Discussion
dogz said:
There are always differing perspectives on what is the best approach. You need to decide what personally works for you. For me its BTL coupled with a pension and some ETF's plus a bit of cash in the bank
Over the years, I've built up a 10 property portfolio which is essentially going to be my retirement fund. All will be fully repaid when I retire (on cap repayment mortgages) and in todays money will generate nearly £100k income without any erosion of capital. Yes, there are costs to maintain etc. Yes, a big bill with crystalise if I sell in terms of capital appreciation. Yes, houses are not the most liquid assets but for me it works
So much so, I'm continuing to buy.
Also, to all those who say there is no offset for interest on a BTL mtg - there is. The rules changed and its not as good but there is still a 20% off set allowance made when you do your self assessment
Between 2000 and 2010 my agency built probably over 100 portfolios like this for people. Which we then managed. Over the years, I've built up a 10 property portfolio which is essentially going to be my retirement fund. All will be fully repaid when I retire (on cap repayment mortgages) and in todays money will generate nearly £100k income without any erosion of capital. Yes, there are costs to maintain etc. Yes, a big bill with crystalise if I sell in terms of capital appreciation. Yes, houses are not the most liquid assets but for me it works
So much so, I'm continuing to buy.
Also, to all those who say there is no offset for interest on a BTL mtg - there is. The rules changed and its not as good but there is still a 20% off set allowance made when you do your self assessment
The nice thing I have to tell you is that its worked out well for every single one of the people we built them for. So it should be the same for you. We used to offer a buyback deal for anyone who wasn't happy with what they've bought. Of +/- 1000 units, only ONE was given back which I still own, and it's one of my favourites.
Funnily enough I've just sold a small portfolio of 5 supplied to my mate about 20 years ago.
Edited by Portia5 on Wednesday 7th February 14:21
Portia5 said:
Makes you wonder why there's so much worldwide build-to-let activity, doesn't it? (amateurish though its business plan seems)
Mainly its people seeing investing in the the stock market as "risky". Buying a fixed asset, and understanding that people will pay you to use it whilst it grows in value is much easier for the general population than even a basic understanding of how shares / Index funds / bonds workHammersia said:
Pit Pony said:
Portia5 said:
Usually (or often, at least) s&s are bought with already-taxed earnings. Some of them then get taxed again on liquidation.
Whereas property may be bought with 100% debt which may, along with its costs, then be paid off by its rental income, after which all its gains are "free money" by PH logic.
Time passes, rent rises, values rise. Not 'guaranteed' but not far off.
For an asset that cost no "hurt" money?
That'll do me.
You aren't wrong, but you over simplify. Whereas property may be bought with 100% debt which may, along with its costs, then be paid off by its rental income, after which all its gains are "free money" by PH logic.
Time passes, rent rises, values rise. Not 'guaranteed' but not far off.
For an asset that cost no "hurt" money?
That'll do me.
With "Just" £39k of taxed income, we leveraged the purchase of a nice ex council 3 bed semi. Which cost £130k We spent 3 weekends preparing it, and used open rent to find tenants. 8 years and on the third tenant, we used part of an inheritance to pay off the remaining mortgage £63k. (With interest rates going up, it made no sense to us to remortgage at 7% when we could only get 5% on the cash)
Recently I looked at house prices of similar houses and £210 k is possible. £200k more likely.
So effectively we have invested £102k and if we got out now could have doubled our money.
Or we can continue to rent it out for £9000 a year. Return on equity is actually now a bit s
t. 4.5%Or maybe Return on our total investment is 9%
The questions we wish we could answer are how long will interest rates remain at the current level? If they are staying at 5% for the next 20 years, then we might as well sell.
How much higher can the rent go? We are currently undercharging. We could get £12k a year, and if the current tenant leaves, that's what we will target.
What repairs are going to be needed? How long is a peice of string?
What will prices do? Have they stalled ? Unlikely.
I've obviously ignored Tax. Through the use of Form.17, my wife who does not work, can make use of her tax allowance. We use the current rent to pay more into my pension, thus saving me tax at 40% and Ni at 7% (is that the current rate ?) Effectively the rent we get is worth £16k into my pension pot.
As I say you need a spreadsheet. And assumptions.
IMHO this (government tax policy) ties up a lot of property (in unproductive capital) which could be helping to solve the housing crisis for the young.
Plus I just assumed we'd keep it until we passed away, and then it would go to our kids.
CivicDuties said:
Caddyshack said:
Willhire89 said:
Whenever these threads come up they always assume mortgage requirement and use that to try and kill the idea.
When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
That is one good option that worked well for you.When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
It is not really correct to say "it IS the best place" - it may have been correct to say "it worked out very well based on what has happened in past" - we simply do not know how property will perform against other options.
I sat down with a mate who sold a business and his net amount was £2.5m, he was essentially a financial director and absolutely loves property - he soon came to the conclusion that 2.5m cash in to property was not close net for net to what he could get elsewhere. He did buy a few properties but used mortgages and invested the rest, he managed 14% for 2 yrs on a kick-out investment.
