Best investment for OAP after house sale

BucksLady

kidmugsy wrote: »

That's because it's not really a BTL, it's the purchase of a retirement flat for the OP, which he will let out in the interim. If he chooses well, there's a limit to his downside since he can just move in himself. It's a world apart from someone in the home counties deciding he'd like to punt on property prices in Leeds. Or vice versa.

I understood 'exactly' what the proposal was.

whitejohn

jamesd wrote: »

Yes, the loss from not having the pension income needs to be recovered before you get ahead but for three years of deferring the chance of dying first is pretty low and a cautious man would go to five years if healthy so they have good income if they live a long time. It's about producing a safe, steady and inflation-linked long term income for you. It's a bargain at its current price, so good that the plan is to double the price under the flat rate system.

Lots of people just don't look around much to see what property is available. You can usually find bargains if you're flexible about where you'll live. So I enjoy surprising people with them.

Yes I was amazed at the properties, I would live anywhere so long as it's quiet and one of those flats at £40,000 looked quite nice in a tree lined setting. It was small but that's OK for one.

On the pension, I'm guessing that if I deferred for 3 years then it would be around 5 years in total before I got back to where I would have been if not deferred. BUT, if I then live another 10 years, thats where I start to benefit?

whitejohn

bowlhead99 wrote: »

It does mean you have to do without in the short term. It is a way to maximise your wealth in the longer term because if you take the monthly cash that you would have had from the state pension and invest it, you can't get a risk free return that comes close to matching it.

My Dad was similarly reluctant to defer - "but.... we're living on these pensions!". I had to sit him down and say "look, you have £xxxxxx in the bank, I don't think you'll end up on the streets living in a cardboard box if you defer collecting your £xxxx from the government this year while holding out for a much bigger number in the longer term". He got it in the end.

If 3 years of deferral sounds like too much, you could always just do one or two. Or, if you defer and then decide you don't actually want to risk sacrificing the cash in pursuit of getting paid a higher figure for a long time in future (e.g. if you had health concerns) there is an option to get paid it back in a lump sum with a bit of interest. However, that would push up your income in the year you took the lump sum and make you a bit worse off if it puts you in a higher tax bracket.
Anything that involves you trying to get something better than you could on the open market involves involving some time and skills of your own. So technical and DIY skills would be important, as a bare minimum.

However, it is rather more difficult to build a safe and valuable and desirable house from scratch than it is to change the oil on your car or plumb in a dishwasher or reroute a bit of piping for the toilet, and at your age you would need to know your limits (not wanting to sound age-ist but clearly some things are harder work at 66 than at 26).

Ultimately you might find it difficult to source a cheap piece of land that is near civilisation and easy to hook up to local infrastructure and lay foundations without anybody minding, that someone else has not thought of first.

You have £100-200k to invest. Some people have millions. So you would need to ask yourself, if I can get this plot for £20k and build a house for £80k and have it be worth any more than £100k at the end without too much risk, then why has someone else not already done that?

As a retired person who doesn't need to pay themselves a salary, you might feel you can save a lot on the fixtures and fittings and painting and plastering compared to a professional development company (even though you would still need someone to sign off re building regs and electrical work etc). However, if you are putting a lot of time and effort into something when you could be relaxing in southeast asia, perhaps you should be paying yourself a salary (i.e. generating value) and in a lot of circumstances you won't be able to end up in a significantly better position than if you just buy someone else's ready made house or flat in an affordable area. Otherwise everyone would do it.

Yes you are right about most of that, I am quite experienced with building work and renovating but do I really want to be doing it again at my age. Well no, not really!
I'll keep looking at building plots as an option (without developing), just in case I drop on to something during my travels. Just thought it's a good place for for a lump sum to sit whilst I'm travelling.
Will also keep an eye on the flats too, probably easier to shop around and get a good deal as a cash buyer than to start renovating things and getting stressed up.

Eco_Miser

On pension deferral, however long you defer for, it's a further 500 weeks (just under 10 years) before you get back all the money you deferred, but you do have a higher index-linked monthly income for the rest of your life.

DesG

Are there not very large charges associated with those retirement properties?


Also, do you need to buy a brand new motorhome for your adventure?

buglawton

Buy a new off-plan studio or small flat in a decent city center. With newly developed/built off-plans, the return on investment percentage can be a bit modest but it will be a popular let and have very few maintenance issues.

Some developers are a bit challenged at the moment as they price higher than lenders are willing to value at, as a cash buyer you might be a able to bargain.

Solid, if modest income and you keep the value of your investment.

whitejohn

DesG wrote: »

Are there not very large charges associated with those retirement properties?


Also, do you need to buy a brand new motorhome for your adventure?

Yes there are constant charges even whilst I'm travelling and that's the reason I started looking at other properties and plots of land.

I wanted a new motorhome because that's them my home and cannot afford to breakdown or have anything unreliable. However, I have a caravan which is much cheaper and has other advantages. Big drawback is the towing but I'm still undecided on the caravan v motorhome.

macman

I'd start with £40K into 2 Santander 123 a/c's (max £20K each) paying 3% gross, and £40K maximum into Premium Bonds: that will absorb £80K in 100% secure cash investments that are quickly accessible if needed.
PB's can be increased by another £10K next year if needed.

badger09

macman wrote: »

I'd start with £40K into 2 Santander 123 a/c's (max £20K each) paying 3% gross, and £40K maximum into Premium Bonds: that will absorb £80K in 100% secure cash investments that are quickly accessible if needed.
PB's can be increased by another £10K next year if needed.

Santander 123 now limited to 1 sole and 1 joint so probably not appropriate for OP

whitejohn

badger09 wrote: »

Santander 123 now limited to 1 sole and 1 joint so probably not appropriate for OP

Looks like you need direct debits too. Have plenty now but maybe not when I sell up, apart from the mobile.