Is it Better to Invest in Property or the Stock Market?
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- Опубліковано 22 тра 2024
- Should we invest in the stock market or in the property market? This is not a simple question, but in this video, we will look at the pros and cons of both types of investment and also their historic returns and risk to see which has performed the best.
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Timestamps
00:00 Introduction
00:24 What Kind of Property?
00:50 Pros and Cons
10:44 Which gives you the best return on investment?
17:14 Conclusion
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Mr Vanguard's roof never leaks.
🤣🤣🤣
It might do but we’ve already paid for it with our relatively minuscule fees 😅
Purchase price …75k…
Renovation 10k
Refinance 105k
House was effectively 7k.
Returns £400 a month…
This is the worst deal I have done out of the twenty properties I own.
Some I have refinanced out with money left, can you do that with vanguard?
Property is that good they are pumping money into it!
HAHAHA ! , Jack bogle the man of construction hahaha
Property is far too much of a hassle for me. I'm sticking to broad market index funds plus a few ETFs which I can auto-DCA and forget.
Depends what level of residential property you buy tbh. I have a portfolio of new/ish good looking properties in better than average areas that cover a higher income earner audience and get little to no problems, and with thr capital appreciation included with the net income, I can make a return of at least 25% each property.
I'd always say both is best
I'm of the same opinion. Plus the general public (Mainly young leftys) hate landlords.
There's too many cons to property.
- CGT.
- Stamp Duty.
- Solicitor Fees.
- Estate Agent Fees.
- Properties can sit empty.
- Require maintenance and repairs.
- Evictions and bad tenants.
- Lack of liquidity.
- Forms part of your estate for IHT purposes, unlike pensions.
- Insurance.
- Can keep you in one location. Due to not wanting to be a long distance landlord.
If I ever do it I'd do it through a limited company so my children can become the director one day. I'd just use the profits to fund a pension and pay for other benefits like pensions, life assurance, private medical insurance and even child private education.
The effort gap is so huge there's no contest.
Liquidity plays a big part. You can literally get rid of your funds within seconds. Imagine having to find a buyer and and lawyers and so many hidden fees if you wanna sell your property.
And dealing with estate agents! Torture
And then see the deal fall through just to put you back to square one
I'm invested in both, the stock market is more liquid and less hassle than dealing with property.
Same here... property is definitely more hassle but it's good to diversify assets, and people will always need a place to live.
Another negative for btls are increased legislation and a general sentiment that landlords are the source of all evil. The level of hassle is high
Yes new EICR and local councils now require licensing which is costly
Why do you think that’s happened?
But if you stay, you reap the Financial rewards of that as more landlords leave and the supply and demand stretches further. Goes both ways
My Vanguard boiler never breaks down and the roof never leaks.
There is one feature that makes or breaks above all the factors you mention, you are unable to sell a portion of a house (a room) if you need to cash in for whatever reason, I can always sell 5% or 10% of my portfolio within my ISA and after 2 working days the money is on the bank, it takes me a minute. Maybe the alternative is to extend the B2L mortgage (if you find the bank and the cost of the transaction it is not too high.... takes a lot effort / time / money)
RoA - Return on Arse, love it Ramin !
I would hold both stocks and residential property. Leverage is the trump card with holding property. Also you can add value by improving or extending property. Its more work though.
In the UK a second property is liable for capital gains tax. Yes you can off set some property costs, but it’s still a big chunk of money and the government seem to be reducing capital gains allowance to almost nothing.
Yes good point. Although I think the days of massive capital gains are over. I think we will get stagnation and maybe a mild decline.
Also a lot of people don't count costs such as mortgage interest payments and finance arrangement costs when they sell these buy to lets as part of their returns. If you get a new mortgage every 3-5 years and own the property for 20 years these costs add up.
And of course, capital gains tax is calculated on the nominal gain, not the real gain, reducing real capital losses further
And to think I went and saw a financial advisor from unbiased just this end of March. Granted, it was only an assessment, but I should've just waited instead hahahaha. appreciate the video Ramin
how did it go? I have a call set up, but so far my impression - at least speaking to HL was that they do less than I do! They basically said their offer is "investing in funds" - they exclude all other assets - gilts, corporate bonds, gold, property, etc.
