Passive Income - ideas

[Mezger]

With the increasing controls and cooling measures for BTL, what other areas are people investing in for passive or semi passive income?

By passive I mean not your full time occupation, obviously all investment requires some effort.

Commercial Property?
Stocks and shares (I do this via indexes)
Cars - think I've missed the boat here and would prefer to wait as prices seem to be softening (Porsche GT models as an example)

[Jockman]

Your Kids?

Your Grandkids?

Your Quality of Life?

[Mezger]

Ozzie Osmond said:

If you see the words "car" and "investment" in the same sentence,

Exactly, cars are not something I would "invest" in, hence my question apart from BTL and index investing what options are there?

[Mezger]

Jockman said:

Your Kids?

Your Grandkids?

Your Quality of Life?

Quality of life is good, first child is arriving in November (can't wait)

[Hoofy]

Watches? But you really need to do your research. The amount of time you spend doing your research, you might as well have spent it earning money actively.

[Jockman]

Mezger said:

Quality of life is good, first child is arriving in November (can't wait)

Congrats

Set up a Pension for them in December - drip in £80 per month and the Govt will top it up to £100.

Not a bad return

[Mezger]

Thanks Jockman, yes, I will be setting up an investment account for sure, sadly don't benefit from tax relief as I'm currently an expat.

[trowelhead]

B2L via a ltd company (interest still deductible)
P2P investing - 12% returns can be had
Commercial property
Buy a managed business
Some online businesses such as ecommerce can be systematised to become semi passive
Dividend investing
Write a hit song and collect royalties

[Mezger]

trowelhead said:

B2L via a ltd company (interest still deductible)
P2P investing - 12% returns can be had
Commercial property
Buy a managed business
Some online businesses such as ecommerce can be systematised to become semi passive
Dividend investing
Write a hit song and collect royalties

Thanks
B2L - do you need to have "scale" for ltd company to make sense for BTL - e.g 5+ properties?
Commercial Property is interesting me, but truth be told not an area I know anything about
the idea of buying a business is interesting, possible to buy something in the 100-200k range that is managed, which sites to find these kinds of businesses?

[Ozzie Osmond]

Mezger said:

B2L - do you need to have "scale" for ltd company to make sense for BTL - e.g 5+ properties?
Commercial Property is interesting me, but truth be told not an area I know anything about
the idea of buying a business is interesting, possible to buy something in the 100-200k range that is managed, which sites to find these kinds of businesses?

How much is the extra 3% Stamp Duty cost in hard cash terms? Small I suspect. Running a company will be an ongoing PITA/expense and the income tax benefits of doing so were eliminated in George Osborne's last budget. You'd have to crunch detailed numbers to answer your question properly - there's no magic, broad answer.

[Foliage]

lego

[Jockman]

Ozzie Osmond said:

Mezger said:

B2L - do you need to have "scale" for ltd company to make sense for BTL - e.g 5+ properties?
Commercial Property is interesting me, but truth be told not an area I know anything about
the idea of buying a business is interesting, possible to buy something in the 100-200k range that is managed, which sites to find these kinds of businesses?

How much is the extra 3% Stamp Duty cost in hard cash terms? Small I suspect. Running a company will be an ongoing PITA/expense and the income tax benefits of doing so were eliminated in George Osborne's last budget. You'd have to crunch detailed numbers to answer your question properly - there's no magic, broad answer.

We're just buying another company through our Ltd Co and it's an extra £7,100 IIRC.

[trowelhead]

Mezger said:

Thanks
B2L - do you need to have "scale" for ltd company to make sense for BTL - e.g 5+ properties?
Commercial Property is interesting me, but truth be told not an area I know anything about
the idea of buying a business is interesting, possible to buy something in the 100-200k range that is managed, which sites to find these kinds of businesses?

Short answer - no i think it can make sense from day one depending on the deal. It will add accountancy costs of circa 600-700 pa (to submit all your accounts etc) but on the other side, you can still set mortgage interest against profit. If you plan to build up a portfolio then in many cases its the best way to go at the current time imo.

If you pay higher rate tax, ltd company makes sense as you can leave the profits in the company taxed at 20% (then reinvest) rather than a personal BTL where profit would be taxed at higher rate, without the deduction of your mortgage interest.

LTD company mortgages used to be less competitive in terms of higher interest rates, but that is changing now as there is increased demand for ltd company products from all the investors switching to ltd. Rates are quite competitive at the moment.

[Mezger]

trowelhead said:

Short answer - no i think it can make sense from day one depending on the deal. It will add accountancy costs of circa 600-700 pa (to submit all your accounts etc) but on the other side, you can still set mortgage interest against profit. If you plan to build up a portfolio then in many cases its the best way to go at the current time imo.

If you pay higher rate tax, ltd company makes sense as you can leave the profits in the company taxed at 20% (then reinvest) rather than a personal BTL where profit would be taxed at higher rate, without the deduction of your mortgage interest.

LTD company mortgages used to be less competitive in terms of higher interest rates, but that is changing now as there is increased demand for ltd company products from all the investors switching to ltd. Rates are quite competitive at the moment.

thanks, very interesting, what type of interest rates are available for mortgages?

[trowelhead]

Mezger said:

hanks, very interesting, what type of interest rates are available for mortgages?

I have one going through thats 5 year fix at 3.99% - nowhere near residential but still not bad. Tracker or 2 year fix would be a bit less.

[fishseller]

If say you had 250K to invest where would you invest this ?

[trowelhead]

fishseller said:

If say you had 250K to invest where would you invest this ?

10 x 100k houses, 25k deposit each...

[CaptainSensib1e]

trowelhead said:

10 x 100k houses, 25k deposit each...

Managing 10 houses is a hell of a lot of work, why not 2x£500k houses?

[fishseller]

CaptainSensib1e said:

Managing 10 houses is a hell of a lot of work, why not 2x£500k houses?

125 deposit on each with 375 BTL loans on each one would need to yield 8 percent min to make it worth while capital growth is now stagnant as we are in the mids of a bubble

[CaptainSensib1e]

fishseller said:

CaptainSensib1e said:

Managing 10 houses is a hell of a lot of work, why not 2x£500k houses?

125 deposit on each with 375 BTL loans on each one would need to yield 8 percent min to make it worth while capital growth is now stagnant as we are in the mids of a bubble

Sorry, not getting it. Are you saying lower value properties yield more than higher value properties?