Is investing in property still the best long term option?

short_butt_sweet

Retireby40 wrote: »

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

perhaps it depends how you look at it, but IMHO, this is incorrect.

you could buy a BTL property, and let it to Pat Leb, and then the rent Pat pays is a large part of why your investment will (perhaps) go up in value.

or you could buy shares (probably via a collective investment, which spreads you money across shares in many different businesses), and then the income those businesses (which might include supermarkets, food producers, electronics manufacturers, builders' merchants, phone companies, travel agents, etc) get from Pat buying her groceries, a new TV, a new bathroom, a mobile on a monthly contract, a holiday, etc, are a large part of why your investment will (perhaps) go up in value.

so in that sense, property and shares are similar.

OTOH, one difference between them is that with shares, your losses are limited to what you put in, and you will never be forced to put in more cash later on. with a BTL, you are obliged to pay the mortgage, and to carry out necessary maintenance, even if no rental income is coming in (because you have no tenant, or they aren't paying the rent on time, or at all), or when it's a large maintenance cost which is greater than the rent coming in over a short period.

takesyourchances

Retireby40 wrote: »

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.

Were in NI is new semi's for 110 to 110k with good long term rental?

reeac

If it wasn't for the fact that you have rent free accommodation I would suggest looking at buying a bigger house using the cash from selling your rented out place plus whatever mortgage you can afford. The bigger house would appreciate at about the same rate as the smaller in percentage terms ie. bigger actual cash appreciation which would be tax free if you lived in it. You would have the bonus of living in a better house. Ultimately you could sell and downsize to release cash.
This is what we did several decades ago. We moved steeply upmarket mainly on school catchment area grounds and found that the shabby prewar house that we bought, with some apprehension on my part, turned out to very sound and in the best position in the best road in town. For over 20 years we lived there enjoying all the benefits of the place and when we both retired we found there was a stonking demand and we sold the place in 2 weeks to a man with no chain. We had already built a retirement place for cash so synchronising the change over was dead easy. We put the resultant cash into the stock market, incidentally. If we'd kept the old place we'd have gained another £600k through subsequent appreciation but hey ho.

Retireby40

https://ww w.prop ertypal.com/ 130-baltylum-mead ows-port adown/540 087/photo-20

If someone can post this link. Doesnt work for me.

It's in Portadown an area I know well. It's less than 5 years old maybe even less than 3. As I don't live there I'm not 100% but it's what you would call a new house.

25miles from Belfast with good communication, lots of schools in the area and in what I would call a respectable area with mostly young families and young professionals.

p00hsticks

Retireby40 wrote: »

https://www.prop ertypal.com/ 130-baltylum-meadows-port adown/540 087/photo-20

If someone can post this link. Doesnt work for me.

https://www.propertypal.com/130-baltylum-meadows-portadown/540087

takesyourchances

Retireby40 wrote: »

https://ww w.prop ertypal.com/ 130-baltylum-mead ows-port adown/540 087/photo-20

If someone can post this link. Doesnt work for me.

It's in Portadown an area I know well. It's less than 5 years old maybe even less than 3. As I don't live there I'm not 100% but it's what you would call a new house.

25miles from Belfast with good communication, lots of schools in the area and in what I would call a respectable area with mostly young families and young professionals.

I was able to look the property up, got enough info from the broken link.


http://www.joyceclarkeestateagents.com/130-baltylum-meadows-portadown/540087


It helps to know the property, location is very important for property so that was why I asked and price. It seemed low to me when I read your post, so asked incase it was in the sticks for investment reasons it certainly looks a very good property for the price in a good area of Portadown, certainly price wise against a good area of Belfast it is more house for the money.



Also not far to the Craigavon hospital, I know people who rent in areas close to the Ulster Hospital and have rented to staff working there.



Also it's close to the motorway to Belfast, but also close to Armagh and Newry too so a commuter town as such as well as Portadown being an estiblished town.



I can see why you are looking at this now I see more details. As you already have property though too, I would be careful not to go too all eggs in the one basket as in property only and the NI property market too is also small.



I am not sure how captial growth would be long term in Portadown going forward, likes of Lisburn etc would of got a boost with gaining City status and being closer to Belfast, similar I guess would be in the 130k region. I cannot see the NI boom and bust being repeated like it did before when many made a lot of money before it popped. The option could be to get the house paid out and have it as an income stream from rental yield, maybe it can yield 5%-6% per year if no void periods,



I would look wider than physical property too. Investing does not need to be difficult, the most simple is a multi asset global index type of fund. Vanguard ranges, there are others Blackrock, HSBC etc, etc. Bascially programe yourself to pay in regular for the "long term" which is what you also need to do with that style of property too "long term" and take emotions out of it. The less you tinker and leave it the more likely it will do better for you over the long haul.



Often a few close friends who know I invest and have an interest in it ask me the odd question, I often point them to this link as a starter and tell them to read up themselves and this will give you a simple break down idea of index funds, this one happens to be Vanguard but will give you ideas and it is very easy to set up this type of investing and forget about it too https://monevator.com/using-vanguard-lifestrategy-funds-life/


By the way, the same people have asked many times and dispite the links etc not one has set anything up and expect me to give them some get rich quick investment ideas. I never recommend anything and said if I make mistakes it is my fault and my money, you need to learn youself. But still not one has made any attempt to start and the question will come up again I am certain and I will reply the same



While that property looks very good for the money at present and location wise for the standard and access to other towns and to Belfast etc I personally would not go all physcial property if it is all the investments you have.