@@aldoromano-be8su It was almost the same as the vid, property is illiquid and less tax efficient compared to investing in an ISA. less headache as well if you get a bad tenant.
it'd be nice to hedge and have both, but I can only properly go for one for now and probably pivot if needed.
A great video - again. :)
Anyone thinking about going into property / renting needs to look at the local market. National figures are not very useful.
For my London flat I get about 4% after overheads and before inflation is subtracted.
The government has been increasing regulations too and this looks likely to continue. So, there can be big surprise bills. Insulation and new electrical standards are current examples.
I am now selling my flat. It just does not have the yield in the current market conditions.
Thank you for sharing @kevinu.k.7042 and thank you for support us on UA-cam! Ramin
I'm just getting into BTL alongside my stocks (SIPP and ISA) and agree with all the points raised here. Another pro for property is that as a retired person, buying and renovating a house has certainly given plenty to do...no chance of getting bored in retirement!
Great video! Thank you
The home that you live in does generate a kind of rental income, the rent that you are not paying by living there. When that is taken into account, its returns can look much better.
That's like saying that being teetotal generates an income because you don't have to buy wine.
Opportunity costs are not income.
What? No, your primary residence does not generate Any income because there is ZERO cash flow. It’s 100% money out.
I rent and my investments cover the rent and then some. I guess I should buy if the house prices decline a bit next year, but financially it's not the logical choice.
@@chargers9221 and @ChrisShawUK You extract value from the home that you live in that is equal to the rent that you would have otherwise paid. The fact that it doesn't show up as cash in your bank account does not mean that you should ignore it. It is a real and significant component of the return from owning your own home. If you want to make good financial decisions, it's important to include this when comparing owning your home to alternative investments.
The home you live in is a roof over your head, it does not preclude you from having a stocks and shares ISA
Provided much info I didn't know before but perhaps 3 possible omissions 1) didn't mention leveraged equity products e.g. leveraged ETFs which can multiply 2/3x an indexes gains 2) the increasing legal/compliance burden of owning property 3) can lose all your money in equity whilst property/land will always retain some value
Not in a index fund
If you buy a property with RAAC or unsafe cladding, or some other future hazard but unknown at time of purchase, it's pretty close to zero.
I find it very hard to come up with an even hypothetical case where someone loses all their money in a stock. You can always sell at a loss and regain some of your investment
I bought a good amount of TSLA and AMD today, I'm focused on the growth of my portfolio this year
Same here, My TSLA is for long term holding, last weekend My portfolio made it to $20m total, started from $1m, investing weekly dividends in long term ETFS that’s my route. to the moon.
Are you a pro? how did you achieve this
No I'm not, Katherine Elizabeth Humphreys is behind my growth, look her up or make proper research for one who is suitable with your goals.
I'm roughly 50/50 between financial and BTL net assets which works well for me. The BTL gives me a steady income so that I don't have to keep on drawing down from my equities. I use an agency (10% commission) to reduce the hassle of maintaining the properties. If you look after your properties well the costs are high (24% of gross rent n my case). The rental income has gone up faster than inflation but I do worry about interest rates and inflation coming down over the next 3 years.
I have both. If you put property in a limited company, there’s no inheritance tax, same with a pension; otherwise holding property in your personal name will generate inheritance tax and the same with investments outside an ISA
I've been thinking about this very topic recently. Great video - thanks!
Glad you enjoyed it @TastySanchez
Fun fact: The prices of Prime Central London residential property has not moved since 2014. In fact, it has dropped slightly. In inflation adjusted terms, there is a very large loss.
Hi, may I know the source of this info? Thanks
@@blhlow4904 Rightmove! W11, W8, W14, SW1, SW7. It’s common knowledge and even agents like Knight Frank and Savills have written about it.
A mate of mine sold his flat for 1.6m when the usd was 1.80, 2.88m usd in around 2013. That same flat is 1.4m now, about 1.75m usd...... For the intl owners it's been a disaster
Ramin is very soothing to listen to.
