Before you commit, it’s a good idea to consider the following.
Picture yourself in the future and act as if you already own it and then act as if you have to:
- sell it in a hurry
- sell it while taking your time
This one step will save you from hundreds of thousands of pounds of pain.
Ownership is all about the time you need to put into managing an investment property and the costs associated with keeping it. Stress test the costs. In my opinion, it’s best to hire professionals to manage your property.
Ignore sales pitches. A classic example of one to avoid is a company offering a 15-year rental guarantee when you buy through them. It might sound great at first, but when you consider they’re offering a 6% net yield for 15 years with no increase during the term, you’ll realise your yield actually will be effectively minus within four years of inflation stands at 2% per year.
Their offer will grab your attention, but you need to go deeper to check what it really means for you and the implications for your ownership.
Another example is a guaranteed buyback after (say) five years at (say) 115%. This means that you’re only getting a 3% return per year. And you have to consider who is offering the buyback. I’ve seen hundreds of these schemes fail when it’s time to pay up.
UK pension changes 2015
The recent pension changes 2015 give you much more choice in where your pensions are invested. You have a variety of options for your retirement and how to use your pension fund and property investment stands as one of the best.
I’m very interested in these changes. My business teaches people how to invest in property – something that was off limits to many people before the changes. And I’ve been saying property is the new pension since 2008.
Property is the option I chose for my retirement, what about you?
Live with passion and fun,
Brett Alegre-Wood