My friend who rents near the Ulster Hospital / Dundonald is not really making any money at the moment as such, also it cost him to replace many things in the house after tennents left after 12 months which eat a lot of money too, then had maybe 4 months void and new renters in. The house really has not increased in value, granted it was bought around 2005 so a crash has come and gone, but really it is back were it was at when bought. Also the hassles too, I often think my equity investing is much easier and is passive and I don't see the point of this house and he is hoping in 20 years it will be his pension. I explained it is not enough to be your pension and again said about other asset classes, but this is one the examples of nothing comes from it.



Also if you have a property interest, once you learn more about investing there is property investment trusts for commerical property which can offer hands off exposure and a dividend yield maybe not far off many BTL's now and with BTL tax laws tightened you can hold the property investment trusts tax free in an ISA and no need to worry about tax. I also invest in a few of these and the dividends are decent for hands off and I re-invest them.



As you learn about investing your knowledge will broaden. I started off with the Vanguard Lifestrategy and thanks to this forum and others and reading up and educating myself I expanded into other investments like investment trusts, commerical property etc, I had some blunders in p2p not really my fault those but I knew the risks and certainly know them now



Keep your options open would be my advise, if you did go for this style of property I would also add in equity investing as you will be heavily exposed to one property market, NI and it is a bit uncertain times too if things slow down mid Ulster could be a bit stagnant for growth overall too.



Just some thoughts hope they help

Retireby40

Takeyourchances excellent input and write up. Although I wont be doing anything for likely 18 months or so it's just an idea but this is my idea.

Good value housing in a relatively decent area.

I will study further into vanguard and stuff as I believe that is something I could dip my toes into now whereas property wise I probably will have to wait 18 months to 2 years.

My current house is similar to that one only abit bigger and with a garage hence the 125k value. My current house is about 20 years old so still relatively new.

Thanks again for input.

takesyourchances

Retireby40 wrote: »

Takeyourchances excellent input and write up. Although I wont be doing anything for likely 18 months or so it's just an idea but this is my idea.

Good value housing in a relatively decent area.

I will study further into vanguard and stuff as I believe that is something I could dip my toes into now whereas property wise I probably will have to wait 18 months to 2 years.

My current house is similar to that one only abit bigger and with a garage hence the 125k value. My current house is about 20 years old so still relatively new.

Thanks again for input.

I am glad that my input has helped you, location is a big factor to consider and I understand the region and area and the property market in NI and wanted to share some of these thoughts and points mentioned.



I know another couple of people very heavily into BTL NI property owning lots of places mostly bought around the 2004 to 2006 period in NI and one told me recently he thinks he is just about breaking even and is trying to beat the mortages down to get more yield. Again I think of the hassles of this over a long period of time and was it really worth it against other investing.



While property is an asset class, it performs different in various countries and regions, so it is important to understand the local region and area of the investment too so hopefully that helped give another perspective.



I do agree it is good value housing in a decent area. Also if you are likely to not do anything for 18 months, maybe the situation of brexit will be more known if there is any impact on NI good or bad that may affect the property market too or any big employers in the mid Ulster area. Nobody knows and I would prefer personally to see how the situation unfolds and if it will affect the market before putting my money forward into an investment property..



With your house worth around 125k another would bring you about 230k in property in one area.



Yes likes of Vanguard is very easy to set up and start with and don't require large amounts of money to get going, it is simple and not really much you can do to mess it up as they are all in one portfolios and give a wide spread around the world.



I don't think your general idea is bad one, but at your age look at building a diversified overall portfolio which property is part of rather than all your wealth and hopefully future non working income in a couple of single houses as such and read plenty of this forum, there is some amazing knowledge here from respected posters.

Alexland

takesyourchances wrote: »

I know another couple of people very heavily into BTL NI property owning lots of places mostly bought around the 2004 to 2006 period in NI and one told me recently he thinks he is just about breaking even and is trying to beat the mortages down to get more yield.

And people are frustrated their S&S investments have just gone backwards by 12 to 18 months! Puts the current volatility into perspective when compared to a significantly more onerous investment.

Alex

takesyourchances

Alexland wrote: »

And people are frustrated their S&S investments have just gone backwards by 12 to 18 months! Puts the current volatility into perspective when compared to a significantly more onerous investment.

Alex

It really does Alex, I have known these people for many years, this conversation came up few months back when one of them needed more income yield from their BTL properties due to income loss being self employed in another area. It came down to beating the mortages down more and was hoping it will start to turn around better in another 3 to 5 years.



They have been heavily into property, on reference to stocks and shares I made they don't know anything about it. It seemed to me a huge amount of effort and work. It certainly does put the current volatility into perspective, it is not really that bad on the scale of things when you hear and know real life examples like this type of investing too.



It has changed my thoughts towards BTL in many ways and many are 100% in it as their future pension / income and it is not that easy.



The way I see it is just punch through the markets and keep going and accept volatility is part of it and it can't always be going up so grab the cheaper prices for the long haul when it comes up.