What do I do now!!

dunstonh

vale wrote:

nationwide
the surrender value you have been quoted will not contain a terminal bonus as life companies don't pay an end/terminal bonus on early surrender! Hope this helps.

Not strictly true. Some will pay a proportion. However, not all will disclose what the TB is before you surrender.

LRUK

Well thanks I think i will probably pay it off.

LRUK

would there be any benefit in using the money as a deposit for another property and renting it out.
I am thinking that this could be risky if I only have enough for one property and only really a deposit. ( what about maintenance )
what would happen if the tenants did not pay?
Only looking at this at the moment
has anyone done it and what are the pro's and cons

dunstonh

Rental properties are not generally that good value at the moment. The purchase price of the property and the rental income achieved is quite low at this time. 5 years ago was the time to do it. However, like most things, people jump on the past performance bandwaggon. An awful lot of people are going to get bitten big time when mortgage rates go up and they cannot afford both their own mortgage and the rental property. On this occassion, they wont have anyone to blame though as they did it all themselves.

Stockmarket has outperformed property in the last 2 years. Not saying that is neccessarily the right way to go. Just highlighting the fact that people jumped out of the stockmarket into property because they saw the stockmarket as performing badly and saw property as doing well. After many did that, the stockmarket took on its little burst and property has gone nowhere. Its the past performance band wagon.

If you fancy a bit of flexibility, there are commercial property funds available. This sector has only seen one negative year in the last 20 and averages over 10p.a. (closer to 15%). Past performance is no guide to future returns but forecasts are for commercial property to perform at 8-10% p.a. for the next 3 years. Thats no guarantee but as rental income is what makes up most property funds, they can judge it quite well. Plus, at the moment, there is a lot of demand for commercial property and insufficient supply. Always a good time to consider something when its like that. Its when supply outstrips demand that you have to worry.

meanmachine_2

Sounds to me like commercial property is yet another johnny come lately bandwagon.

There was a big article in last week's property section of the Mail on Sunday banging on about it.

And when the sunday supplements get wind of it, you know the game is up.

This was the same publication trying to convince its dopey readers that "old people loved city centre new builds" (yeah right) and "buy to let was still a great investment".

Wrong on both counts. So why should I believe a damn thing that these journos say?

dunstonh

Sounds to me like commercial property is yet another johnny come lately bandwagon.

I wouldnt say lately but it is certainly higher profile than it used to be. It was the forgotten asset class in many respects.

There was a big article in last week's property section of the Mail on Sunday banging on about it.

And when the sunday supplements get wind of it, you know the game is up.

Thats a shame but you are right, when the papers say its a good thing, what that really means is that it WAS a good thing. Investing in property funds isnt as easy as it used to be. You do have be a little more selective than in the past due to overfunding with some funds who are now holding too much cash and that is bringing returns down. Or just because it says property in the name, it doesnt mean its all rental income or all one risk. Aberdeen property share, for example, is a medium/high risk fund (say around 8 out of 10 on a scale) where as norwich property trust is a low risk fund (5 out of 10 on a scale).

I recall the days when the Mail put corporate bond funds and tech funds in the same chart and said how much better tech funds were!!!

Im leaning more towards more specialist property funds now and I have had a personal dabble in the recently launched Britannic property fund. Generally avoiding all those with overfunding and concentrating on those with office, retail and warehousing.