How to benefit from property investment for retirement income

The five must-dos of property investment as your pension

Property investment with the objective of creating passive income in retirement is gaining in popularity. Investing in property for stunning retirement income is possible. By using an appropriate investment strategy and buying property in the best places to invest in property UK, you’ll be ahead of the game come your retirement date.

However, you’ll need to make sure you take the right actions as you build your property portfolio. These five pointers should form an integral part of an evolving investment strategy.

Get a head start on your investment financing

Lending criteria change on a regular basis. The Bank of England changes its mortgage rules as the economy moves through its cycle. Sometimes you’ll be able to get a buy-to-let mortgage easily. Other times you’ll have to pay a larger deposit, and show that your rent covers the mortgage payments by 140% or more.

It pays to keep on top of the rule changes and understand how the buy-to-let mortgage and remortgage market is developing. Of course, there are things that you can do personally to make sure you’re always a viable borrower. It will ensure that you’ll be able to take advantage of property investment opportunities when they come along. For example:

  • Make sure your credit history is correct
  • Pay off your credit card bills when they come in
  • Put other regular payments on direct debit or standing order, so you never forget them

Finally, take advantage of the benefits of using a buy-to-let mortgage broker. They’ll fill in gaps in your knowledge, and know exactly which lenders will offer the best mortgage terms and conditions for your property investment.

Build and maintain an investment property cash reserve

There are going to be unexpected expenses, and void periods between tenants, that need to be paid for. If the water system fails and floods your buy-to-let property, you’ll need to repair it immediately. If you don’t have the money to do so, your tenants will move out. You’ll be left with an empty property, a mortgage to pay, and no way to fix the property to let again.

Maintaining a cash reserve account will ensure that your investment property portfolio isn’t put at risk. (Read “5 Facts you need to know about a reserve fund for rental properties” to learn how to calculate the size of reserve fund you need to maintain for each property in your portfolio.)

Keep on top of property tax

Like the lending rules, the property tax regime is constantly changing, too.

Keep on top of these rule changes, and you won’t be disadvantaged by them. The main thing with any investment is to make sure that the investment is working as it should. Never invest just to save tax. However, if you know and understand how tax affects your investment, you’ll be able to invest for profit and reduce tax liability.

You’re using a buy-to-let mortgage broker to help you with your financing options. Hire a great accountant to stay ahead of the taxman. The cost of doing so is a tax deductible, too.

Invest in the best property investment opportunities

If you’re investing in property, you’ve got to buy in the best places to invest in UK property. You’ve got to invest in the best property in those places.

Get educated about property investment, and do your research. Make sure that the location and property you buy to benefit from the property fundamentals – shops, schools, transport links, major employers and major investment. It should ensure there will always be demand from tenants and buyers.

Use a great investment property manager

It’s probable that the last thing you want to do as a property investor is to manage a property yourself. Unless you’re great at DIY, numbers, and collecting rent, leave the day-to-day donkey work to a professional.

Choose a property manager with experience, local contacts, and a healthy bank of existing properties on their books. Make sure that they can source the best tenants, and that their tenant vetting process is comprehensive and robust. Ask about the systems they use to monitor and maintain the properties on their books. And ask about how they collect rent and chase late-payers.

Once you’re satisfied that they will do what you need them to, hire them. Review how they are performing once a year. If they prove to be untrustworthy, fire them and get a new investment property manager.

You work hard for your money. It’s about time your money started working hard for your retirement, whenever that is. Property investment done right is the retirement plan that really can give more than it takes.

For information or to discuss how to create a bespoke property investment strategy, contact one of our team today on +44 (0)207 923 6100. Your retirement should be the best time of your life. Let us help make it so.

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
May 7, 2017

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