Retirement income from property?

Dithering_Dad

dopester wrote: »

That isn't to knock you DD. I just want the best for you, honest.

That's OK dopester, I didn't think you were knocking me.

To answer your earlier question - I was looking to renovate the shop (it's a bit down at heel after being run my an older couple well into their retirement) and then lease it out at a reasonable rate.

Conrad

In the end I concluded pensions were'nt for me as they die with you and I am concerned the annuity provider on retirement could fail / mess up, as could the actual investment companies themselves enroute (pesnion funds were hit with Icelandic, Bank, hedge fund and other failures). I am simply not keen on relying on others. We therefore cancelled any further contributions.

I was at a crossroads then, pay down the resi mortgage or extend it and use the 'cheap' borrowing as a tool for investing.

I extended my debt and bought some B2Ls, however I sold them in 06/07 as I didn't want to be exposed to value decline.

I re-invested into areas I felt offered better medium term prospects, namely two properties abroad and I am pleased I did so as the income yield is substantialy higher and capital values not affected much at all.

At this time I also decided to buy business premises from to operate out of rather than rent.

The plan is to maximise rents from the 2 foriegn properties and then use that to pay down the resi mortgage asap, by which time I anticipate the shop mortgage will also be cleared, paid using monthly profits.

Thats then 3 properties, plus the frozen pensions, state pensions, ISAs and potentialy inheritance, plus I could downsize the main resi although I would miss the place much (hence why I did not favour your maxiresi then downsize plan)

I've toyed with buying a UK B2L again, but am minded not to so do. I have enough.


OPTION 1
As you say youre least risky option with the goal of near term security in sight.

I can see why many would opt for this one, but for me I wanted a little more adventure in my life and felt I would not be satisfied with such an option, afterall you still need a huge amount invested to retire comfortably, so simply having no mortgage still left the main objective unresolved. Ok I could save like mad once mortgage cleared, but somehow it all seems a bit long term and dull for me personaly, but I would not critiscise others.

I wanted to be underway with the main objective early on in life so I could invest and forget, that is, forget the never ending search for a fully satisfying investment plan, which I became obsessive about.

Of course your own temperment is the key here. If you detest risk, then option 1 is way to go. I have to add I always felt pensions going forward hold too much risk, so certainly do not consider those low risk, easy sure, but not low risk.

SHOP IN VILLAGE

Sounds interesting and satisfying in the sense you will truly be in the entrepenuerial frame with that one, but the shop needs to be lettable unless you can convert it to a dwelling.

I've known many a sucessful village shop but as ever sucess is merely a function of the personality running it.

One thing I've learned is to be thorough but not too expect a proposed investment to be completely rational and logical. Otherwise you anaylise to the enth degree and always talk yourself out of it. Every new significant Human endeavour always comes with a midicum of uncertainty and this point is well lost on life pessimists - they always refrain from the new and the wild with a smug raise of eyebrows, but such types never advance the Human condition, merely preserving the status quo - anyone could do that it's the easy option.

Conrad

dopester wrote: »

How can I squeeze the value-producing part of society and business, to use my capital and have them pay from their profits and income to support my own lifestyle?

The world has changed.

Not at all. As an example on one development I know a bit about, several high profile touristic firms bid to have the rights to manage the properties owned by investors. One such touristic manager is David Lloyd leisure.
It's all about supplying something in short supply which other users will pay thier rent dollars for.

What is the 'value - producing' sector? My touch phone is allright but it doesnt really add any value to my life, but I parted with some dollars all the same. If you like the phone firm is merely a depository of investors cash seeking a return.

This notion everything is changed is way over stated.

Dithering_Dad

Conrad wrote: »

In the end I concluded pensions were'nt for me as they die with you and I am concerned the annuity provider on retirement could fail / mess up, as could the actual investment companies themselves enroute (pesnion funds were hit with Icelandic, Bank, hedge fund and other failures). I am simply not keen on relying on others. We therefore cancelled any further contributions.

I was at a crossroads then, pay down the resi mortgage or extend it and use the 'cheap' borrowing as a tool for investing.

I extended my debt and bought some B2Ls, however I sold them in 06/07 as I didn't want to be exposed to value decline.

I re-invested into areas I felt offered better medium term prospects, namely two properties abroad and I am pleased I did so as the income yield is substantialy higher and capital values not affected much at all.

At this time I also decided to buy business premises from to operate out of rather than rent.

The plan is to maximise rents from the 2 foriegn properties and then use that to pay down the resi mortgage asap, by which time I anticipate the shop mortgage will also be cleared, paid using monthly profits.

