Is investing in property still the best long term option?

Ken68

There is a housing shortage and being a landlord could be the solution or part solve the problem.
For example in my street there are 28 houses and 18 spare bedrooms.
Unless more affordable houses are built and/or old folk made to go into a home to release spare accommodation, then I can see a revolution and not just from the left.

Apodemus

As I’ve mentioned before on this board, I can’t shake the knowledge of family history and the experiences of my great grandparents in the late 1800s and early 1900s.

As was quite common in those days, many people who had made a bit of money bought into the urban building boom and the “buy to let” market as their pension - often living in the ground floor flat with their tenants in the rest of the property. At the time this was a “sure thing” with guaranteed returns and you were on-site to manage the properties. That was fine until WW1, Rent Control and depression, when the BTL model went horribly wrong.

My urban great-grandparents went down that BTL route, retiring in 1907, while the rural ones invested in shares on retirement from the rented farm at about the same time - with the urban ones probably more wealthy than the rural ones. The BTL money was gone before that generation died, while the share investments were still providing a retirement living for the next two generations and will contribute to the third and fourth.

I’m not suggesting history will repeat itself, but it influences my views on BTL!

reeac

atush wrote: »

Property has NEVER been the best place to put your money.

Over any time period of 10 years or more, incl the recent credit crunch, equities have out performed property.

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

dont_use_vistaprint

The best property investors have very a unique set of buying and selling skills and use some questionable approaches. Just attending those seminars on Facebook wont give you those skills. Having said that some people who are very practical and know lots of tradesmen or have family members in trades can work together to make a good return.

People usually invest in what they understand, small property investors dont do it because its better than S&S, its normally because they dont understand S&S and they understand how much time and cost it takes to convert an auction property.

Prism

reeac wrote: »

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

I haven't got stats for the global market but as an example if you had invested 31k in the US S&P in 1976, by 1998 that would have been worth about 890K (assuming you also paid 1% per year in fees). For the second example 120k becomes 533k. So yes the stock market can beat that. However the stock market doesn't also provide you with a place to live

chucknorris

fiisch wrote: »

Equally you can't drive round to your equities and touch them! The tangible nature of BTL means that public perception typically views BTL as a "safe" option to gain investment returns, whereas equities are viewed as far more risky (although that's invariably because people think in terms of investing in individual companies rather than funds).

Personally, for my money, I have opted for the equities route. The tax changes on BTL mean it is very hard to make a decent return - not impossible, but you have to find the right property.

That said, my parents have just bought a BTL, as they absolutely cannot get their around the risk of investing in equities, yet view BTL as a safe option, presumably because they have seen property price booms throughout their adult lives...

Yes, the return on equities is decent, but I don't want all my eggs in one basket (I already have a lot in equities), so quite a lot of the equity will be invested in bonds which are safer, but have a lower return. There are a number of reasons that I am selling property soon:

1. We don't have anyone to leave the money to, and therefore we need to give ourselves the chance of spending it. I don't want to sell in a recession, so therefore I have decided to sell earlier rather than later (before I'm 65, depending on market conditions). My wife is 11 years younger than me, she is going to keep her property, for about another 11 years.

2. Letting relief is due to be abolished in April 2020, that's an £28,800 (net of tax) per property incentive to sell prior. I have lived in 3 of my investment properties.

3. I want less hassle during my later years of life.

4. Realistically, I probably can't spend my wealth before I die anyway (good problem to have), so that is an incentive to avoid both hassle and higher risk.

chucknorris

reeac wrote: »

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

Although I agree with you reasoning, it's worth pointing out that if you are comparing property to equities, you need to compare equities with investment property, which is not tax free.

System

reeac wrote: »

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

Yes, easily if you take into account dividends. Your second house has increased by 275% between 1997 and 2018 while the S&P500 total return index increased by 382% in the same period!
Also, have you taken account of the money spent on improvements, maintenance, and decorating (including the opportunity cost of your time for DIY)?

chucknorris

Economic wrote: »

Yes, easily if you take into account dividends. Your second house has increased by 275% between 1997 and 2018 while the S&P500 total return index increased by 382% in the same period!
Also, have you taken account of the money spent on improvements, maintenance, and decorating (including the opportunity cost of your time for DIY)?

Plus all the dividend income paid, or did you base your figures on an accumulation tracker? (I guessed not).

bearshare

chucknorris wrote: »

I wasn't fortunate, I specifically moved to London from Newcastle to invest in the London property because I had researched it, and decided to invest in that particular property market. Because it very much looked like a one way bet, and it certainly was.

As for London in particular, maybe you missed this:

EDIT:

Obviously you have to do your own research and invest where you see the returns, property markets are regional, so you have to be specific where you invest. My post was obviously limited to London property, which you either overlooked, or chose to ignore.

I think it was the 'for us' part of your original message that was missed. If that was YOUR best performing investment, then there is no argument.

But you WERE lucky, and it IS like comparing a undiversified investment with a diversified one. No matter how much research you do beforehand,, you are still have much more risk due to unforseen events: Brxxxt? Labour not allowing eastern European migrants in 2 years earlier than required? Pollution controls causing businesses to move out of London? A Corbyn government?