So pleased you enjoyed it @MultiMogman
I’m 50% invested in property and 50% invested in Vanguard VWRP global index fund. I helps me sleep better
One important differentiation is the ability to utilize leverage... If you're looking to take advantage of an economic boom-bust cycle, properties give you the chance to pocket more profit... I know trading is not the idea for this channel... just thought it is worth putting it out there
Leverage works both ways can you explain why it would be bad
You can leverage stocks too, though buying stocks on margin carries margin call risks and volatility of stocks can be a problem. You can still end with negative equity with property.
You can buy Investment Trusts which leverage to increase their profits 🤷🏻
Very well argued and balanced
Thank you I am glad you enjoyed it @michelhedley1805
Another great video and great analysis.
Much appreciated @bprosperie
Absolutely love it!!! I'll have to be financially stable in every sense before purchasing my first supercar. The best thing to do with your money is to invest rightly because money left saving will end up with no returns
Thankyou.
I always look up to your video for update. I hit 310k today I am truly grateful for all the knowledge and nuggets you have given me over the past few months. Started with 70k in few weeks,Thanks to Harriet Cohen for her helpful guide.
I've always invested in property until I was 53. I then stopped renovating and development works. I now put all my spare money into globally index accumulation funds. ISA's first then SIPP, then JISA's. As and when mortgages come due, I will consider selling a house every 2-3 years to increase fund holdings in equities, which essentially mean easy access to money. If the markets are down, I will just put a mortgage on a property if I 'NEED' the money. Prob. a good time to put that mortgaged money into equities !!
Great video.
I’m interested in maybe adding REITs to my portfolio.
I’d love to see REITs vs property
Problem is REITs are mostly commercial, not domestic renting, although I think there are some student rental REITS
@@aldoromano-be8su Not sure why that is an issue for an investment portfolio?
I have between 10% and 15% of my portfolio in UK REITs. A good option to balance in between equities and bonds.
Thanks for the great video, Ramin! I ventured into buy-to-let early because it seemed like a popular way to make money. I didn't know anyone with a stockbroker or fully understand stocks back then. Now, with mobile apps simplifying stock investments, I've been tempted to diversify. It's nice to invest smaller amounts rather than wait for a property deal. Overall, I'm happy with my decision since owning properties and earning rent provide security. I agree with you-having real estate to rely on helps me worry less about equity fluctuations. While we tend to stick to what we know, it's good to step out of our comfort zones and learn, especially when we're young and have time to recover from mistakes.
Arguably, I say that buying a house and living in it does actually generate an income in terms of the rent you don't have to pay. Its a sort of invisible income, but currently working well for me (with no rent or mortgage to pay).
PS - Don't tell the tax man, or he will regard the "rent" you pay yourself as something liable for income tax.
The reason why I started investing in property was for this very reason. My pension was invested (in the 80’s/90’s) in Equities and that period was very volatile. Exchange rate mechanism equities prices and pension funds going bust. It wasn’t a good time. Having something I could touch and feel was important to me.
I hold both - and it has made me feel more secure and able to not worry about the long term!
Thanks for the video Ramin.
There’s definitely a case for both equity and buy-to-let.
If buy-to-let is your job then that’s fine, but if it’s a side hustle, like it is for me, then it is a very active way of making “passive” income.
Dealing with tenants, updating decor etc, those Saturday night calls about the boiler. Stressful and hard work. The differences in return do not warrant this amount of effort.
I’m currently selling my buy-to-let to invest in my pension and ISA, because I like sitting on my arse and not paying tax!
As you mentioned its the total return on property and the leveraged yield you earn after adjusting for risk that 'can' sometimes lead to better returns than equities in the long run.
Few more cons of BTL that were not mentioned
1. Taxation on Entry (Stamp Duty with Surcharge) and Taxation on Exit (Capital Gains Tax)
2. Endless Legislation (Such as Section 21 Removal, Renters Reform Bill)
3. Increased Costs eating into profits . (Interest rates , Repair Costs, Estate Agency fee etc) . With Section 24 , You are effectively taxed on Turnover and not on profits .With interest rates at the current levels, a typical Landlord with 1-2 properties will be lucky if he/she breaks even
4. General Anti Landlord sentiment by both political parties used for cheap political points scoring .
If you buy above average properties in above average areas you make great gains with a target tenant audience that gives you very little bother. In a good amount of circumstances you get what you pay for.
