Spare £160k buy house or pension pot

Terron

garyelder said:

I would want the easy life 3% interest which is coming and easy money and no grief
But everyone has different circumstances so it’s difficult to advise not knowing all the full  facts 

My returns from BTL dropped below net 8% on average in FY20/21 but were still over 7%. Those numbers are pre-tax and ignore capital gains, but include paying for full management. Prices have risen above inflation around here so it would be difficult to match that if I was starting out now.

My income is above the national median but below the HRT threshold. Plenty for a comfortable retirement.

But it does require more work than my DB pensions, annuity and SIPP.

pjread

Terron said:

But it does require more work than my DB pensions, annuity and SIPP.

That's the kicker; I wouldn't want someone calling me at 3am because there was a leak or the boiler broken, the risk of voids on a single property impacting my lifestyle or to sacrifice returns for full management while worrying every job I was being ripped off on now, let alone when I'm 70/80+. 

So unless you're butting up against lifetime allowance issues & are already filling your ISAs, or are an experienced landlord who can diversify and manage several properties, personally I think you'd have a less stressful retirement throwing the cash in to some low fee tracker funds and finding a more fun hobby than dealing with tenants.

Terron

pjread said:

Terron said:

But it does require more work than my DB pensions, annuity and SIPP.

That's the kicker; I wouldn't want someone calling me at 3am because there was a leak or the boiler broken, the risk of voids on a single property impacting my lifestyle or to sacrifice returns for full management while worrying every job I was being ripped off on now, let alone when I'm 70/80+. 

So unless you're butting up against lifetime allowance issues & are already filling your ISAs, or are an experienced landlord who can diversify and manage several properties, personally I think you'd have a less stressful retirement throwing the cash in to some low fee tracker funds and finding a more fun hobby than dealing with tenants.

No one calls me at 3am - that is what I pay my letting agents 10%+VAT for (and still get over 7% net even in FY20/21).
But the letting agents might email me during the day regarding an expense over the limit I have authorized them to spend without asking me (£300). or I might need to pay an extra rates bill when a property has been empty between tenants.
You do need to find agents you can trust. I go with small local ones where they are more concerned with their local reputation than getting a promotion by producing good numbers for a distant head office.
I have 5 residential properties and a commercial one (or three depending on how you count) so a single void does not impact my income too much.
The only tenants I deal with in person are the commercial ones and that most often involves visiting one of the shops as a customer.

pjread

Terron said:

pjread said:

Terron said:

But it does require more work than my DB pensions, annuity and SIPP.

That's the kicker; I wouldn't want someone calling me at 3am because there was a leak or the boiler broken, the risk of voids on a single property impacting my lifestyle or to sacrifice returns for full management while worrying every job I was being ripped off on now, let alone when I'm 70/80+. 

So unless you're butting up against lifetime allowance issues & are already filling your ISAs, or are an experienced landlord who can diversify and manage several properties, personally I think you'd have a less stressful retirement throwing the cash in to some low fee tracker funds and finding a more fun hobby than dealing with tenants.

No one calls me at 3am - that is what I pay my letting agents 10%+VAT for (and still get over 7% net even in FY20/21).
But the letting agents might email me during the day regarding an expense over the limit I have authorized them to spend without asking me (£300). or I might need to pay an extra rates bill when a property has been empty between tenants.
You do need to find agents you can trust. I go with small local ones where they are more concerned with their local reputation than getting a promotion by producing good numbers for a distant head office.
I have 5 residential properties and a commercial one (or three depending on how you count) so a single void does not impact my income too much.
The only tenants I deal with in person are the commercial ones and that most often involves visiting one of the shops as a customer.

Yup - so you're an experienced landlord with an existing portfolio (purchased at pre-today prices) and your diversity helps protect against the void risk. 

But unless I'm reading wrong, the OP is talking about buying their first, single BTL property at age 61 as a way of funding retirement, so my advice was aimed at them  

Terron

pjread said:

Terron said:

pjread said:

Terron said:

But it does require more work than my DB pensions, annuity and SIPP.

That's the kicker; I wouldn't want someone calling me at 3am because there was a leak or the boiler broken, the risk of voids on a single property impacting my lifestyle or to sacrifice returns for full management while worrying every job I was being ripped off on now, let alone when I'm 70/80+. 

So unless you're butting up against lifetime allowance issues & are already filling your ISAs, or are an experienced landlord who can diversify and manage several properties, personally I think you'd have a less stressful retirement throwing the cash in to some low fee tracker funds and finding a more fun hobby than dealing with tenants.

No one calls me at 3am - that is what I pay my letting agents 10%+VAT for (and still get over 7% net even in FY20/21).
But the letting agents might email me during the day regarding an expense over the limit I have authorized them to spend without asking me (£300). or I might need to pay an extra rates bill when a property has been empty between tenants.
You do need to find agents you can trust. I go with small local ones where they are more concerned with their local reputation than getting a promotion by producing good numbers for a distant head office.
I have 5 residential properties and a commercial one (or three depending on how you count) so a single void does not impact my income too much.
The only tenants I deal with in person are the commercial ones and that most often involves visiting one of the shops as a customer.

Yup - so you're an experienced landlord with an existing portfolio (purchased at pre-today prices) and your diversity helps protect against the void risk. 

But unless I'm reading wrong, the OP is talking about buying their first, single BTL property at age 61 as a way of funding retirement, so my advice was aimed at them  

Most of which I both agree with and had already written about in this thread, but you were exaggerating some of the problems of BTL. 
I became a landlord after I was made redundant in 2013 with the same aim as the OP, though a few years younger and with more savings.

fuzzynavel

chipsdog5a said:

I have a spare £160k, shall I buy a house to rent out (they are cheap where I live) or put in my pension pot?  I am 61, planning on retiring at 66.  My pot is currently at £350k and I also have a civil service pension.  Just wondered which would give me more money when I retire, the rent or the extra pension?   thank you

I would set up a LTD company, seed the company with the £160k and use that money to buy 4 x £100k properties at 75% LTV on interest only mortgages. You will still have a few thousand left after fees/stamp duty etc but you could have a decent, immediate income depending on the rental yields in your area and the state of the properties.
There will be doom mongers coming along who will say "what if a tenant doesn't pay?", "have you thought about all your costs?", "will you manage it yourself of get an agent?" and a whole lot more....These things can be worked out with a bit of educational research but don't let fear of the unknown stop you at least looking at the idea.
Fear has 2 meanings:
1. Forget Everything And Run
2. Face Everything And Rise

Which will you choose?