another popular method is to take the 'hurt money' in the purchase and the bottom line return in the pocket after all exes inc tax and again express one as a percentage of t'other. Of course that's an 'in arrears' calculation, but for some using leveraging it could be a very high figure indeed. For example, I have (quite a number) of properties whose purchase was funded 100% by RBS on 10 year cap and int loans at the turn of the millenium. Theoretically I suppose the ROI on them = infinity. etc etc.

[Testaburger]

selmahoose said:

The lower end of the rental market is MASSIVE. This is because, as Jesus said, the poor are always with us. And as you may have noticed in your travels round the world, there are rather more humble dwellings than impressive ones. And that's because there is hugely more demand for cheaper property than there is for expensive.

It might dawn on you that there's a great deal of sense in offering a product for which there is huge demand as opposed to, say, a product only available to a very much smaller pool.

You’ve (presumably deliberately) missed my point.

I’ll just respond to the two paragraphs I’ve quoted.

1 - What I see on my travels and back home are more average homes than any other type. That is quite obviously, demonstrably & inescapably the default case. I’ll leave you to to research what that is.

2 - The biggest demand for comes from the biggest demographic. That, too is the average joe. Again, an inescapable default position.

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.

For me, that is not worth being illiquid, an IHT bullseye, tax targetable, and at significant personal effort or sacrificed yield to manage. Your mileage may vary.

Fundamentally, and getting mildly closer to the track of the thread - you’re clearly bigging-up how easy it is to beat the market. Plenty of market commentators like to do it, too. But the simple fact is; the vast, vast majority will not.

You can keep banging the same drum - I’m sure you will; but despite you etching your ideas into the PH servers via repetition, it doesn’t them right.

[springfan62]

selmahoose said:

TL portfolios are no more difficult to IHT plan for as any other asset. My personal plan is to leave mine to the wife, and our plan is for her to subsequently leave them to a charity.

It's not exactly an IHT plan when there won't be an inheritance.

selmahoose said:

Yeah a sizeable portfolio (like any business) these days requires active and able management

Interesting concept of retirement.

springfan62 said:

It's an easy target for the taxman.

selmahoose said:

this plan may change but right now Im in a bad mood with HMRC so fk them.

nonsense is it , you proved my point,

If you had the sense to put forward the good points of BTL and the negative you might be more credible.
Some of your responses are crass.

[selmahoose]

JulianPH said:

Let me turn a question you once put to me back on you.

If I were to invest in one of these properties with you, how much income would I receive each year and how quickly could I get my money back if I wanted it?

On another note, my wife has just walked past this and expressed an interest in me buying it:

https://www.zoopla.co.uk/for-sale/details/45308142

What are your thoughts? I think the conversion costs (and ongoing heating/maintenance would wipe out any profit.

I do like that it is is a town/village called ttt though!

IF you were being serious then you would be far better to ask someone dealing with letting those types of properties in those areas.
That's what I'd have to do to give you a proper answer because I know next to nothing about the inside track of letting in any of those areas. At a broad guess you COULD have money back in 5 years with strong management. Wouldn't even attempt it with anything other than proven agents from the area.

Personally I'm no fan of treeless Orcadian landscapes although during occasional bursts of proper summer weather some of its beaches are world class. If it's for herself to use then you should tell her to try renting something similar for awhile. If it's to hedge against breathable air and water becoming scarce some time in the future or as a place to hide post nuclear holocaust then it might have more of a point, but there's enough to worry about right now never mind trying to surmount potential future problems.

And yeah the de/reconstruction would be a "learning experience" to say the least. There might also be deconsecration issues including usage immediately subsequent to being used as a church. You weren't thinking of starting a church I hope. I was only ever friendly with one Orcadian. He was a real good guy. But like most rural farmland Scots - most rural farmland anyone in fact - they're mostly pretty clanny and standoffish and just s really.

[JulianPH]

selmahoose said:

IF you were being serious then you would be far better to ask someone dealing with letting those types of properties in those areas.
That's what I'd have to do to give you a proper answer because I know next to nothing about the inside track of letting in any of those areas. At a broad guess you COULD have money back in 5 years with strong management. Wouldn't even attempt it with anything other than proven agents from the area.

