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  • Buy-to-Let

    What would you do & why ?



    I would like some advice please:

    I have inherited some money and I am undecided as to what to do with it. A little about me, I am in my early 50's and looking to build passive income for my retirement, so should I:

    Buy 3 x buy to let properties with good deposits

     Or

     Open a wellness/natural health clinic and rent out the rooms ( this is the area that I currently work in ,so know the business well).

    I am swinging more to the buy to let option as in order to develop the clinic into a  form of passive income ,I will need to rely on other therapists renting the rooms. I am worried about the risk but then also realise that buy to let is also a risk.

    Am getting into a bit of a muddle here so look forward to any replies that come my way......

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    I'm also in my 50s and have received an inheritance. That muddled feeling is very familiar, be prepared for a bit more of it and then hopefully you will formulate a plan. There's no simple solution but some options are riskier than others.

    As a care and support worker I can see a viable opportunity with a supported or assisted living unit. However, after much consideration, I have opted for a mixed use retail/residential unit as my first purchase. I probably asked myself 100s of questions before making this choice and dismissed several other options along the way. Try to understand what you want to achieve and then decide whether the options available can achieve it.

    Take extreme care with 'experts' that have an ideal solution. They're not all bad, but many will be happy to take your money.

    I don't think either option will give you a truly passive income, but you could receive a good income for a minimal effort.

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    Thank you Gary, at least I now know I am not going mad!

    Marion

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    Sorry forgot to add some important info;

     If I go for the therapy centre I was looking at converting an old Victorian house into the therapy centre.

    Does anyone have any experience of converting residential to retail premises?

    Is permission hard to obtain  from the local authority?

    Is it difficult to obtain a mortgage  that would allow the conversion to take place?

     I was thinking that this would be a better option rather than renting retail premises on a local high stress. My idea is that this would also be cheaper and that I would own the premises rather than rent it at the end of the day.

     Thanks

    Marion

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    The current 'trend' is to convert commercial to residential. You may find you face difficulties going the other way.

    Among my searches I have viewed several Victorian properties that were already commercial; dentists, offices, beauticians, etc. Maybe this would be a better approach for you?

    Take some advice on the tax implications and the mortgage implications, there are a lot of variables.

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    I dont know the rest of your financial situation and i am not an fca regulated financial advisor.

    However if you have not maxed out your isa and pension allowance i wohld consider it. If property is your bag you can get industrial warehouse reits that pay a 5% dividend, which would be tax free income in an isa and you can sell 10% or 15% or whatever when needed. Along with the other benefit of effectively no work for you which when retired is an advantage

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    Raffles the answer must in part turn on the overall health of your financial situation and, of course, how much you have to invest.

    I’m 55 and my finances were truly buggered, but I then had a £250,000 inheritance, £20,000+ of which I had to spend fighting my ex for joint custody of the two very young children I’d had with her (there’s no fool like an old fool, etc etc...).

    i don’t know if this is of any help to you, but - for what it’s worth - I invested £226,000 in four 2-bed terraced houses in Hull (all bought though a Ltd company set up for the purpose), which, when the final one is let, will give me a net before tax income of about £1,500pcm.

    Nothing to get excited about, of course, but it’s hopefully a start on the road to better financial security.

    I’m now going to release £128,000 from the two unencumbered houses to invest in another, possibly slightly more adventurous BTL project.

    I am concerned that I’ve gone into this new world somewhat blind, and it definitely all feels a bit risky and uncertain, but it nevertheless seemed the best option. I think I could n the not too distant future create a net before tax income of about £3,000pcm, after which I’d have to rely on capital growth before doing anything else.

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    I am very risk adverse at this stage in my life. I also want to spend some time travelling in the future and so buy to let's seem a better option for me as I can get someone to look after them for me. I must admit  that purchasing commercial property is of interest to me and I will look into this further. 

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    Hi Marion,

    Do you have ambitions to one day retire by the coast or some other location that is special to you?

    If so, think about buying that property now, and let it out as a holiday let in the meantime.  Holiday lets are not subject to Section 24 taxation, and you could run wellness retreats from it as well.

    With any left over money, buy 3 bed terraced houses in a good street and area with a 40% deposit.

    When the time comes, you can move from your existing property, turn it into a BTL, and move to your retirement home by the sea.

    You should have some decent cash flow and be able to start paying down the mortgage on the retirement property using excess cash flow.

    If you have any spare rooms in your home, consider letting them out to lodgers and enjoy £7.5K cash free income per annum.  Put this rent into a "pot" for a rainy day/retirement fund.

    You are right to be low risk.  Just as property can significantly increase your wealth if you get it right, it can financially ruin you if you get it wrong.

    Be extremely wary of any opportunity that sounds too good to be true, do intense due diligence on everything to do with spending your inheritance, and , if in doubt, come back here and ask for input.

    ​Hope that helps and good luck!

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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com


    Hi Nick,

     I like your idea of running a holiday let/ wellness retreat so will look into this further.

    Thank you all so much for your replies.

    Marion

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    I am still at the very early stages.I am just thinking about my options and then I will go into further detail and crunch the numbers fully.

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