Property as investment: Still a good idea?

[trendie]

How many have property as one arm of your diversified investments?
Buy to Lets?
With new laws reducing mortgage payments as deductibles, is it still worth keeping a portfolio?
I must be something of a misanthrope, as I hate dealing with people directly, , so wonder if I should off-load my properties.
Also, is Saddiq Khans push for rent-control a worry for those of you in London?
(I am out in the sticks, so don't give a hoot.)

 

[Trader333]

Whilst you have a situation where the number of people requiring a place to live exceeds the ability to supply that demand (ie a basic supply and demand market) then property investment makes sense. However, I would not consider buy to let personally and would only buy outright and then let. We have a bizarre situation with regards to the buy to let market as it is the only business I can think of where you can now be taxed on a loss since being unable to offset interest costs as a legitimate business expense.

 

[J_C_Anderson]

It all depends on the meaning you use for "property".
If we talk about real estate, it requires large initial capital and sometimes lacks liquidity. As an alternative, you can invest in REIT.
If we talk about movable property, the most interesting approach would be to invest in antiques (like painting or other things), but it requires deep knowledge and understanding of the market.

 

[trendie]

It all depends on the meaning you use for "property".
If we talk about real estate, it requires large initial capital and sometimes lacks liquidity. As an alternative, you can invest in REIT.
If we talk about movable property, the most interesting approach would be to invest in antiques (like painting or other things), but it requires deep knowledge and understanding of the market.

property as in real estate, specifically. otherwise thread could go off in all random tangents.

I was looking to explore how costs of running property is becoming less likely to be written off against income, and wondering how other owners are coping with this.
increasing and complex laws; all good, to protect good tenants from bad landlords, but sadly protects bad tenants from good landlords.

 

[Lightning McQueen]

Not really sure how/if the new treatment of loan interest is effecting anything.

Just filled out my tax form and to be honest theres no difference whatsoever in the final tax calculation. you can test this out for yourselves by putting the whole interest in the interest costs box and let the system do the calculation, then redo the calculation putting the currently correct 75/25% interest split in to their respective boxes, result is the same. to be fair if the "25%" box is left blank then some auto calculation could be going on, but if thats the case why make us manually calculate the split.

Also new this year is a £1000 property allowance, i think this is only useful if you have low costs, as you cant use this allowance as well as offsetting other costs, thats how i read it anyway, anyone know more on this?

 

[trendie]

There's a Guardian news story of Lloyds bank offering 100% mortgages to first timers.
Correct me, but didn't doing this last time trigger a housing bubble? I seem to recall that Ireland got particularly screwed.

 

[Emini-mouse]

Not really sure how/if the new treatment of loan interest is effecting anything.

Just filled out my tax form and to be honest theres no difference whatsoever in the final tax calculation. you can test this out for yourselves by putting the whole interest in the interest costs box and let the system do the calculation, then redo the calculation putting the currently correct 75/25% interest split in to their respective boxes, result is the same. to be fair if the "25%" box is left blank then some auto calculation could be going on, but if thats the case why make us manually calculate the split.

Also new this year is a £1000 property allowance, i think this is only useful if you have low costs, as you cant use this allowance as well as offsetting other costs, thats how i read it anyway, anyone know more on this?

If you jointly own a rental property you can both use the £1000 property allowance. Which makes it more usefull

 

[jovancarterr]

Investing in real estate, especially in apartment complexes and other residential projects are still a good investment.

 

[Guest36985]

As practice shows, having your own house is still more profitable than renting. I mean the last lockdowns in the country. Not all landlords agreed to lower or deferred payments. It was easier for me to negotiate with the bank (on the mortgage). I also like the fact that I can be freer to change inside the house. I had a lot of free time last year and did some minor repairs and also found a cool way to improve safe water purification. I already have a remote job but I am completely self-sufficient in my own home.

I think you missed the whole point of the thread.
Its not a question of rent or buy, its a question of should we own a second or third property as an investment.

The rent or buy question is answered well here.

There is a train of thought that says you should NOT buy a house as an investment as it gives a return of between 4% and 8% per annum depending on when you start counting but there are also huge costs involved which takes the return down plus its not a liquid asset and its a pain in the arse with solicitors, renters, estate agents, rental agents, changing tax regulations, hiring workmen for repairs ...
Compared that to an s&p index tracker which has returned an average of 6.8%. No fuss no nonsense and in the right wrapper no tax.
Or you can just trade yourself and easily beat the s&p because you're making 20% per annum compounded, so its really a no brainer.

TLDW : Here's a screenshot of the key message.

 

[McQuant]

This is my workflow:
Buy O, collect monthly dividends, add some extra funds monthly, and buy more O. Rinse and repeat until retirement.

1. I do have mortgage on my property I live in, I would not take another one. Too risky.
2. I also do want to avoid problems I can eventually have with tenants, unnecessary stress and my time is precious to me
3. I do not want to act as landlord. Being engaged into services for tenant, managing repairs, doing taxes, etc.
4. Diversify. I do not have only O in my stock portfolio, but it's my largest holding regarding realities, liking its monthly dividends . There is a lot of good REIT ETFs out there

 

[CharlieWex]

I think you should have thought about it a long time ago. real estate is always a reason to invest. I even took out a loan to buy real estate. Already paid it off and started investing in bitcoin. I think you should check this resource called https://coinabu.com/ when you invest in crypto and you need to be always up to date. I can say with certainty that it is one of the best investments of my life. Any investment will always be relevant, you just have to be smart about it.

