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Two very different options, both have great potential. It is a hard decision to make for sure!! But do what is best for you, what will benefit you the most and also which option would you enjoy the most? Is there even potential to do both? Could you purchase just 1 buy to let for example and also have a small clinic?
Yes I may be able to do both, I have had my fingers burnt in an overseas property transaction in the past . Now I like to spread risk and need to be completely happy before I sign anything..
That’s brilliant and another option you can take.
Sorry to hear about your experience with your oversea property.
100%! Make sure you are completely happy with everything before signing. I have no doubt you will succeed in your next investment and wish you all the best.
Without knowing more about you, your finances, lifestyle and the amounts involved it is very hard to give you an opinion.
However, my view is that you should do neither of the options you have proposed.
You said that you are in your early fifties. You also said that you want to build a passive income for your retirement.
You have not said when you want to retire or how much “passive” income you want/will need.
Assuming that you want to retire in your mid-sixties that gives you a little over a decade to create the income you are after. In property or business terms (both options you have proposed) a decade is not very much time at all.
Personally, I do not consider income from property to be passive (perhaps that puts me at odds with the general consensus but that is my opinion regardless). It takes work to operate a BTL business and you either do that work yourself or you pay someone else to do it for you, but it is not passive.
The same is true for a business. It will take many years to set-up and develop a business into an owner independent business (the holy grail for all entrepreneurs) and there are no guarantees this can be done, it is high risk and can go wrong at any stage (most businesses in the UK are not owner independent and are in fact just jobs for their owners which is about as far from passive as you can get!).
I just don’t think you have enough time and at your stage in life time is also against you in terms of the risks involved as well i.e. if you were in your twenties or thirties then you can take risks and have time to recover before retirement but in your fifties if you make a bad judgment and lose a lot of money then there is no time to recover before you retire.
It is not uncommon for people in their forties and fifties to suffer major financial catastrophes that wipe out the previous 25 years of hard work and diligent saving and investing [around middle age people often get inheritances or are made redundant with big pay-outs and in many cases these windfalls are “invested” in high risk ventures/businesses which the person investing has little knowledge of or practical experience in resulting in failure at best and catastrophic failure at worst].
Don’t be one of these people, protect what you have and avoid any unnecessary risks.
My advice is use the money to pay-off any debts/mortgages/loans that you may have (then diligently save and invest the money that was being spent servicing/repaying that debt).
Invest any balance/excess in an ETF Tracker – as much as possible within an ISA wrapper.
You can only place £20,000 each year into an ISA but if you have a partner then that becomes £40k.
An ETF tracker is about as passive as investing gets and each year you can place another £20k/£40k within the ISA wrapper (if you are invested in an ETF tracker outside of the ISA you would need to sell [realise gains/losses] and then place the funds in the ISA(s) before buying the ETF again, you cannot transfer existing holdings into the ISA).
Reinvest the dividend income until you want/need to start living on it.
This would give you a passive TAX FREE income upon retirement and you also have the option of drawing the capital out at any time (it takes minutes to sell an ETF and withdraw the funds from an ISA rather than the weeks/months required to sell a property).
No-one has made a fortune investing in an index tracker at the age of 50. You can only lose a fortune if you have one in the first place. I am a big fan of tracker investments and utilising the tax wrappers available (ISA's and Pensions). I would agree that using this would be sensible. Maybe put the money you earn from your property investment into this. But, please lets not pretend you can make serious money a) without any effort b) without any risk
How do you manage the risk? Make sure your offering is the best it can be. Buy well (if its not a great deal walk-away), Hold cash reserves. Scenario-plan. Hedge a little. But let's clear, there is no money without risk. Make your decision and work hard to make it happen - that's the only way I know.
You have written a great reply
age is a factor and we all age
this is why I now use pensions and ISA over 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.
You have made some very valid points Expatriate, and I too have seen people lose fortunes due to the decisions that they made. This is why I will give myself plenty of time before I do anything. Thank you for taking the time to reply.
If you have a dream and ambition then I think you should follow it. Otherwise you will spend the rest if your life thinking "what if?"
Early fifties is a very good time to be starting a new venture. You've got maturity and experience and probably fewer financial and other commitments yet you've still got lots of energy and are more likely to think things through carefully and have contingency plans and an exit strategy.
I'm 62 and bought my first buy to lets six years ago. After working part time when my children were young, my pension provision was inadequate and I needed to remedy that. The pension issue is now resolved thanks to the properties and a well paid job and I've enjoyed that but it's no longer a challenge Now I'm looking for something more interesting. I'm about to give up my desk job to spend more time on my secondary careers as a self employed outdoor pursuits instructor and teaching English as a foreign language. I also want to travel and I'm exploring other things to do in property. I believe if you have an opportunity to live the dream, you should give it a go.
Thank you Alison, you are certainly right about the "what if", I have always promised myself that I would not be a person sitting in my rocking chair in old age, thinking "what if" or "if only".
You are a very pro-active lady !
Your first investment should be in your education (I mean this in terms of time not money). Set yourself a goal of say 6-12 months of learning before you do anything.
You say you know the business of a health clinic, but is this is terms of management of clinics or working in one? It is a very different skill set - I would highly recommend the e-Myth by Michael Gerber as a starting point to give you things to consider. Very few businesses are truely passive income (including property investment).
From the sounds of it single lets may suit you, there are plenty of excellent books on the subject, anything by Rob Dix, Angela Bryant or Richard Brown is pretty good, with no upsell - just good advice. Be very wary of exactly where and what you buy, you should seek advice on a street by street basis relating to tenant demand if buying in an area you don't know, or even to sense check what you're doing before you do it.
Buy for fundamentals, be an investor not a speculator - look at the cash flow of properties before purchase, don't bank on huge capital growth as we don't know what the future holds.
I wish you the very best of luck with it