Would you be a landlord?

System

Havingaball -

you have monthly rental income as well as the capital growth. How do other investments compare?

Shares have capital growth and sometimes dividend income, depending on what the company does with profits. The FTSE and other indices have historically outperformed property over the last 100 years, through all the crashes (just don't sell)

. Doesn't that therefore make equities illiquid?

You always have the option to sell, its just that you shouldn't - people who sell in a crash tend to miss the upswing afterwards and re-buy at a higher price than if they just held on

The problem with property funds you saw after the brexit vote - people tried to withdraw their money, the funds couldn't sell property quick enough, so they either had to sell below market value or suspend the fund

Nano/micro cap stocks can have liquidity issues, so I target small and medium cap which are fine.

Isas are of course more liquid than pensions, and more liquid than mortgage overpayments which I don't generally recommend

System

The illiquidity of property actually forces most people to be better property investors than equities investors - since you're forced to wait out crashes - people mess up shares when they try to time the market and day trade, rather than treating it in a passive buy&hold strategy with a similar long term mentality that they would have with property

scriv

I have just relinquished being a landlord with a huge sigh of relief.

You can hardly call it a an easy 'no brainer' with all the rules and regs, laws and conditions you have to be aware of and it is becoming much more complex. I have paid a letting agent to manage mine to make sure everything is covered. You would be wise to seek some advice at least to make sure you have covered everything and have paid all your dues etc - and know what to do when a tenant doesn't pay their rent or does a moonlight flit or damages your property or won't go.

And at the end of it all, you have to think of how easy it will be to sell your property - and then how much CGT you will have to pay.

Petite_Anglaise

I recently sold my property that I had let out for several years- was an "accidental landlord" when my job changed location.

Will admit I breathed a big sigh of relief when we exchanged & completed.

All my tenants paid their rent, had no big issues at all, nobody trashed the place ever.

I counted myself very lucky!

It wasn't in London and although the value had increased and I sold it for more than I paid, it was only about 10% more.

But I was very happy to sell up and not have a mortgage to pay any more! The sale took ages to go through and it was empty for several months.

Now looking to buy (a home) in London...wishing thinking maybe.

System

Let fund managers do the hard carp of the landlording job
Get ownership and diversification by owning part of the fund
Do it through an isa or pension to pay less tax...
Funds may in some cases contain their own mortgages but give you no exposure to the debt if it goes teats up

walwyn1978

We were, temporarily, when we moved from That London back to Yorkshire but couldn't sell the house. So we rented for 4 years, let our tiny London house out and thus were (reluctant) landlords.

I found it stressful, time consuming and a huge hassle, and that was with (generally) good tenants, a letting agent who were both efficient and proactive, and with us (me) doing a lot of reading beforehand, doing all the right things re: insurance, deposit protection, etc etc.

Admittedly it was almost 200 miles away, which obviously is a completely different scenario to if you have property the next street over, but consider all these things, which chip away at your money making:

Mortgages still have to be paid even when you have no tenants, so that needs to be budgeted for
Gardens? Will you have to pay for those to be kept? If you're getting the tenants to do it, still assume you'll have to pay someone to sort it when they leave, as it may not have been done well. Unless you plan to do that yourself, in which case your time is an expense of a different sort.
Furnished? Cost of that.
Unfurnished? Still cost of white goods etc
Unless you're super practical, or already have people in mind, expect to have an expensive journey of different tradesmen until you find people who are: good value, reliable, and available at short notice.
Then there's the time and energy dealing with queries that range from serious (the boiler has just shut die and its -2 outside, my 18 month old is freezing, please fix it' to the ones where you just wish they'd use common sense 'the handle on the cabinet is loose, it needs screwing back tightly, can you send someone to do that please'.


All that said, there are people on this board who do very well out of being a landlord, and will no doubt be far better placed than me to tell you how good it is. But it's a hard, potentially unforgiving game with a significant amount of financial risk for not a huge amount of gain, IMO, unless you have the capital to do it on a large scale, which is different.

Conrad

I have ISA's, but property is my thang, and far, far more profitable, especially when you factor in the fact gearing is impossibly cheap.


I don't find the regulations onerous, just be organised and diarise actions.


I stick to flats, small ones, where there is far less to go wrong or worry you. You pay a lease but you don't pay your own insurance or all the works associated with a house such as roof / fences / gardens etc


My aim is to always find nerdy tenants that seem harmless and considerate. If you let to some rough type you're gonna get trouble.


I've had occasional trouble and in the early days did let to a rough lad, big error.


I simply pay an agent £150 to advertise and then I take all calls directly from prospectives.Of say 20 approaches I will interview 1, and they usually end up being my tenant. I ask for 3 months Bank Statements and payslips up front and you'd be amazed how this alone filters a lot of people who never get to that stage, in other words they aren't the organised, careful type you want anyway.


When selecting a tenant, think of yourself as a mortgage underwriter - look for the same stable clientele they seek.


INVESTING IN ISA's et al IS A RISK. If there was some massive global depression, which could occur given the level of sovereign debt in the world, you may end up with nothing more than worthless bits of paper. Think about it.


As I say I have ISA's but I would not sleep well knowing I was reliant on them.

System

Conrad - don't worry about equities in a depression - we've come through loads of crashes through history stronger and stronger and stronger - you wouldn't expect a house price to stay down in a crash, so why would you with equities? They're not just pieces of paper, they're tangible chunks of real business, some of which (I.e. food or tobacco) is extremely reliable. Property companies are even inside my sipp just because they happen to be in the index

I get the gearing on BTL but that's a lot of interest rate risk for the yield you're getting - you could achieve that through small cap and come back from a loss in value if it happens just by waiting but you can't come back from a rate hike...

Marvel1

No, too much hassle with the wrong tenant, but even with the right one, still to much law to follow.

Cakeguts

Not with only one property that has a mortgage on it. Yes with several properties that are mortgage free.