I was being serious.

You couldn't give me a figure for the same reason I couldn't give you one.

I was prepared to admit this though (and explain why).

You have also ignored every point I have made.

You know me and know that I don't dislike you, so I don't understand why you continue to do this.

At least acknowledge what I am saying and point out where you think I am wrong!

[selmahoose]

Testaburger said:

increasingly overwrought nonsense

In order for me to even approach your level of understanding of the uk rental market I would have to undo the understanding gained from the experience of working in it at every level over 43 years including the management of 1000's of properties of all types and 10's of thousands of individual tenancies. Actually as old age advances I do tend to forget some things. Even so, I doubt I'll manage to attain YOUR level of insight before the curtain comes down (quick and overwhelming alzheimers notwithstanding).

[selmahoose]

springfan62 said:

Some of your responses are crass.

Great band in their day. Promoted them at Bearsden Burgh Hall in 1978

https://www.youtube.com/watch?v=sqJhY9-qziU

Play it to your plants. See what they say.

[selmahoose]

JulianPH said:

I was being serious.

You couldn't give me a figure for the same reason I couldn't give you one.

I was prepared to admit this though (and explain why).

You have also ignored every point I have made.

You know me and know that I don't dislike you, so I don't understand why you continue to do this.

At least acknowledge what I am saying and point out where you think I am wrong!

Well seriously re. the flats if you get hold of the right agent then he'll base things on the local LHA rents. Now the nice thing is in Glasgow a studio classifies as a 1-bed. So if you spent £20k on a Glasgow studio you could be looking at close to £5kpa gross return.

Personally I'd give the agent permit to take the right tenant (including non DSS or under 35's) at anything from £300pcm upwards, so about £3.5kpa. From that you might lose up to £1kpa to costs. So you'd be getting 12.5% return on £20k or pretty close. So that's a pretty easily achievable example.

If you're investing here, be aware of the potential for independent Scotland and the potential for the introduction of LVT. This may have little or no effect on lower end stuff which will be bottom banded or zero-banded and the proposed rent caps (not the same as rent freeze currently slightly souring Berlin btl) should still leave leeway to dump a bit of any LVT back onto tenants via rent rise.


Don't wish to annoy, but could you reappraise me of what/which post I haven't acknowledged ? (and I will although maybe not till a bit later on)

[JulianPH]

selmahoose said:

Well seriously re. the flats if you get hold of the right agent then he'll base things on the local LHA rents. Now the nice thing is in Glasgow a studio classifies as a 1-bed. So if you spent £20k on a Glasgow studio you could be looking at close to £5kpa gross return.

Personally I'd give the agent permit to take the right tenant (including non DSS or under 35's) at anything from £300pcm upwards, so about £3.5kpa. From that you might lose up to £1kpa to costs. So you'd be getting 12.5% return on £20k or pretty close. So that's a pretty easily achievable example.

If you're investing here, be aware of the potential for independent Scotland and the potential for the introduction of LVT. This may have little or no effect on lower end stuff which will be bottom banded or zero-banded and the proposed rent caps (not the same as rent freeze currently slightly souring Berlin btl) should still leave leeway to dump a bit of any LVT back onto tenants via rent rise.


Don't wish to annoy, but could you reappraise me of what/which post I haven't acknowledged ? (and I will although maybe not till a bit later on)

Cheers

It was my explanation of pensions as simply being a tax allowance (and your responses to this!).

[Testaburger]

selmahoose said:

In order for me to even approach your level of understanding of the uk rental market I would have to undo the understanding gained from the experience of working in it at every level over 43 years including the management of 1000's of properties of all types and 10's of thousands of individual tenancies. Actually as old age advances I do tend to forget some things. Even so, I doubt I'll manage to attain YOUR level of insight before the curtain comes down (quick and overwhelming alzheimers notwithstanding).

Relevant as ever. I never realised you were so old. Little wonder you’re so touchy.

Your belligerence obviously means you must be right. The professional consensus for retirement planning should be to build an empire of slums.

Got it.

