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  • Property-a-holics

    Shares, Property and Returns

    Agreed.

    Ultimately its all gambling .look at Voda yesterday. One of the most respected companies,, Committed to dividend strategy in Oct and Changed course yesterday. the more i see it the more the markets will knee jerk to the new world.

    For me, Im swaying to property, if you can get the yield,  then for a 30 year investment I cant see the issue; Corbyn worries me, but he will come and go.

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    Hi All

    Interesting thread.

    Although I am open to other opportunities, I tend to stick to what I know.

    I don't know about stocks, shares, commercial, serviced apartments, HMO's, and all the other ways the inexperienced and uneducated can be parted with their cash.

    Stock seem to me little more than gambling - and I NEVER gamble!

    Every time, we are tempted to diversify into something else, after a bit of due diligence, nothing compares to the risk / reward model that property gives us.

    Just my opinion....

    Ed


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    LETS MAKE HOMES by treating landlords as partners, tenants as customers & every property as our own."

    http://www.letsmakehomes.co.uk


    If your a Landlord Your not stupid ??

    So you can learn the game of shares and investments

    Its like anything else you only learn when you put some cash into an investment

    I personalty use managed funds because I am rubbish at individual share selection so I am happy to leave it to a fund manager

    Best of luck DL


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    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.


    Here is a comparative 10 year chart showing returns using a pension and BTL making the following assumptions:

    Pensions gain at 6% p.a. and gain an immediate 25% in tax relief

    BTL through a LTD company at 3.5% mortgage rate 6% rental yield and 20% allowance for voids and repairs.

    Property gains at 2% per annum

    I have kept the drawdown figures for the pension in line with the net rental returns after tax so that the only difference if the equity remaining at the end of the period.




    BTL Ltd



    YearValue +2%MortgageRentMort@3.5%TaxNet ProfitEquity

    £130,000£97,500£6,240£3,413£537£2,290£32,500
    1£132,600£97,500£6,365£3,413£561£2,391£35,100
    2£135,252£97,500£6,492£3,413£585£2,494£37,752
    3£137,957£97,500£6,622£3,413£610£2,600£40,457
    4£140,716£97,500£6,754£3,413£635£2,707£43,216
    5£143,531£97,500£6,889£3,413£661£2,816£46,031
    6£146,401£97,500£7,027£3,413£687£2,928£48,901
    7£149,329£97,500£7,168£3,413£714£3,042£51,829
    8£152,316£97,500£7,311£3,413£741£3,158£54,816
    9£155,362£97,500£7,457£3,413£769£3,276£57,862
    10£158,469£97,500£7,607£3,413£797£3,397£60,969



























    Pensions



    InvestYear
    DrawdownTaxNetBalance
    £32,000
    £40,000£2,700£405£2,295£37,300

    1£39,538£2,750£413£2,338£36,788

    2£38,995£2,869£430£2,438£36,127

    3£38,294£2,990£448£2,541£35,305

    4£37,423£3,113£467£2,646£34,310

    5£36,368£3,239£486£2,753£33,130

    6£35,117£3,367£505£2,862£31,750

    7£33,655£3,498£525£2,973£30,157

    8£31,967£3,632£545£3,087£28,335

    9£30,035£3,768£565£3,203£26,267

    10£27,843£3,907£586£3,321£23,937
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    For many landlords the collapse in interest rates some ten years ago has caused prices over that period to the extent that cheap money is fully reflected in property prices. For those with borrowings this has amplified returns

    HOWEVER these returns in property have been good as prices rise however having a geared portfolio in property does carry significant risks when prices fall as losses are equally amplified

    most private individuals with share portfolio are not geared unlike those with property portfolios - if the returns on the share portfolios are less it reflects that those with share portfolios carry less risk

    We are currently buying a commercial ground rent on a business park in the Home Counties . It’s currently yielding 5% (20yp) and rises every 5 years by the RPi - we have no management obligation we just invoice for the rent . With long term inflation we will see around 7% growth with no risk and with no demands on our time - I believe it Iis a better return than our residential investments

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    Hi


    Yes agreed, Leverage is your friend or enemy depending which way the tide turns. My only issue with ground rents and leaseholds is they arent owned by many people but paid by the masses. It would be a great vote winner in my view to force holders to selll for say 8 times the rent value etc.    I e looked at them but worry its an easy government target.

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