 

[Guest36985]

I think you should have looked into this a long time ago. real estate is always a reason to invest. I even took out a loan to buy some real estate. Already paid it off and started investing in bitcoin . I can tell you with certainty that it's one of the best investments of my life.

Bitcoin down 53% in a month ... such a good 'investment'.

 

[NVP]

Bitcoin down 53% in a month ... such a good 'investment'.

think how cheap it is now though ......hahahahaha

 

[NVP]

This is my workflow:
Buy O, collect monthly dividends, add some extra funds monthly, and buy more O. Rinse and repeat until retirement.

1. I do have mortgage on my property I live in, I would not take another one. Too risky.
2. I also do want to avoid problems I can eventually have with tenants, unnecessary stress and my time is precious to me
3. I do not want to act as landlord. Being engaged into services for tenant, managing repairs, doing taxes, etc.
4. Diversify. I do not have only O in my stock portfolio, but it's my largest holding regarding realities, liking its monthly dividends . There is a lot of good REIT ETFs out there

REIT ETFs ?

great when market is rising ......disaster when it falls ...liquidity dissolves ....

 

[McQuant]

REIT ETFs ?

great when market is rising ......disaster when it falls ...liquidity dissolves ....

Nope. We speak about investing here which is a long term business category. Compound and reinvest dividends, invest regularly, diversify your portfolio and forget leverage of course.
In about 10 - 20 - 30 years you will have a solid stable monthly income.

 

[sideways-sid]

Real estate as an asset class is fine.

Buying a single illiquid asset directly and dealing with management makes almost no sense until scale is reached and even then without an 'edge' such as development experience, owning an existing estate/lettings agency etc there are better ways to deploy funds.

Much better to buy indirectly via one or more REITs where the portfolio of underlying assets will be managed far more cost-effectively and volatility of returns is significantly lower, with returns tax-free if held in an ISA/SIPP.

I also own Realty Income and collect dividends and call option premiums every month.

 

[Forexintradiadarwin]

Real estate as an asset class is fine.

Buying a single illiquid asset directly and dealing with management makes almost no sense until scale is reached and even then without an 'edge' such as development experience, owning an existing estate/lettings agency etc there are better ways to deploy funds.

Much better to buy indirectly via one or more REITs where the portfolio of underlying assets will be managed far more cost-effectively and volatility of returns is significantly lower, with returns tax-free if held in an ISA/SIPP.

I also own Realty Income and collect dividends and call option premiums every month.

Hi Sideways, interesting...if you'd want to invest let's say 50 or 100 grands right now, can you explain in detail what would you do (step by step)? You can PM me if you prefer. Thanks in advance

 

[MasterOfCoin]

Property (as in real estate) as an investment should always be considered as an important part of a diversified portfolio.
Particularly in the UK, where demand consistently exceeds supply and available land for development is scarce.
Profits (returns) of 8-12% per year are the norm for moderately low risk investment profiles.

Whilst, traditionally, this required substantial sums to be committed, like everything else, modern technology and innovation have facilitated various ways of doing this at much more modest scales, so accessible to most.

As this is primarily a forum frequented by mostly would-be traders looking to make big returns on short timescales, I'm somewhat reluctant to go into the details of the very many ways this can be done, but if there is enough genuine interest from those prepared to take a longer view and get rich slowly, then I will happily expand on the topic.

From an investment perspective, it's one of very few asset classes that consistently generates well above inflation returns (and thus a stable, predictable income) over multi generational timescales. You'd be hard put to find better.

Basically, because nearly everybody is always looking for somewhere nicer to live and call their own.

 

[sideways-sid]

Hi Sideways, interesting...if you'd want to invest let's say 50 or 100 grands right now, can you explain in detail what would you do (step by step)? You can PM me if you prefer. Thanks in advance

Buy stock
Sell OtM calls.
Pocket the premium.
Repeat.

The REIT that was mentioned earlier, Realty Income is currently paying USD0.235 monthly dividend (4.1% pa on c.USD69 price), and there are OtM calls for August expiry for example that can be sold for up to c.USD1.05.

The two combined is a better yield than most BtL, with virtually no transaction costs and no tenancy/management headaches.

 

[Forexintradiadarwin]

Buy stock
Sell OtM calls.
Pocket the premium.
Repeat.

The REIT that was mentioned earlier, Realty Income is currently paying USD0.235 monthly dividend (4.1% pa on c.USD69 price), and there are OtM calls for August expiry for example that can be sold for up to c.USD1.05.

The two combined is a better yield than most BtL, with virtually no transaction costs and no tenancy/management headaches.

I think I get it, a friend of mine use to do that, and if I am not wrong this system works always...except when the stock you have bought go downhill. You still make the premium, but your investment is losing value (I know you don't assume the lost until you sell it). My friend had bought Apple and Facebook some years ago, and he has been making a very nice money...while the stock market was bullish, so his assets value are way higher plus all the premiums cashed. I was very tempted to do it, but at the end I kept investing in real estate, plus crypto currencies (as a long term investment, I'll see the result in five years).
And also I keep trading Forex market, as my passion and challenge...