Caddyshack said:
CivicDuties said:
Caddyshack said:
Willhire89 said:
Whenever these threads come up they always assume mortgage requirement and use that to try and kill the idea.
When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
That is one good option that worked well for you.When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
It is not really correct to say "it IS the best place" - it may have been correct to say "it worked out very well based on what has happened in past" - we simply do not know how property will perform against other options.
I sat down with a mate who sold a business and his net amount was £2.5m, he was essentially a financial director and absolutely loves property - he soon came to the conclusion that 2.5m cash in to property was not close net for net to what he could get elsewhere. He did buy a few properties but used mortgages and invested the rest, he managed 14% for 2 yrs on a kick-out investment.
Burrow01 said:
Mainly its people seeing investing in the the stock market as "risky". Buying a fixed asset, and understanding that people will pay you to use it whilst it grows in value is much easier for the general population than even a basic understanding of how shares / Index funds / bonds work
In my case as well as 'risky' I see the stock market as volatile. Businesspeople hate volatility. I'm still in it, but only to the extent of not really caring about it. Plus it seems to me to be predominantly about growth, which as I get older seems more and more pointless.
CivicDuties said:
Caddyshack said:
CivicDuties said:
Caddyshack said:
Willhire89 said:
Whenever these threads come up they always assume mortgage requirement and use that to try and kill the idea.
When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
That is one good option that worked well for you.When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
It is not really correct to say "it IS the best place" - it may have been correct to say "it worked out very well based on what has happened in past" - we simply do not know how property will perform against other options.
I sat down with a mate who sold a business and his net amount was £2.5m, he was essentially a financial director and absolutely loves property - he soon came to the conclusion that 2.5m cash in to property was not close net for net to what he could get elsewhere. He did buy a few properties but used mortgages and invested the rest, he managed 14% for 2 yrs on a kick-out investment.
Portia5 said:
dogz said:
There are always differing perspectives on what is the best approach. You need to decide what personally works for you. For me its BTL coupled with a pension and some ETF's plus a bit of cash in the bank
Over the years, I've built up a 10 property portfolio which is essentially going to be my retirement fund. All will be fully repaid when I retire (on cap repayment mortgages) and in todays money will generate nearly £100k income without any erosion of capital. Yes, there are costs to maintain etc. Yes, a big bill with crystalise if I sell in terms of capital appreciation. Yes, houses are not the most liquid assets but for me it works
So much so, I'm continuing to buy.
Also, to all those who say there is no offset for interest on a BTL mtg - there is. The rules changed and its not as good but there is still a 20% off set allowance made when you do your self assessment
Between 2000 and 2010 my agency built probably over 100 portfolios like this for people. Which we then managed. Over the years, I've built up a 10 property portfolio which is essentially going to be my retirement fund. All will be fully repaid when I retire (on cap repayment mortgages) and in todays money will generate nearly £100k income without any erosion of capital. Yes, there are costs to maintain etc. Yes, a big bill with crystalise if I sell in terms of capital appreciation. Yes, houses are not the most liquid assets but for me it works
So much so, I'm continuing to buy.
Also, to all those who say there is no offset for interest on a BTL mtg - there is. The rules changed and its not as good but there is still a 20% off set allowance made when you do your self assessment
The nice thing I have to tell you is that its worked out well for every single one of the people we built them for. So it should be the same for you. We used to offer a buyback deal for anyone who wasn't happy with what they've bought. Of +/- 1000 units, only ONE was given back which I still own, and it's one of my favourites.
Funnily enough I've just sold a small portfolio of 5 supplied to my mate about 20 years ago.
Edited by Portia5 on Wednesday 7th February 14:21
Caddyshack said:
Was this a property club type setup?
Hahahaha!! It did kind of seem like that. Gang of 3 property owners (me and 2 others) who sourced, 'sorted out' and supplied tenanted dwellings to people building portfolios. We'd sell them the units, then our letting agency would manage them (still does). All funded by RBS Corporate (deceased).Caddyshack said:
CivicDuties said:
Caddyshack said:
CivicDuties said:
Caddyshack said:
Willhire89 said:
Whenever these threads come up they always assume mortgage requirement and use that to try and kill the idea.
When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
That is one good option that worked well for you.When we started I purchased one flat and of course the agent told me I was a muppet and to buy three splitting the money - sure we've missed out by not gearing over the last two decades but I've never had to worry about mortgage margin and as a starter that was what I wanted.
If you have cash it is still the best place to reliably earn money with the opportunity for capital growth and most have doubled or trebled in that time. Rents here in the east mean they technically pay for themselves in around ten years.
Longest tenant moved in 1994
It is not really correct to say "it IS the best place" - it may have been correct to say "it worked out very well based on what has happened in past" - we simply do not know how property will perform against other options.
