Is investing in property still the best long term option?

bluefukurou

Retireby40 wrote: »

I don't understand stocks and shares enough and as some would debate that's just a gamble as well.

You just need to educate yourself about equities, it isn't rocket science if you do the work. I know because I've been doing just that. It's not gambling as it's not a zero sum game. If you back a horse and it loses, you're money is gone, forever. If you invest in equities and there's a crash, you still have assets which can go back up. Learn about index funds and you'll probably feel better about investing in stocks.

Invest in a copy of Smarter Investing by Tim Hale to give you a good lesson in basics. Alternatively, for a simpler, no-nonsense method try Investing Demystified by Lars Kroijer. I'm sure you'll figure out what to do.

Retireby40

My theory is.

I buy a house with a mortgage. Mortgage is 400 a month. I rent for 525 a month. Over twenty years someone else has paid my mortgage minus repairs, tax and management fees some of which comes out of the extra rent.

New semis are going for 100-110k in the area. So I would be buying a relatively decent buy at least for maybe the first 10 years. Not too much should need repaired in terms of major work.

So even if the house stays the same price or falls twenty percent someone else has paid a huge significant part of that.

That is my theory but obviously I'm clearly thinking wrong somewhere along the line.

Retireby40

The area also has a huge demand for decent rental properties. I had 9 couples show up first day my inherited property went on the market to rent.

itwasntme001

Retireby40 wrote: »

My theory is.

I buy a house with a mortgage. Mortgage is 400 a month. I rent for 525 a month. Over twenty years someone else has paid my mortgage minus repairs, tax and management fees some of which comes out of the extra rent.

New semis are going for 100-110k in the area. So I would be buying a relatively decent buy at least for maybe the first 10 years. Not too much should need repaired in terms of major work.

So even if the house stays the same price or falls twenty percent someone else has paid a huge significant part of that.

That is my theory but obviously I'm clearly thinking wrong somewhere along the line.

In theory all perfectly reasonable but that doesn't make it a no brainer investment. A lot can change over a long period of time (duration of the mortgage), such as changes in taxes, rents, rates, laws etc.


You won't know without hindsight whether the property equity would have been better invested in the stock market or any other asset (even cash) even considering leverage benefits of property.


Having said that i think much of the UK (not SE) looks good value. If you can grab a 5-8% yielding house in a decent location then its probably going to be ok. But i wouldn't put all my money in housing, i prefer to diversify across housing and stocks.

reeac

atush wrote: »

Plus if you hadnt deselected and actually read the rest of my post I did say that the most profitable property investment would be your own home.

True. I was distracted by the upper case"NEVER" in your first sentence.....didn't notice the subsequent back pedalling. Even so I can't see that the price escalation of a particular home will depend on the details of occupation assuming that it's kept up to scratch. There will be taxation issues on selling if it's a second home but that applies also to non-ISA protected stocks.

Thrugelmir

Retireby40 wrote: »

Mortgage is 400 a month. I rent for 525 a month. Over twenty years someone else has paid my mortgage minus repairs, tax and management fees some of which comes out of the extra rent.

Making no allowance for an increase in interest rates , nor void periods or potential defaults (in addition). Will a gross £125 per month repay the mortgage over 240 months. I suspect not.

You need to fully crunch your numbers. Maybe far harder work than you envisage.

MEM62

Retireby40 wrote: »

Ok so there's been numerous debates about the best option and the ins and outs.

For those that opted for property over the last 10-20 years why did you choose it over say stocks and shares etc.

I didn't so much opt in as decided not opt out. When I bought a house with my girlfriend I kept the flat that had been my home for the previous 29 years. When I retire and am not a 40% tax payer the income will be useful.

Retireby40

While the £125 extra may not cover everything £225 may which still leaves £300 a month being paid of something that will be 100% mine by someone else.

What I put into stocks and shares and risk is 100% my own money. I get no source from anyone else.

bostonerimus

I'm a landlord and I want local government to provide a solid legal framework for rental properties. I think it's in everyone's interest to regulate the condition of properties and while I moaned a bit about having to install CO2 and smoke detectors with 10 year batteries in the rental apartment I understand the need. In my town they just put limits on Air BnB as it was difficult to get long term rents in some neighbourhoods and I agree with that restriction on property owners rights. I practice personal rent control as I think rents are too high compared to wages and so I price my unit below the market rate, I'm not philosophically opposed to some level of government rent control.

I live above my rental apartment which I think means that I take better care of it than some landlords and I want my renters to live in a nice place and to be happy. I see being a landlord as providing a service to my tenants, not a chance to exploit them.

Remember "All property is theft".

bostonerimus

Retireby40 wrote: »

While the £125 extra may not cover everything £225 may which still leaves £300 a month being paid of something that will be 100% mine by someone else.

What I put into stocks and shares and risk is 100% my own money. I get no source from anyone else.

As you can't know for sure if property or stocks and bonds or just plain saving will do the best over time I'd split your money between them. That way you are sure to have at least some of your money on a winner.