Edited by Testaburger on Sunday 21st July 04:05

[Testaburger]

selmahoose said:

Well seriously re. the flats if you get hold of the right agent then he'll base things on the local LHA rents. Now the nice thing is in Glasgow a studio classifies as a 1-bed. So if you spent £20k on a Glasgow studio you could be looking at close to £5kpa gross return.

Personally I'd give the agent permit to take the right tenant (including non DSS or under 35's) at anything from £300pcm upwards, so about £3.5kpa. From that you might lose up to £1kpa to costs. So you'd be getting 12.5% return on £20k or pretty close. So that's a pretty easily achievable example.

If you're investing here, be aware of the urrently slightly souring Berlin btl) should still leave leeway to dump a bit of any LVT back onto tenants via rent rise.


Don't wish to annoy, but could you reappraise me of what/which post I haven't acknowledged ? (and I will although maybe not till a bit later on)

I know you don’t understand pensions, nor do you have the wherewithal 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.

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.

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.

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

Edited by Testaburger on Sunday 21st July 07:49

[springfan62]

selmahoose said:

Personally I'd give the agent permit to take the right tenant (including non DSS or under 35's) at anything from £300pcm upwards, so about £3.5kpa. From that you might lose up to £1kpa to costs. So you'd be getting 12.5% return on £20k or pretty close. So that's a pretty easily achievable example.

Sounds pretty impressive but there are better returns out there in the Residential housing market and they don't involve stty slums you will have fun selling on and they have IHT and Entrepreneurs relief, come on keep up at the back BTL has had its day move on.

[springfan62]

Testaburger said:

Relevant as ever. I never realised you were so old. Little wonder you’re so touchy.

Your belligerence obviously means you must be right. The professional consensus for retirement planning should be to build an empire of slums.

Got it.

+1

In selmahoose terms:

Retirement = Active Management
IHT Planning = Give it to charity
Liquidity = Leaky Roofs
Yield = Never to anyone


I am just glad I am not one of his tenants.

[rufusgti]

It's getting a bit embarrassing this.

Every interesting thread about BTL or pensions or investments turns into the same people arguing the same arguments. This has been going on a few years now, it doesn't need repeating every thread. I'm Interested in investment, I'm trying to gather enough knowledge to begin investing in funds/equities/bonds. And I'm interested and invested in BTL. If anyone should be interested in these arguments it's me. But it's becoming boring. It's quite clear BTL is great for some and not as great for others. It's really not that exciting anymore to anyone though.
This thread is 'vanguard life strategy'. It has absolutely nothing to do with BTL or property.

[bitchstewie]

rufusgti said:

It's getting a bit embarrassing this.

Every interesting thread about BTL or pensions or investments turns into the same people arguing the same arguments. This has been going on a few years now, it doesn't need repeating every thread. I'm Interested in investment, I'm trying to gather enough knowledge to begin investing in funds/equities/bonds. And I'm interested and invested in BTL. If anyone should be interested in these arguments it's me. But it's becoming boring. It's quite clear BTL is great for some and not as great for others. It's really not that exciting anymore to anyone though.
This thread is 'vanguard life strategy'. It has absolutely nothing to do with BTL or property.

^^

This.

I can't sell £100 of bathroom or bedroom if I need it in a hurry.

[selmahoose]

rufusgti said:

It's getting a bit embarrassing this.

I'm Interested in investment, I'm trying to gather enough knowledge to begin investing in funds/equities/bonds. And I'm interested and invested in BTL. It's really not that exciting anymore to anyone though.

My wife tells me that someone in today's Sunday Times has written "build-to-rent construction has increased by 40% in the past year".

What's that got to do with Vanguard LifeStrategy you might ask.

Well, maybe BTR (btl in a new frock) is something VLS has eyeballed as a thing to place money in? Someone certainly has.

[selmahoose]

bhstewie said:

^^

This.

I can't sell £100 of bathroom or bedroom if I need it in a hurry.

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.

[Testaburger]

selmahoose said:

My wife tells me that someone in today's Sunday Times has written "build-to-rent construction has increased by 40% in the past year".

What's that got to do with Vanguard LifeStrategy you might ask.

Well, maybe BTR (btl in a new frock) is something VLS has eyeballed as a thing to place money in? Someone certainly has.

Irrelevant in the context of your repetitive posts.

If you don’t understand why, do ask.