The legislations aren't that bad if you have a good portfolio and management, and actually benefits you financially as more landlords get scared off meaning supply and demand gets worse.
Section 21 Removal leaves landlords with no other option except going to courts for evicting problem tenants . I hope you are aware how over burdened the courts are . I used to own a rental property . Too much hassle for me . Sold off and invested proceeds in S&P 500 Core and Tech indexes under ISA tax wrappers . Not touching BTL again with a Bargepole
@@prasa1 I get that to an extent, but the need for s21 is completely subjective. S21 to remove lesser tenants, mostly goes down to poor screening. Selling the property, it's a long term asset. There are other measures to this, but the s21 won't be abolished at least until courts are able to deal with the backlog. I've never required the use of a section 21, again it mainly goes down to management and the type of portfolio you have.
The disadvantages you mention by default translate to making more money due to the landlords who get scared out of the market creating a wider supply and demand market for those who remain, meaning higher rents for the ones who stay
25%+ ROI and very little bother with certain choice of rental portfolio over a 14% return stock is just a no brainer for my personal situation. But I like to do a bit of both.
Rents and House prices can only go up so much as people can afford. In Scotland, you already have rent controls. There is nothing stopping a future Labour government to introduce that to Rest of UK irrespective of costs incurred by landlords. Housing is an area where there can be a lot of govt intervention and I personally don’t like it
@@prasa1 you don't need everyone to be able to afford a low stock product, you only need the better prospects, you're always going to find someone who can afford realistically in this current market.
Scotland is another example of rents skyrocketing because of landlords leaving the sector and ones who remain assessing risk by increasing aswell as tennants demand increasing which is causing further bidding wars. That's just confirming the point I'm making. It's all in the statistics, rent controls increase rents not stagnate them.
Government knows this, but it makes them money to keep it this way. You're going to get risks and social issues with most investment or achievement, doesn't mean you quit because something isn't guaranteed. If that's the case, don't invest in anything at all since nothing is guaranteed to be rainbows and sunshine
Apart from the great expense and hassle involved in buying and selling and managing property, its great problem is that any money tied up in it can't be gradually spent down. I'm 65 and want to spend my capital, eroding it over time so I even rent where I live. I have pensions to cover my basic costs. I can't see how dying rich is avoidable if invested in property and relying on rent for income.
Borrow against the property so the rent covers 110% of the loan payments and spend the capital.
You mean equity release. That’s a bad way to go. Run the numbers based on the interest they add. You pay back eye watering amounts.
@@JohnSmith-gy8rc how can that be done when retired? I doubt I could get a mortgage and even if I could the max age limit would mean only very short term. If I could find a way, I would.
@@VoiceOfThe yes, and ER effectively removes the potential to relocate as that could cause big problems and expenses.
@@adm58 Downsize then - there is always a way to release equity from real estate.
The end of the easy money era means BTL is, if not dead, then still a very poor reward vs risk proposition. You ain't getting any significant capital growth, and yields are maybe 1-2% above borrowing costs, so the advantage of deploying a truckload of leverage that used to be property's ace in the hole is greatly blunted. Throw in unfavourable tax and regulation and its clear that the overlord are keen to dissuade property investors.
From my experience as someone that considered the possible idea for it, it seems that its mostly the people without the money or that never had to deal with a second or more properties that are super enthusiastic about investing in property to rent out. Especially among people that are renting and cant even save up for a 1st house deposit at first place as they tend to believe that landlors are living the dream with hassle free money raining on them. But spending more than 10 seconds going over the topic, it becomes apparent that its not the hassle free easy money that people think of (mainly for the reasons mentioned in the video). Overall, its not for everybody and one has to have something going for them either by knowing their way around the system or perhaps by being into decorating by trade in order to save themselves a lot of the building costs that will inevitably be needed (and then a question arises on how much we can view this as passive income).
