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Rental property vs Vanguard high dividend fund
Comments
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I do like muffin.0
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I would echo this, with the caveat that future profit on the rental income can be greatly affected by changes in the interest rate. At 50% LTV, you are probably paying interest in the region of 1.5-2% (at most). If that goes up to (say) 5%, the ROI will be significantly lower.Retired_Mortgage_Adviser wrote: »you appear to have a rental property that is giving you no trouble, is easy to let, managed well by a great LA and giving you a [STRIKE]good[/STRIKE] great ROI for a property in London, so do keep that in mind before considering changing the status quo.0
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Thank you all for your thoughts and how to calculate the return.
I think I will leave matters as they are for now and reassess if and when circumstances change in the future.
Have a great new year!0 -
£12.5k income from £325k value is 3.8%.
£12.5k income from £165k equity is 7.5%.
And over the last 8 years there's been the equivalent of 4.2% compound interest, in the increase in value of the property, on top of that.
Zone 3 probably won't be as volatile a property market and subject to the boom/bust in house prices related to the global financial markets as others. City types may desert Docklands £1m+ developments but local people in zone 3 will still be looking for local flats.
Even if mortgage rates and letting expenses rise, reducing the net rental income to zero, if the property still keeps increasing at 4.2% p.a. that's a very fair rate of return on a safe investment.A kind word lasts a minute, a skelped erse is sair for a day.0 -
Owain_Moneysaver wrote: »Even if mortgage rates and letting expenses rise, reducing the net rental income to zero, if the property still keeps increasing at 4.2% p.a. that's a very fair rate of return on a safe investment.
4.2% for the hassel and huge risks of property isn't worth it.
Buy an index fund, you'll make more, far less risk and liquid asset, 20k tax free a year into isa.0 -
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