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

[Grandad Gaz]

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.

Thanks

[Vocal Minority]

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]

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]

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]

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]

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]

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.

[Mr Pointy]

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.

well using the 4% rule you should get about £26k a year on average without depleting the capital.

[Hoofy]

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]

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]

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]

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]

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]

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

I'll have read of that later, thanks

[Mr Pointy]

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]

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

I'll have read of that later, thanks

Thanks, just the sort of info I was after.

[moonigan]

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]

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

[XJSJohn]

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]

low risk-property
med risk-bit coin as they have stabilised
high risk-Brighton to win the premiership next season.