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I often see on PT that yield is king and of course it's true. I stand by a good yield to pay the bills, and hopefully after a good year, we make a profit and pay our taxes.
But today we go through a lot of stress keeping up to date with new rules and regulations and the threat of more taxation on the sector
I don't think any of us can say it's getting easier to be a Landlord
So as you all know I now invest in Pensions and an ISA with my wife
Two property funds I use are Standard Life and Legal and General
Both invest in a range of Property and the performance is not mind-blowing but they have been around a long time
L&G in the past year has performed at 5.23% per year and over 10 years its performed at 101%
Standard Life has performed at 4.46% the five year performance is 27.6% no ten year fig at present
If you are a Higher Rate tax payer and you can achieve 5% tax free over a five year period its worth 7% gross
Think of that for a moment .... 7% tax free with zero work zero hassle!
L&G which retuned over 10% per year over ten Years is worth 14% to a higher rate tax Payer. I think If I could get 14% tax free from BTL I would invest back into BTL But I know I could not achieve that sort of return in the coming years.
I know when I go to bed at night I never think about my Investment funds ... but I have lost sleep with BTL in the past years.
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
``I know when I go to bed at night I never think about my Investment funds But I have lost sleep with BTL in the past years``
I think different to you on this DL .
I see the Investment funds I have as fragile and non tangible
Its a piece of paper maybe if I am lucky - but not even that these days .
Its in the cloud somewhere in full view of any jobbing hacker
They could crash over night and be next to worthless .
Property is tangible though and secure even in these testing times.
Even if it explodes in a freak accident my insurance co will build me a brand new one
I will go to one of my 3 bed semis today and physically see its beauty
Bought with an 85% LTV mortgage for 145K in 2005 its now worth 245K
Cash flows 800 pcm
Even if there is a crash of 20% it wont be overnight . I can react to any downturn
A fund though can crash before you have even got dressed in a morning
Even if the cash flowed halved on my bricks and mortar to 400 pcm that would be ok .
Even if it dropped 50K from its value that would be ok . It would recover in time
There is a good reason why the phrase ` Safe as Houses` is still true today as in the past 100 years
No one has yet coined the phrase ` Safe as an Investment Fund`
I wonder why!
Jonathan Clarke. http://www.buytoletmk.com
No JC your compairing a Property find with an equity fund
look at the cash reserves they hold one fund is 25% in cash and don’t forget they have assets just like you and me they own bricks and mortar
shooping centers offices and who knows they may invest in BTL soon
have a look at the funds in depth and you will see what they own and the sectors there in
``No JC your compairing a Property find with an equity fund``
No DL I am not comparing a property fund with an equity fund
I am comparing my own physical property with investment funds
You are investing in and through a third party who invests in another third party
You are delegating trust to your broker who is delegating trust to another unknown person
They all take their cut leaving less for you
They are ok and serve a purpose I know but the mechanics are entirely different
I see the house I invest in and that helps me sleep at night
I take 100% of the cut be that yield or CG. None goes to a broker or a fund manager
And at 75% LTV I take 100% of the CG growth cut which is very favourable terms
I think the lender is mad not to take 75% of CG growth as part of the deal. But they dont
They missed a trick there
100K property @ 75% LTV goes up just 5% pa . My ROI is 20% . Brilliant
But can you please not give the banks a hint.
Yes I pay fees ect
but it’s no different when you were setting up deals for landlords
you were dong the same as fund managers
Yes good point there is a similarity there which serves to highlight what I mean
The central point is property owned by an individual makes more than property funds owned by a 3rd party
My fee was 2K
The property I sourced for a client was owned by him
Its gone up 100K in 9 yrs and he gets to keep all of that 100K
Also 80K in rent minus my 10%
A property fund would not be so generous as to pay you 180K I fear
Would you mind explaining how the income from property funds is tax free. I'm not familiar with this, or whether it will effect my other tax free income.
If you use an ISA any gain is tax free
no income tax and no CGT
if you use a SiPP govt gives tax relief when you put cash in and you can take 25% tax free at age 55
they are just a wrapper Pop a property fund in an isa and pension
Thanks DL. I clearly had my brain in neutral!