Reply to: BTL vs Shares ?

[lukemg]

Yeah but you do any gearing in ISAs? Otherwise you are limited to 7k which is fair enough if you want to steadily save a bit but hardly the path to retirement at 30.

The huge benefit of property is ease of borrowing and gearing.

It's a good point Diescum, the gearing makes a big difference (ask private equity companies). I am benefitting from this on my own home, returns being tax free and guess I don't have the extra resources of some so 7k a year is sufficient investment for me + some SIPP stuff.

[DieScum]

Yeah but you do any gearing in ISAs? Otherwise you are limited to 7k which is fair enough if you want to steadily save a bit but hardly the path to retirement at 30.

The huge benefit of property is ease of borrowing and gearing.

[lukemg]

Your all forgetting one point.

When have some shares ever kicked crap outta your internal doors and run off with a huge leccy bill unpaid.

Hell yes or like a mate of mine who moved for work, rented house to a woman who promptly moved nutter in and stopped paying rent. Nutter suggested that if my mate turned up he would kill him and torch the place. Call the police I hear you say, he denied saying that and said he wasn't even living there...Took months to get what was left of the place back.
ISA's for me thanks.

[GreenerGrass]

One thing to bear in mind is that baby boomers begin to retire in 2015. That is when a lot of investment property will be liquidated fo pensions.

Not necessarily, the rental income is a "never runs out" pension and at least the asset is transferable to your children when you peg it. I guess when people get too crumbly to deal with the tenants and maintain the property then they might sell up if they can't get their kids, or an agency, to manage it.
I think the baby boom factor will affect the stock market more than property, as foretold in Rich Dad's Prophecy.

I'd vote for a mix of commodities, cautious funds and NS&I RPI-linked bonds for the next few years, then some back into BTL deposits once property is better value again.

[Gonzo]

Your all forgetting one point.

When have some shares ever kicked crap outta your internal doors and run off with a huge leccy bill unpaid.

I understand that people these days are buying the properties and leaving them empty.

Why go to the hassle of having tenants when you can just sit back and count the capital growth?

[Euro-commuter]

Your all forgetting one point.

When have some shares ever kicked crap outta your internal doors and run off with a huge leccy bill unpaid.

Or suffered the delightful dilemma of one landlord:

The police suspected that a house was being used for drugs. So they arrived mob-handed, bashed in the doors, and trashed the place, ripping out cupboards etc.

Who was responsible for fixing the damage?

Not the police. They were just doing their job, and the Crown can not be held liable.

Not the tenant. They found no drugs, he didn't have any convictions, and as he said the door was open anyway.

Not the insurance company. This wasn't criminal damage, the damage was quite legal.

[Sockpuppet]

Your all forgetting one point.

When have some shares ever kicked crap outta your internal doors and run off with a huge leccy bill unpaid.

[Euro-commuter]

You need to look at what you get from a BTL over 25 years. With the exception of the last few years, house prices rise at the same rate as wages. If there's a big demand obviously they'll go up, which is what happened over the last few years, but there is a ceiling what percentage of average eranings can go into a mortgage. I think it is now pretty clear that everyone is at the limit of what they can afford, so they won't rise more than earnings from here on in, and they may even correct to historical levels with respect to average earnings at some point. One thing to bear in mind is that baby boomers begin to retire in 2015. That is when a lot of investment property will be liquidated fo pensions.

and when there's a lot of it on sale, prices will go down.

The houses will be bought by tradesmen and care workers, who will be in demand.

[BlasterBates]

You need to look at what you get from a BTL over 25 years. With the exception of the last few years, house prices rise at the same rate as wages. If there's a big demand obviously they'll go up, which is what happened over the last few years, but there is a ceiling what percentage of average eranings can go into a mortgage. I think it is now pretty clear that everyone is at the limit of what they can afford, so they won't rise more than earnings from here on in, and they may even correct to historical levels with respect to average earnings at some point. One thing to bear in mind is that baby boomers begin to retire in 2015. That is when a lot of investment property will be liquidated fo pensions.

[the guy with the bowtie]

So why not geta a guaranteed return on your money now, and buy a flat in 6 years time when house prices bottom out?

Agree it makes sense to hold off if you are confident a housing price decline is coming. Thing is, I've been waiting for a couple of years now. My current thinking is it will only stagnate and not decline markedly. Even if it does go backwards a couple of percentage %, my thoughts are it is worth the risk when looking at a 25 year investment

Then of course it could go back by -10% !

It still feels slightly bonkers to be considering BTL though after all the negative publicity recently

[TheRightStuff]

a few months old but still informative:

http://news.independent.co.uk/busine...cle2160042.ece

In that case the inflation % i should be looking at is RPIX.

Although wife wants a bigger house. OUCH.

[TheRightStuff]

CPI is the figure that removes all the useful stuff like fuel, mortgage, food, clothing, etc and only leaves in the cost of a Playstation and flat panel TV.

CPI is the fudge factor figure that bears no relation to inflation as you and I see it.

HTH

Well I've learnt something new today.
So what's the point of CPI then?
Just another stat that is lower so it looks better then it actually is?

[rootsnall]

CPI is the figure that removes all the useful stuff like fuel, mortgage, food, clothing, etc and only leaves in the cost of a Playstation and flat panel TV.

CPI is the fudge factor figure that bears no relation to inflation as you and I see it.

HTH

CPI is the one the government use to offer nurses a sub 2% phased pay rise while keeping a straight face.

[DimPrawn]

I was thinking of CPI 2.5%. Yes I do know if you get less then inflation it's worth is going down.

CPI is the figure that removes all the useful stuff like fuel, mortgage, food, clothing, etc and only leaves in the cost of a Playstation and flat panel TV.

CPI is the fudge factor figure that bears no relation to inflation as you and I see it.

HTH

[Euro-commuter]

I was thinking of CPI 2.5%. Yes I do know if you get less then inflation it's worth is going down.

Purpose of RPI is to measure inflation. Purpose of CPI is to have an inflation figure < 3%.