It can be made to sound ok and would be great if you could afford it at say 25 to 30 but once that 100K is invested you now only have that £475 a month to play with, and at a retirement age that money is to me more useful in the early days rather than later when I may no longer fully utilise it. The other issue is location, over a ten year period my old southern property increased in value by over 20% wheras my northern one has only increased by around 4% so location is another key factor. It is also why you can move south to North but very hard to do the opposite, I would struggle to get a flat now in the same area south.
I absolutely agree with all that Roy but it doesn't change what I said in response to your comment that it would take 17 years to get your £100k back as that £100k is invested in the property and would be returned if you sell it so rental is income just as much as if you got interest by investing the lump sum.
I absolutely agree with all that Roy but it doesn't change what I said in response to your comment that it would take 17 years to get your £100k back as that £100k is invested in the property and would be returned if you sell it so rental is income just as much as if you got interest by investing the lump sum.
Nobody with any sense would do that if their only income would be the rental. Of course there's a risk in buying property just as there is if investing in the stock market and if you put your £100k in the bank it would have lost money in real terms. Quite right about location, I live in Northumberland and my house would be a kings ransom in the South East but the flip side is that the £100k would have bought 2 properties and probably a higher rental yield.
As I said, I researched it and didn't do it in the end though looking back I regret not doing so at the time, too old now for it to make sense.
Why would you want to move back to the south btw?
Yeah I should have said that was one of the factors that worried me at the time and one of the reasons I didn't do it.
Your pension could buy you an annuity, thats the income contract of over a century. Annuity rates are linked to fixed interest rates and which are linked to interest rates, which are very low. Annuity rates are even lower if you want an income for Mrs, and lower still if you want an income that increases in line with rpi or a fixed percentage. Expect annuity rates to fluctuate, depending on you option choices by between 3% and 4.5%.
I think what I was trying to say is that even if it takes 17 years before you get the money back and technically the property is also worth at least 100K will you still be around to benefit? When you are twenty, seventeen years is not that drastic and your body has changed only slightly, but at sixty waiting seventeen years is high risk as the body has already changed and is not capable of doing tyhings as it used to.
