buy to let investment

Johnnyboy11

Malthusian wrote: »

So in other words their tax bill will more than double. That's alright then.

I have my finger hovering over the rofl smiley in case you are going to tell me that the Corbynists are going to abolish council tax. Labour don't abolish taxes.

"Initiative a review" means you are planning to do it. You don't initiate reviews into things you don't want to do.

There are two things going on in that manifesto extract. Given the overt Marxist views of Corbyn and McDonnell, it would be safe to assume property owners will be paying significantly more Council Tax in addition to a new LVT. Property is theft in their minds.


In any case, I will not be investing in BTL.



"A Labour government will give local government extra funding next year. We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term."

sixpence.

Yeah this has all been really helpful. My brother owns a property worth 400k and we crunched some numbers together and worked out that (when you take out service charge, letting fees, repairs etc) he is making about 3.5% rental income (note: this is if nothing major goes wrong like a window breaking or the boiler packing in).

To me that seems a lot worse than investing in, say, this fund. Minus the HL fees you are getting a 3.9% historic yield: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hl-multi-manager-high-income-income

There is a chance I will be gifted a further 150k, that would mean 750k total.

I think what I will do is put 40% into property and 60% into a fund and then feed the yield from either investment (when possible) into the fund. I like the idea of owning a property. It's real. You can touch it. If it does wrong I will sell and stick to funds!

What do people think of that?

Btw, sorry I think I misread the post about the bank account! 5% interest on 750k would be amazing. Wishful thinking!

EDIT: can people link any decent UK property funds? I researched this a while ago but have seen some posts putting it down on the forum: https://www.propertypartner.co/

Alexland

Just because there are high income funds doesn't mean that you should invest in them especially if you don't actually need the income - you might do better overall by taking a total return approach?

It's worth having a good hard think about how you plan to eventually use this money against your life objectives as that might influence your investment strategy.

Alex

Reed_Richards

Broadly funds are often characterised as either Growth or Income. 'Growth' funds aim to maximise the increase in value of the fund units. 'Income' fund aim to pay a high dividend but this is probably at the expense of a reduced rate of increase in the value of the fund units. Income funds are obliged to invest in shares that pay a high dividend whilst growth funds can invest in whatever shares the fund manager thinks fit.

sixpence.

Reed_Richards wrote: »

Broadly funds are often characterised as either Growth or Income. 'Growth' funds aim to maximise the increase in value of the fund units. 'Income' fund aim to pay a high dividend but this is probably at the expense of a reduced rate of increase in the value of the fund units. Income funds are obliged to invest in shares that pay a high dividend whilst growth funds can invest in whatever shares the fund manager thinks fit.

Cheers, yeah I've got a VLS in my ISA (that's my retirement fund) so I'm familiar with funds although by no means an expert. The hargreaves one looks quite good to me, but I haven't researched it in detail.

jimjames

sixpence. wrote: »

EDIT: okay just googled this and the highest is like 1.5% which seems a bit rubbish considering you can get 4-5% at least from rental yield alone. Anyway, will read thru comments and have a think later.

You can get 4% from investing directly in the FTSE. No tenants, just cash income.

sixpence.

jimjames wrote: »

You can get 4% from investing directly in the FTSE. No tenants, just cash income.

The FTSE isn't diverse enough IMO. You want bonds, you want REITS, you want Asia, you want USA, you want small and medium caps.

Thrugelmir

Reed_Richards wrote: »

Income funds are obliged to invest in shares that pay a high dividend whilst growth funds can invest in whatever shares the fund manager thinks fit.

I'd hope that income funds invest in companies that have been suitably screened, to ascertain whether they have the credentials to pay a sustainable and increasing dividend. If a company is offering a high yield. Then investors are shunning buying the stock for some reason.

dales1

sixpence. wrote: »

The FTSE isn't diverse enough IMO.

Also, being a landlord of a single property is not diverse enough. You're too exposed to a rogue tenant.

"EDIT: can people link any decent UK property funds?"
Yes, the Telegraph Money supplement today can highlight as "fund of the week" a £1.5 billion UK property fund.

Its total annualised return over the last 4 years is 3%. That is useless. A simple global tracker VWRL is up 8.3% per year, by my calculations.

Personally I would take my focus right away from property investment - BTL or commercial.
I would stop considering them.
Dales.

Reed_Richards

Thrugelmir wrote: »

I'd hope that income funds invest in companies that have been suitably screened, to ascertain whether they have the credentials to pay a sustainable and increasing dividend. If a company is offering a high yield. Then investors are shunning buying the stock for some reason.

Yes indeed. As a consequence the dividend actually paid by a lot of Income Funds isn't that spectacular. Thus, for example, the historic yield from the HL fund is less than the current yield from the FTSE 100.