Is BTL now the best retirement investment?

Turnbull2000

Seriously, why bother paying hundreds into a pension each month when you can get tenants to firstly pay off one or two mortgages, and eventually give you a nice income?

Two properties could easily bring in £12,000 pear annum (less maintainance,voids of course), inflation linked. You'd have to set aside quite a sum each month to achieve an index linked pension of around £10,000, no?

Cleaver

Probably one of the most in-depth and thought provoking comparisons of pension options that I've ever seen. Thanks very much for sharing.

HAMISH_MCTAVISH

Turnbull2000 wrote: »

Seriously, why bother paying hundreds into a pension each month when you can get tenants to firstly pay off one or two mortgages, and eventually give you a nice income?

Two properties could easily bring in £12,000 pear annum (less maintainance,voids of course), inflation linked. You'd have to set aside quite a sum each month to achieve an index linked pension of around £10,000, no?

Correct, to a point....

People should still have a pension, there are tax advantages and particularly when you get your employer to contribute, that part is basically free money. There's also a case to be made for diversification. Unwise to have 100% of retirement planning revolve around any single asset class.

But overall, BTL's for the long term are an excellent investment.

Even if you made no profit from rent during the term of the mortgage (virtually impossible BTW), you end up with a significant asset that someone else has bought for you, and better yet, one whose capital value is almost certain to rise faster than inflation over the next couple of decades, and whose yield pretty much rises with inflation over the long term.

The only real concern is being able to ride out short term fluctuations and having the cash reserves to deal with contingencies, which is also why it's not a suitable investment for many people.

[Deleted User]

Totally agree. I favour property more than most investments as you can get good gearing in the form of a mortgage, its not very labour intensive, it always has a value (even if it burns down they are cheap to insure), rent increases with inflation while the mortgage value decreases. It will probably annoy a good few people on here but I really do see it as an obvious choice.

One thing that has always made me curious is why some on here who claim to have sums large enough to buy decent houses in good areas don't just buy two or more smaller ones with the money outright. If they went to auction or to a cheaper area they could buy more and be financially independent. Given their apparent interest in the housing market and their claims to be saving to buy a house anyway why not? I can't believe anyone would claim to have more than they actually do on an anonymous forum so I really don't see why someone wouldn't do this.

Graham_Devon

It's just another risk really. Same as any other investment.

However, the BTL investment has a very large management aspect to it. One which you don't find in many other investments.

For example, my pension doesn't require me to be on call just incase the hot water fails.

[Deleted User]

Graham_Devon wrote: »

It's just another risk really. Same as any other investment.

However, the BTL investment has a very large management aspect to it. One which you don't find in many other investments.

For example, my pension doesn't require me to be on call just incase the hot water fails.

Easy to set up emergency cover for this sort of thing and its hardly a daily occurrence. You could even get an agent to fully manage it for you. Once you get a decent number of properties employing someone becomes worthwhile and you can get someone to do this fairly cheaply.

HAMISH_MCTAVISH

Graham_Devon wrote: »

It's just another risk really. Same as any other investment.

Less risky than most, in the long term. More risky than some in the short term.

You pay your money and take your chances, same as anything else.

However, the BTL investment has a very large management aspect to it. One which you don't find in many other investments.

For example, my pension doesn't require me to be on call just incase the hot water fails.

Managing it yourself is certainly a good idea to maximise return, particularly in the early years, and if you do so then your point is correct.

However it's also entirely possible to have an agent run it for you and be completely hands off.

And whilst your return will be lower, it's still the case that someone else will have bought you a very valuable yield generating asset.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Less risky than most, in the long term. More risky than some in the short term.

Managing it yourself is certainly a good idea to maximise return, particularly in the early years, and if you do so then your point is correct.

However it's also entirely possible to have an agent run it for you and be completely hands off.

And whilst your return will be lower, it's still the case that someone else will have bought you a very valuable yield generating asset.

I dunno really. Depends on so many external factors.

Loss of tenants. Stamp duty (we don't know what this may be in 30 years time). Any other government intervention on second or investment homes (again, we don't know what may happen....second home ownership is being looked at).

Obviously HPI is not guaranteed, though obviously more than likely over a long period.

Interest rates could cripple some. There is absolutely no guarantee that rents will always cover mortgage payments. Indeed, we have been through periods where this has not been the case.

As a secondary retirement investment outside of normal pensions, then I'd agree, it's a good gamble based on history.

But the hassle factor is not one that should be ignored in the comparisons.

Lastly, theres a reason why no genuine IFA will advise this route over any other product.

HAMISH_MCTAVISH

Graham_Devon wrote: »

As a secondary retirement investment outside of normal pensions, then I'd agree, it's a good gamble based on history.

But the hassle factor is not one that should be ignored in the comparisons.

Can't disagree with that.

As always, the richer you are, the less risky it becomes as you can ride out short term fluctuations and costs. The less money you have, the harder/riskier it becomes to make more..... Although this is true in most things.

PasturesNew

I'd not fancy being a LL. It's probably because what I've read on these forums terrifies me

lostinrates

As a matter of interest, what BTL lending is currently available? is there more than OO mortgages?