Is BTL now the best retirement investment?

lisyloo

Yield of 8.1%....
Yield of between 6.3% and 8.4%...
Yield of around 6%.

I have to say those yields do not look stunning to me for the risk/work involved.
I can get tax free, completely safe, work free savings from NSI at RPI + 0.25%.
I would be relatively confident of getting more from a Stocks & shares portfolio, tax free in ISAs.
Yes there are some risks involved in that but it can be spread amongst many funds/shares as opposed to one or two tennants.

Sorry if this is a dumb question but is this on top of a repayment mortgage? i.e. you get a house at the end of it?
If so then it's a different story.
But otherwise I could get those sort of yields elsewhere with a lot less hassle (plus 40% tax relief if I'm prepared to tie it up in a pension wrapper).

Can I ask also whether you've factored in your time at all, or is that just donated for free?

With regards to your/your parents property. I am assuming that they want to remain in the same property and you are only interested in doing this on their property.

Primarily the motivation at that time (about 8 years ago) was a private equity release scheme for them, because they didn't have enough to live on.
We could buy their flat and rent it back to them, in the meantime they have caiptal to spend.
Since that time they have downsized to a flat and due to disabilities qualified for every benefit under the sun and now have more than enough income to live on under our ridiculous benefits system.
Because sales to family are looked at supiciously by local authorities when elderly people go into care, we would have to make sure everything was done properly e.g. we would have to pay a fair price for the property and have properly documented valuations.
We did not offer to go ahead with it mainly because I was concerned that it might affect our own plans to move house (which we did) or start a family and they downsized instead which has been much better for them all round.

As there is, I'm guessing, a personal element to this with it being your parents home

The example I gave was not their property but recent numbers I took from the web TODAY for a random property in my area.
I don't have the numbers from the exercise 8 years ago, and I also wanted to base my figures on 2011 prices (which I think would give a worse yield than 8 years go).

I think we will all have to agree that there are genuinely differently held views on this.
The yields above are certainly not a no-brainer from my viewpoint compared will what is available elsewhere.
A certain amount also comes down to whether you see property owning as a sort of enjoyable hobby or a chore.
To me personally it would be a chore and therefore I think that colours my judgement as I would see all my time going into it as a cost/chore.
For someone that enjoys it then that is completely different.

I may consider investing if prices drop significantly, but otherwise I think we have to agree there are genuinely held different views on this.

[Deleted User]

abaxas wrote: »

Just a thought.

If we move from a owner occupied to a renting style society.

Wont all the advantages of letting be eaten by politicians wanting the votes of the renters?

Sort of the opposite of what we have now.

The tenants already have a lot more protection than the landlord.

Thrugelmir

Turnbull2000 wrote: »

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?

On that basis rents will fall in the medium term. As public sector workers are facing 0% pay rises and having allowances cut. Let alone keeping their jobs.

mystic_trev

A lot of people seem to unable to 'see the wood for the trees' when it come to Property investment. If you want to invest in property why not look at shares like Land securities (up 40% last twelve months) or, Quintain estates, trading at 50% NAV which has doubled my investment in six months - happy days! :j

Graham_Devon

Well I think this thread has at least put the "its all about the yield, not the capital through HPI" line to bed, whenever house prices fall.

It's pretty clear it's all about the capital gain. It was before, but this thread is just evidence. So the next time prices fall and the good old "ahh, but its all about the yield" comes out as usual, I will just laugh and post a link to this thread!

chucknorris

Graham_Devon wrote: »

Well I think this thread has at least put the "its all about the yield, not the capital through HPI" line to bed, whenever house prices fall.

It's pretty clear it's all about the capital gain. It was before, but this thread is just evidence. So the next time prices fall and the good old "ahh, but its all about the yield" comes out as usual, I will just laugh and post a link to this thread!

Well start laughing now then because as far as I'm concerned yield is king (obviously providing the property is suitable), if the yield aint there I won't even call the agent (although that said it's extremely unlikely I will buy more investment property anyway)

Graham_Devon

chucknorris wrote: »

Well start laughing now then because as far as I'm concerned yield is king (obviously providing the property is suitable), if the yield aint there I won't even call the agent (although that said it's extremely unlikely I will buy more investment property anyway)

You are not one who gets in a tizz over price falls.

[Deleted User]

Graham_Devon wrote: »

Well I think this thread has at least put the "its all about the yield, not the capital through HPI" line to bed, whenever house prices fall.

It's pretty clear it's all about the capital gain. It was before, but this thread is just evidence. So the next time prices fall and the good old "ahh, but its all about the yield" comes out as usual, I will just laugh and post a link to this thread!

I genuinely do not understand this post Graham. Who has used the line 'its all about the yield, not the capital through HPI'?

Surely, the big advantage of property investment is that you get decent rental return AND ultimately capital gains. If you look at the last 15 years we have had good capital gains and fairly low rental growth followed by a relatively small fall in capital followed by price stagnation (falls if you take inflation into account, however inflation is also reducing the value of any mortgage on the property) and good growth in rental prices.

chewmylegoff

At various points in time over the last few years I have thought about buying a BTL, but I could never really be arsed. Paying 15% of the income to an agent would be pointless, so you'd need to manage it yourself, and all the hassle of learning all your legal obligations etc didn't seem worth it just for one property. If I could afford 4 or 5 properties it would be more attractive, but I could only afford that many properties in some northern hellhole like aberdeen (:D) and it would be tricky to manage them from that far away.

[Deleted User]

mystic_trev wrote: »

A lot of people seem to unable to 'see the wood for the trees' when it come to Property investment. If you want to invest in property why not look at shares like Land securities (up 40% last twelve months) or, Quintain estates, trading at 50% NAV which has doubled my investment in six months - happy days! :j

Because nobody will lend you 4 times as much as you are prepared to invest to buy them and the dividends are typically not as good as rents. Houses don't go bust but companies do potentially leaving you with nothing. If its your own residence it is a major cost saving compared to renting as well.