The 4% Rule

TBC15

Desirable property in the first place.

A number of my colleges bought properties in Aberdeen as second properties/BTL the oil capital of Europe (Ho Ho Ho) . Due to the US successful exploitation of shail oil the price of oil is unlikely to go above $60 a barrel in the foreseeable future.

The properties are on a fire sale market/get what you can in plummeting rents market.

In the context of I don’t want to hear about/pay someone else to hear about someone else’s problems I’d rather stick with the market.

TBC15

On the plus side anyone wanting to get away from the rat race/ enjoy fantastic beautiful scenery, Aberdeenshire and the surrounding area is probably what you are looking for at the current prices (bring sensible clothing)

Not sure what this has to do with OP just going with the flow.

bostonerimus

TBC15 wrote: »

Desirable property in the first place.

A number of my colleges bought properties in Aberdeen as second properties/BTL the oil capital of Europe (Ho Ho Ho) . Due to the US successful exploitation of shail oil the price of oil is unlikely to go above $60 a barrel in the foreseeable future.

The properties are on a fire sale market/get what you can in plummeting rents market.

In the context of I don’t want to hear about/pay someone else to hear about someone else’s problems I’d rather stick with the market.

The numbers in the UK might not be the best for BTL right now. The housing market certainly has a bubbly feel to it in many areas and I wouldn't want to pin my hopes on buying in a place like Aberdeen with an economy heavily reliant on oil and fishing. Good places are probably university towns where there's a nice turnover of students and young professionals. I would always want to live close to any rental I owned. It's just as possible to buy poor BTLs as it is to buy poor stocks or funds.

TBC15

And there’s the problem. I’ve never felt the urge to move to Mauritius just to keep an eye on Terry.

maia_evo

Im a newbie to learning about financial independence (and new to the MSE forum) and I have picked up all of my knowledge so far from US based bloggers and podcasters.

I did wonder whether:

a) the 4% often quoted by US people would be the same within the UK
b) how do you account for the fact you don't need to leave any capital to anyone once you pass on?

Please do suggest any UK based people talking about this in layperson language.

bostonerimus

TBC15 wrote: »

And there’s the problem. I’ve never felt the urge to move to Mauritius just to keep an eye on Terry.

I agree, look for local BTL bargains and if you can't find any then don't buy. If you are retiring with a substantial pot and have been considering a move anyway then BTL might figure into what you do with some of the 25% lump sum. getting away from the tyranny of the 4% rule does bring the blood pressure down, but like everything else it has to be well considered.

bostonerimus

maia_evo wrote: »

I
I did wonder whether:

a) the 4% often quoted by US people would be the same within the UK

The 4% rule is derived form US historical investment data....in the UK the number is usually thought to be a little less ie 3.5%. Remember you also have to account for financial fees.

b) how do you account for the fact you don't need to leave any capital to anyone once you pass on?

The 4% rule sets the probability that you'll have nothing left after 30 years at 5%., For the vast majority of scenarios you'll have lots of money left. If you want to spend down you can always adjust your spending level as you go and as you get closer to the "grim reaper". An annuity can also become a useful planning tool as you get older.

atush

bostonerimus wrote: »

People always need to run the numbers to see if an investment will work. Not being able to deduct mortgage interest is certainly a hit. That's why I said a BTL should only be considered after an ISA and pension are funded and as a compliment to equities and fixed interest. I would say a single BTL is better than owning multiple properties for most people because it doesn't require as much capital or work. Time that a place is unrented can be minimized by good planning, a sensible lease and buying a desirable property in the first place.

yet no mention of pitfalls such as maintenance, repairs, vandalism, unpaid rent etc.

renting property is a business. It needs to be treated as such, and not passed off as an easy option to financially unsophisticated individuals.

atush

TBC15 wrote: »

On the plus side anyone wanting to get away from the rat race/ enjoy fantastic beautiful scenery, Aberdeenshire and the surrounding area is probably what you are looking for at the current prices (bring sensible clothing)

Not sure what this has to do with OP just going with the flow.

Bring sensible clothing lol. Bring ugg boots, thermals and a hot water bottle?

atush

and I have picked up all of my knowledge so far from US based bloggers and podcasters.

Dont, unless you are based int he USA. Look here for UK centric information.