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I have just completed my tax return and as often happens this has made me reflect on how things are going. A few reflections:
So I reckon, that a fairly average year for house price growth and a poor year for rental income, means that I have returned 24% on my investment - this is a pay-back of 4 years on my investment. Appreciating that things can change and further regulation may come. I still have to ask: Are there any alternatives that can compete?
For context, I have x3 hmo's and x2 one bed flats, which cost me circa £200k in cash to buy.
Property is a super investment
and the Govt know its good that's why S24 and stamp duty were introduced
You are holding assets the Govt would prefer you not to have ?
So in the Long term they will tax you and I out of BTL
They will use Taxation & Regulation to stop you in your tracks
You have sampled the effect of S24 so expect further changes to your plans
Todays property prices are a bubble built on low interest rates and QE
I now prefer to invest elsewhere in Pensions and ISA where I feel there is value
Keep watching your back because the Govt is breathing down your neck
They want your money and they don't want you to invest in BTL.
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.
So DL what does your pension and isa return? 7%? Understand the winds of change, understand the risks of short term property price volatility. But, unless somethings changed the cg growth is still there for the long term.
Frankly 7% just won’t get me where I want to be.
What do you think the annual compound growth rate is for property over the long term?
5%? What’s your point?
You said that investments with a 7% return did not provide sufficient returns, the implication appeared to be that property would exceed this long term I therefore asked the question what you thought property would provide.
I thought I explained in my post that I was making 24% on a bad year from property.
As Andy stated - critical to this is gearing.
I am puzzled that you say 24% is a poor year yet you only expect long term yields on property to be 5%, that would suggest that 24% is a good year.
The link included a chart that showed annual change in property prices between 2006 and 2018 and none were anywhere near 24% with several being negative growth.
To say nothing is better is on a par with saying nothing can go wrong, both inaccurate, at different times different investment strategies will be best, the advantage of property is the man in the street understands it, the disadvantage is it is illiquid and is very easy to see significant drops in value before it is possible to sell.
As most of us I speak for the area I live in and I am seeing a significant change in sentiment, the problem being for most landlords is CGT which means even if we see a thirty percent fall in house prices coming we are likely to hold because of the cost of exit and re-entry.
£11k profit for five properties including 3 HMOs, it sounds like a lot of work and risk for a speculative profit on growth but we all have our own model.
Congratulations on your 24% profit in one year but I am not convinced as some of the others commenting are that it can be used as an indication of likely future returns.
Hi Essex, I don’t buy the whole house. I put down 25/30% deposit. That’s my money invested. But any price growth is mine. So I put down circa 50k and my 200k house goes up by 5% that means I make £10,000 on £50k invested. That’s 20% Roi.
I think you are mxing measures. Yield is normally used to describe rental returns. That is the remainder of the profit described above.
This is what Andy means by gearing. And Dl describes some excellent returns in his pension. But as he can’t (I presume) borrow to invest. He only makes money on his original stake- with property you benefit from making returns on the proportion of the house that’s mortgages (that you don’t need to find the cash to fund yourself)
Sorry DL are you a he? (Assumption)