Thats then 3 properties, plus the frozen pensions, state pensions, ISAs and potentialy inheritance, plus I could downsize the main resi although I would miss the place much (hence why I did not favour your maxiresi then downsize plan)

I've toyed with buying a UK B2L again, but am minded not to so do. I have enough.


OPTION 1
As you say youre least risky option with the goal of near term security in sight.

I can see why many would opt for this one, but for me I wanted a little more adventure in my life and felt I would not be satisfied with such an option, afterall you still need a huge amount invested to retire comfortably, so simply having no mortgage still left the main objective unresolved. Ok I could save like mad once mortgage cleared, but somehow it all seems a bit long term and dull for me personaly, but I would not critiscise others.

I wanted to be underway with the main objective early on in life so I could invest and forget, that is, forget the never ending search for a fully satisfying investment plan, which I became obsessive about.

Of course your own temperment is the key here. If you detest risk, then option 1 is way to go. I have to add I always felt pensions going forward hold too much risk, so certainly do not consider those low risk, easy sure, but not low risk.

SHOP IN VILLAGE

Sounds interesting and satisfying in the sense you will truly be in the entrepenuerial frame with that one, but the shop needs to be lettable unless you can convert it to a dwelling.

I've known many a sucessful village shop but as ever sucess is merely a function of the personality running it.

One thing I've learned is to be thorough but not too expect a proposed investment to be completely rational and logical. Otherwise you anaylise to the enth degree and always talk yourself out of it. Every new significant Human endeavour always comes with a midicum of uncertainty and this point is well lost on life pessimists - they always refrain from the new and the wild with a smug raise of eyebrows, but such types never advance the Human condition, merely preserving the status quo - anyone could do that it's the easy option.

Excellent post Conrad, I was hoping you'd happen along.

I agree completely with your comments on option #1. It's the traditional route that assures a comfortable middleclass lifestyle, but will result in me having to retire in my 60's, where I'd rather look at 55 onward.

Option 3 would be the same, because I'd have to pay down a huge mortgage and still wait for those pensions to build up.

Option 2 seems to be the one that allows me a possibility to retire early, provided I could pay off my home and shop mortgages. I like the idea of having a commercial lease combined with an element of residential letting because the shop leases are longer while the residential let will keep things ticking over should the shop be empty. The fact that the flat is above a shop also gives the tenant a feeling of security of tenure because if the premises are sold, they are sold as a 'sitting tenant' and are an asset, rather than being asked to leave if a residence is sold. I used to rent a flat above a charity shop and it was great - we knew we could stay there forever if we wanted to.

The shop is 'for sale or lease', so I might ask the estate agent that the lease price is - it'll give me an idea of how much I could charge once it's renovated (obviously I'd charge less because they'll lose the top two floors to the flats).

It'd certainly be nice to have a second income stream other than my salary, that's for sure. Plus I can't be called a 'scumbag BTLer' because it's not a residential property

chucky

commercial property will be the area where the "BTL investors" will be investing.
SIPPS make it more attractive.

it's something i'm looking at doing soon once the commercial property sector starts to stabilise a bit.

Conrad

The rates can be off putting.

Dithering_Dad

Conrad wrote: »

The rates can be off putting.

What additional things do you have to pay with a commercial property than with a residential one. I'm assuming that if I have 2 self-contained flats then I'd have to pay 2xcouncil tax and 2xwater rates if they're empty. What do you have to pay on the shop if it's empty (or indeed occupied)?

dopester

Dithering_Dad wrote: »

What additional things do you have to pay with a commercial property than with a residential one. I'm assuming that if I have 2 self-contained flats then I'd have to pay 2xcouncil tax and 2xwater rates if they're empty. What do you have to pay on the shop if it's empty (or indeed occupied)?

Click the link DD.

dopester wrote: »

What about non-domestic rates (NNDR)? Apart from some relief/exemptions or temporary exemptions, won't you be charged whether you have someone trading from the shop and making a profit or not? Lot of people feeling the squeeze with this.

Dithering_Dad

"What if I have a tenancy that is inclusive of rates?

In accordance with current rating legislation, the liability for Business Rates falls upon the occupier of the premises. This is regardless of stipulations within your tenancy agreement, as the Council can not enter into third party agreements between you and your landlord. In the event of the property being vacant, liability falls upon the 'owner', defined as the person entitled to possession of the property, again regardless of any third party agreements that you may have. "

So, similar to Council Tax, if the shop is empty, the landlord picks up the tab.

silvercar

I thought Conrad was refering to the interest rates on loans for mixed use properties, but I may be wrong.