I sat down with a mate who sold a business and his net amount was £2.5m, he was essentially a financial director and absolutely loves property - he soon came to the conclusion that 2.5m cash in to property was not close net for net to what he could get elsewhere. He did buy a few properties but used mortgages and invested the rest, he managed 14% for 2 yrs on a kick-out investment.
JuanCarlosFandango said:
Not so sure. As above if you had put the same amount into a fund tracking the FTSE 250 or S&P 500 you'd have achieved a similar rate of return with less risk of a bad tenant or expensive repairs and maintenance. All else being equal.
You're saying that the FTSE 250 would have delivered a trebling of fund value as well as paying out a 5% (and since then steadily increasing return from rent review) annually? Very different when the return is being compounded back in
Jackals said:
Yes this is called a Structured Product, they don't necessarily need to be based on the property market, most now are based on equity markets. IFAs can access these via certain investment banks, Investec used to be the biggest provider for IFAs however they closed this service about 3 years ago. The other way to access them is via an Investment Manager managing your portfolio, retail clients aren't allowed to buy them.
Thanks. Now the challenge for me is to remember this information for 6 years time when I've actually, finally got some money to invest...When it comes to structured products, in all honesty you're probably better off forgetting about them anyway 
ETA: they primarily exist to enrich the people/organisations involved in hawking them. Obviously a few end customers might do well out of them, but they're usually paying over the odds to bear risk that they probably don't fully understand. The fact they're beloved by IFAs and money-for-old-rope wealth managers tells you everything.
ETA: they primarily exist to enrich the people/organisations involved in hawking them. Obviously a few end customers might do well out of them, but they're usually paying over the odds to bear risk that they probably don't fully understand. The fact they're beloved by IFAs and money-for-old-rope wealth managers tells you everything.
Edited by NowWatchThisDrive on Thursday 8th February 13:35
^^^^
And there is exactly why normal folk like me turn to property instead of "financial products".
Those of us who have spent a working lifetime in normal jobs, i.e. not working in the financial sector ourselves, simply can't get consistent, stable advice and information about the benefits and risks of financial products. It's the old birds in hands and bushes. Sure, there might be something better over there in the bush, but I have no idea how to access nor understand it and right here in front of me is an option which will produce a steady, predictable and above all acceptable income from my lump sum of money.
And there is exactly why normal folk like me turn to property instead of "financial products".
Those of us who have spent a working lifetime in normal jobs, i.e. not working in the financial sector ourselves, simply can't get consistent, stable advice and information about the benefits and risks of financial products. It's the old birds in hands and bushes. Sure, there might be something better over there in the bush, but I have no idea how to access nor understand it and right here in front of me is an option which will produce a steady, predictable and above all acceptable income from my lump sum of money.
Willhire89 said:
You're saying that the FTSE 250 would have delivered a trebling of fund value as well as paying out a 5% (and since then steadily increasing return from rent review) annually?
Very different when the return is being compounded back in
It has tripled since 2000. Current dividend yield is 3.48%, average 2-4% since 1998Very different when the return is being compounded back in
https://www.lseg.com/en/insights/ftse-russell/ftse...
If I'm reading it right total return with compounding is more like 6 times.
Willhire89 said:
I have structured product in my pension portfolio along with money in gilts
Several have just matured (kicked out) and the replacement ones were offering around 8% annually with a one off 1.5% arrangement cost
Yeah...what a rip off with all this talk of 14% and 8%...compared to the ????Several have just matured (kicked out) and the replacement ones were offering around 8% annually with a one off 1.5% arrangement cost
Many people are very happy with their structured products.
CivicDuties said:
^^^^
And there is exactly why normal folk like me turn to property instead of "financial products".
Those of us who have spent a working lifetime in normal jobs, i.e. not working in the financial sector ourselves, simply can't get consistent, stable advice and information about the benefits and risks of financial products. It's the old birds in hands and bushes. Sure, there might be something better over there in the bush, but I have no idea how to access nor understand it and right here in front of me is an option which will produce a steady, predictable and above all acceptable income from my lump sum of money.
Property often doesn't come with consistent advice either though. The key is to find an IFA that people know and trust. I have met some excellent ones over the years. BUT you must be 100% happy and if property helps you sleep at night do that.And there is exactly why normal folk like me turn to property instead of "financial products".
Those of us who have spent a working lifetime in normal jobs, i.e. not working in the financial sector ourselves, simply can't get consistent, stable advice and information about the benefits and risks of financial products. It's the old birds in hands and bushes. Sure, there might be something better over there in the bush, but I have no idea how to access nor understand it and right here in front of me is an option which will produce a steady, predictable and above all acceptable income from my lump sum of money.
Caddyshack said:
Yeah...what a rip off with all this talk of 14% and 8%...compared to the ????
Many people are very happy with their structured products.
But clearly it's not guaranteed, so the question is what risks are customers assuming - in terms of capital loss, foregone upside, counterparty credit etc - for a sniff at the touted 8/14/whatever %. I doubt the vast majority of customers properly understand the subtleties of these products.Many people are very happy with their structured products.
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