With recent events and the cost of living crisis, you may be concerned about the future of your investments.
If, like many investors, you have noticed that pensions don’t offer the kind of promising returns they used to, and stocks and shares are a little too volatile for your liking, you may be wondering if you can safeguard your retirement with property.
If you’re a little bewildered by all the property investment strategies out there, I get it. There’s so much information out there it can be difficult to sift through it all. The one you’re most likely to see if buy-to-let, and with good reason.
Buy-to-let is a recognised property strategy for investors that has continued to perform right through recent events. Yes, there is a risk, as with all investments, but you can mitigate that risk with careful planning, research, and the right team at your back.
***IMPORTANT*** In order to successfully safeguard your retirement with property, I would urge you to consult with a qualified financial advisor. As I am not FCA registered, the contents of this blog are for informational purposes only.
What if you already own buy-to-let property?
You may not have considered that your buy-to-let property could supplement or even replace a pension, but it’s not too late to start future-proofing. Check regularly to make sure that your properties are performing well with good yields.
If you’re satisfied that your existing properties are in a good area with an acceptable yield, don’t rest on your laurels and check with an accountant or financial advisor that your investments are set up to grow your wealth efficiently.
For example, if you already own multiple buy-to-let properties in your own name, consider moving into a limited company. This way you can pass on your properties to family members while lessening the potential tax burden and safeguarding your assets.
Make sure that existing appliances in your properties are the highest standard they can be, with adequate guarantees and up-to-date PAT testing. This ensures greater energy efficiency, prolongs appliance life and lessens the likelihood of costly leaks or repairs.
Some landlords are reluctant to increase rents, particularly since the pandemic. If this is you, then you could be losing out as interest rates increase and new legislation from the Scottish Government limits rent increases.
TIP: Review your tenancy agreement to make sure that it takes account of latest legislation, so that you are protected in the event of a tenant dispute.
For new investors
If you’re self-employed, buy-to-let can be an excellent way to boost your pension pot as you’re making passive income which can be reinvested. You can generate significant wealth with a carefully chosen portfolio.
This means choosing wisely from the start and thoroughly researching your chosen area, asking questions such as:
- What is the average yield of a buy-to-let? Is it enough to provide a stable income that can supplement or take the place of a pension if you are self-employed?
- Is there significant demand for housing in this area? Rental demand ensures that you can not only charge sufficient rent to provide good passive income, but you are less likely to suffer void periods which could impact your pension.
- Is there anything which might positively or negatively affect the local market? Recent planning applications or local events may mean the removal or addition of significant amenities which will impact rental yields.
- What are the acquisition costs of the property, including refurbishment?
It’s tempting to take a low-cost property in your chosen area, but be wary of hidden costs and always look closely before putting in an offer.
As you can see, these are questions that can’t be adequately answered with a quick internet search (and I wouldn’t advise this as a general rule) so enlisting the services of a professional property sourcer or estate agent is a must.
What about other property investment strategies?
I’ve focussed on buy-to-let here because, as a way to safeguard your retirement with property, it’s hard to beat. However I’d be remiss not to mention other strategies such as buy to flip and BRRR (buy, refurbish, rent, refinance)
Buy-to-flip isn’t an investment strategy in the same way as buy-to-let as you only own the property for a short time before selling it on. Where it can be useful is in raising capital and making a profit in a reasonable amount of time.
BRRR is similarly good for raising capital and involves buying a property, refurbishing it, renting it out and then allowing a period of time for the property to appreciate in value. You can then withdraw equity and repeat the process.
Not many investors can afford to buy outright, or simply may not want to. If this is you, or you’re wary of taking on an interest-only mortgage, this might be something to consider. You can read more about buy-to-flip and BRRR here.
Advice from a property professional:
As an experienced property sourcer and developer, I can state that it’s good news; you can safeguard your retirement with property.
In this time of housing shortages and uncertainty, you also have the opportunity to help provide someone with a safe, sound and secure home which, if you are ethically inclined, is a pleasant bonus.
All the strategies mentioned in this blog are highly effective but do require extensive experience and I don’t recommend that anyone undertake them without an experienced team behind them.
You’ll need to do your due diligence and work out an investment strategy that’s tailored to you, but this is absolutely worth it. Property appreciates over time, particularly if you have been able to buy below market value.
There can be no greater test of an investment strategy than a cost of living crisis, and property has passed with flying colours. It’s consistently, repeatedly proved that it’s literally ‘safe as houses’.
In conclusion
I hope I’ve been able to clarify the ways in which you can safeguard your retirement with property. No investment is without risk, but property remains one of the best investment options and that’s not likely to change any time soon.
I’m always happy to offer the benefit of my own experience as everyone has to start somewhere, so please don’t hesitate to get in touch for more information. Your first consultation is always free and without obligation.
Written by John Nicol
Founder, Ascension Property Investments
Get in touch on 01383 603091 or email me via [email protected]
