Property Investment for retirement Income

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    Property Investment for retirement Income

    Firstly my apologies as this topic must have been done to death.

    Nevertheless, I am in the fortunate position of having a certain amount of finance available to invest in the property sector with a view to providing retirement income. Like many people who have spent 30 years in the private sector, my pensions are insufficient.

    Obviously I am looking for the lowest risk/highest monthly return options. I need advice around the options available and equally who to speak to with regards to impartial advice. For example, should I be looking at private residential letting including HMO's and student lets or is the commercial sector a better bet considering the stamp duty situation.

    I am not looking for a mortgage or additional finance at this point.

    Any help or advice greatly appreciated.

    Any professional investment adviser would advise you to diversify your investments, with property only being a smallish part of the total.

    Also direct investment in property is a business, not a pure investment. You need to put significant, but unpredictable, time into it. You also need to have access to significant liquid funds for emergencies. That is likely to be particularly true of HMOs.


      A practical problem you will encounter is that financial advisors usually don't make recommendations across all available options.
      They are expert in different investment schemes (which pay their income), but are not experts in property investment or (as another example) holiday lets.

      There is no investment that is lowest risk/highest return. Life doesn't work like that.

      Property is completely different to other investment.
      On the plus side, it's quite easy to understand and there's a real asset at the centre of it. It's also possible to borrow at reasonable rates against the asset that is part of the investment, which for individuals is otherwise next to impossible.
      On the negative, it's an active business involving people, some of whom are nasty, rude, criminal and many will regard you as scum. Student accommodation and HMO are particularly high on the management scale.

      The commercial sector is more specialised and has its own plusses and minuses. It's not as easy to borrow money against commercial property, the leases tend to be longer and the gaps between leases likewise. There's a reason most small property investors rent properties to people.

      If you look at the picture over the next x years, you might find that removing other outgoings is more advantageous over a lifetime than adding new (and taxable income). For example paying off a mortgage with a windfall may generate more money advantage than you could earn from investment.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


        'sfunny, we never get people after high-risk, low-return.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...


          Most people get high-risk and low return from buying leasehold flats .


            Originally posted by leaseholder64 View Post
            Also direct investment in property is a business, not a pure investment. You need to put significant, but unpredictable, time into it. You also need to have access to significant liquid funds for emergencies.
            Just what I was going to say when I saw the thread title.

            If you invest you become a capitalist and one of the basic rules of capitalism is that low risk gives a low return.


              Property can end up losing you money.
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...


                property does not make you money these days - not like it used to. There is too much legislation, its too worrying and time consuming even when you have an agent - its very stressful - like they will call you up and say the boilers not working when they didnt switch it on , they will want a butler service (almost) and they will mess your house up and break everything and they wont pay the rent and have parties and have their nails done whilst you suffer. They will call you when your just getting off a plane and say this has broken or something and expect you to sort it there and then - then theres the tax return which takes an age to complete -
                Having said that though I do know someone who rents out a builders yard or something just the land and it makes him a profit - no repairs you see -
                Personally I would spend the money on a cruise every year and stick it into an isa or something


                  relying on property as your sole return for retirement is unlikely to work because in order to generate the amount of income you need to live on, you are going to have to put in significant amounts of capital and there is no low-risk rental property income. Compared to other investments, residential letting is potentially subject to everything alice123 mentions and more and therefore much higher risk than sticking your capital into bonds and getting a guaranteed return each year for doing nothing.

                  We see our seven properties as one part of a retirement portfolio that will include a private pension and two state pensions. We work hard to manage those properties well so that we minimise the risks involved. That takes time out of so-called retirement.

                  We're also in professions (teaching) where we can pick and choose as much or as little work as we need if we ever need to return to work in the future because residential letting didn't work out. You need your retirement plan to be as multi-layered as possible.


                    Since I lost my job I have got most of my income from property. I do have pensions as well, most of which I will start to access next year.

                    Going for capital growth brings more wealth in the long term, but buying in the right area can produce a decent income at a low risk compared to shares. You need to know such an area or know someone you trust who does. I bought in the area where I had grown up, and where I still had contacts. Properties were pretty cheap, yields were fairly high and rental demand was good. I wasn't expecting much capital growth, but have been pleasant;y surprised over the last year.

                    I started by buying two houses in need of renovation for cash, then an opportunity for a commercial property appeared. Then I started buying using mortgages. completing on my 7th property in my own name just after the annoucement of S24. I also moved housing letting my old one with the aim of making some tax free capital growth from it. I plan to sell it next year and use the proceeds to pay down the mortgages in my own name. That should leave me with an income from property of about £28k. Since I have multiple properties a problem with one does not have too much affect. Once they are all mortgage free interest rate rises and S24 would affect me.

                    Compared to shares property is much less liquid, but also much less volatile.

                    Apart from my one commercial property I only have single lets, and I use letting agents to fully manage them. I do very little apart from my accounts.

                    Recently I have been buying using a company - currently three properties including one where the tenant is not paying. The most tax efficient way to take money out of a company is to get the company to pay into a pension. Buying a few properties using a company, paying into a pension until you retire, then paying a salary/ dividends looks a good option if you are planning for retirement.

                    The big problem is finding the right properties. Even though the area I operate in is good for income production from property there are places within it that are not so good.


                      Originally posted by PJackson View Post
                      ...............Going for capital growth brings more wealth in the long term, but ............
                      Only if there is capital growth... ( obvs,,...). There have been periods & there will be again then there was/will-be capital drops.

                      Were I starting out now I'd not been looking at property. And my assets are split between pensions, shares/savings accounts, property... Spread the risk!

                      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...


                        I have lost money on property - bought my first home in 1989. I also had shares drop about 80% in the dot com crash.

                        But it seems a good time to invest in property now, around here - net yields over 8% last year, with over 10% equity growth on top. Rental demand is high. Those numbers will probably drop once I get rid of the mortgages in my own name next year, but so will the risk, whilst the actual income will rise.

                        I have several pensions, and some other savings.


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