Investment & Investing

I agree with regards the yield. However most properties are mortgaged essentially leaveraged investments. Esp with the low interest rates they are likely to out perform equities that are cash held. I wouldsteer clear of leaveraged equities even professionals have ruined themselves with them.

leaveraged equities

Gotta love Leaveraged equities!

It depends what you define as risk. As you say there's the lost earnings, £300k or whatever invested elsewhere could earn a decent amount.

There's the costs of the property upkeep and bills. There's also the increased stamp duty on a second property which could be hefty.

If you want a second property as an option to live in or whatever then it's worth keeping.

If you want it to make money then you're probably better selling it and putting the money elsewhere.

Yea that’s true but in the actual case we are describing (Hippie’s) it’s not leveraged at all.

body corp

You what now?

The stuff you pay to have flats insured and grass mowed and bins emptied. I can never remember what you lot call it. We call it body corporate fees.

"service charges"

The initial investment is already invested. This ain't no buy to let situation and I don't define money I never had as a 'risk'. Selling my flat and having the new place I buy collapse into a pile of dust is a risk. Not earning money off something, not much of a risk.

Stamp duty - is it higher if you already own one property?

I would be living in the second property, yes.

I have very little appetite for 'investing' in that sense. I'd rather pull out my pubes one by one than follow stock markets. Then again, if tenants trash my flat I'd be spending my spare time concocting more and more elaborate revenge schemes. So, that could be a time suck...

I have very little appetite for 'investing' in that sense. I'd rather pull out my pubes one by one than follow stock markets.

Buy some global ETFs (i.e. Vanguard), they're just an aggregate of every stock. You basically never need to look at them until you die/retire/need cash.

Your second home will cost another 3% in stamp duty if you keep your current home.

If you plan to live in your second home then you have 3 years to sell your old home and claim the 3% back from HMRC.

Yeah, I did that with pension fund. They started spamming me all of a sudden. Unsub.

Cheers. Something to bare bear black sheep in mind then.

if this only happens between tenants and before selling, who cares? Couple of grand is fuck all when you're talking about buying a house.

You already have the house though. If that’s how you want to spend your capital, more power to you.

Unless you retire/need money during a recession or crisis.
They happen quite often..sadly.
Timing is key.

Retirement you can plan for and start cashing out so you're not locked into a pension fund. Also by retirement you would hope to have a few options to choose from. The other shit you can't plan for (hence my desire to hang onto the zombie apocalypse shelter)

Most people i know have retirement sprung on them by virtue of a redundancy package. If your pot is 40% down in peak valuation it wouldn't be a good time to take you 25% tax free lump sum or buy an annuity.
No wonder companies were desperate to get rid of the 'gold plated' pensions.

I don't have my own house or anything but thought I would chime in on the property investment chat. I recently read 'property magic' by Simon Zutshi just for some buying tips more than anything. Not something I'd get involved in I don't think. Having said that, it was interesting showing an example of how if house prices double every 10-15 years, even if you aren't making a huge amount each month, because of leverage, you can get a huge ROI in the long run.

even if you aren't making a huge amount each month, because of leverage, you can get a huge ROI in the long run

this.
I moved recently and decided to take a larger mortgage and keep some savings/investments

Regardless of the size of the mortgage then you get the full benefit of any house price increases (/losses)
Obv more of a risk since both can go up and down, but I took the view that it was likely that I'd make more by having, say, 100k in an ETF and 100k more on the mortgage than not.

The other consideration is the house needs a load of work so if I took the smallest mortgage I could then the house gets no improvements ever.

you should take anything on motley fool with a pinch of salt. their writers are basically paid on volume of articles now and come up with some real crap; often contradicting their old views!

i was bought the below ~10 yrs ago by my grandfather who has done very well for himself through investing. it is a very good book and teaches you all the fundamentals - written by an esteemed FT author

day to day i would also highly recommend the investor's chronicle podcast, as well as FT's money show podcast. while the IC's companies and markets show is currently suspended, they still get a lot of interesting people on (read; fund managers). they had the polar capital technology fund manager on earlier this year - seriously smart guy who really knows his shit... although that whole sector has gone bonkers this year, the polar capital fund has outperformed tech sector ETFs

Unfortunately mortgage interest can no longer be classified as an 100% expense for most people. After tax changes that have happened in recent years and now fully tampered in.

Essentially it means a house that is just braking even and one would assume as it has been for decades no income tax is due because there is no profit, would now be considered profitable as interest is written off at marginal income tax rate.
Meaning you have to put your hand in your own pocket to keep the tax man happy on a property that breaking even.
The solution is to buy high yield (risky) properties or buy cash (unrealistic in london)

This is decent calculator to give you idea

https://www.privatefinance.co.uk/calculators/buy-to-let-calculator

Wasn't talking about buying loads of houses, I'm happy with mine.
Just that it often makes sense to have a large mortgage and save what you could otherwise have put into the deposit elsewhere, as you still get the increase on the house value regardless of whether you own 10% of it or 100%

I see.. apologies.
We've been very lucky with low interest rates and big mortgages are doable.

apologies

Ah, didn't mean to come across as short, was just I think generally referring to Hippy's post a little further back thinking of putting money somewhere that might work better than it being tied up by owning a place 100%

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