I think you are spot on. The people who love property as an investment the most are those who don't have any investments at all.
A brilliant video. I personally do both. Invest in the VHVG but also But to Let Properties to help increase my stocks each month.
That’s smart
Same, most of my rental income goes into stocks.
Something on my mind is that most investors would purchase a BTL property with an interest only mortgage. So leverage + mortgage costs. It would be good to factor these points somehow to reflect the average investors experience.
Leverage is an important factor. I've made over 20% pa on my BTL over 25 years after factoring in tax if I sold. My initial investment was £5k including costs. If I'd invested that in equities I'd have made around 9% pa and wouldn't have received any income. I bought 25 years ago though and it was initially my home. It's not worth it now.
Thanks Ramin. Perfect balance of analysis as usual.
I have a large SIPP and looked into ways to use it to buy property. It felt like it was loaded with fees for advisors and was going to suck a large % out. Is this something you have any knowledge of and can help me and your members understand better?
For me, married to an estate agent and a father in law who is a builder, the potential is good but my cash is all in SIPP.
Thanks, this was really interesting and covered lots of aspects I'd never thought of. I've pitched totally with stack market which I now know suits the fact I'm not phased by it being intangible and it is less effort. The difference between buying to live and buying to let was something I'd not really considered and a second place to stay would be for the fun of it but very likely come with a cost ... as most fun things do.
Glad it was helpful @davidcollier6520
This is so useful, I wonder what the correlation is between gold-property-stocks is? I personally have been put off property because of all of its pitfalls, and the leasehold stuff didn't help. But I feel if I were to invest in a small house as an investment, then it could be an interesting hedge.
The answer is to have a bit of both, isn't it? BTL no longer works if highly leveraged, esp if a higher rate taxpayer, but a Ltd company solves that issue. Keys are not to have too much debt, manage yourself and pick your tenants carefully.
Agree double so if property is on lower end of market.
But there a admin hassles/expenses with running a limited company and you get double taxed if you take money out (corporation and income)?
@@user-sg1wn7ho2r Nope - corp tax only on profit, as salary is an expense to the corp but you will pay normal income tax on the salary you draw.
Great video Ramin! Leverage makes BTL property better imo but it’s not for everybody. I love the liquidity & tax benefits of equities. I £ average into both the property market and equities. I aim for 50:50 in both but I’m slightly property skewed atm.
Thanks for sharing @anthonyuzum
BOTH, period.
It’s called portfolio diversification.
If you take how an average home has appreciated in value over the past 25 years and subtract the cost of interest on the mortgage as well as all the costs of maintenance & property taxes it works out to roughly a 5-6% annual return on investment, which isn’t substantial considering that’s only a few basis points higher than inflation. I also figure the real return is lower when you consider how much money people actually spend on the upkeep of their homes plus the cost of renovating which doesn’t always increase the resale value as much as homeowners think (and they end up refinancing it to do so eating away at equity).
One thing which is in favour of property is that a low cost leverage is available. Whereas leverage for stocks would be high interest with usual high risk. Therefore if we compare property and stock with equal amounts of leverage built in, then property on paper may look like doing better. But bad tenants, maintenance costs may pull it down.
Owning your own home has comparable cashflows to buy-to-lets. When you have your own home, you do not have to pay rent, therefore you are making a saving which is comparable to the rent received if you were to let it out. Owning your own home has less headaches, less costs and is much more tax efficient. Though owning your own home is a balance between investment and consumption considerations and carries idiosyncratic risk by itself.
What about getting exposure to property through stocks, I.e. REITs etc. Best of both worlds?
Personally I prefer to go all in with a global index fund and rent.
You have diversification with real estate in there anyway, so you’ve all bases covered.
Besides property is illiquid and many people don’t factor in maintenance costs, taxes and interest when running the numbers.
One could also benefit from the residential property market indirectly by owning the equity of home builders. This solves the cost of ownership and liquidity problems associated with direct ownership of a BTL, for example. There may also be ETFs that I don't know about. Furthermore, there is the commercial property market (rather than just residential).
And by owning banks who earn the interest from the leverage
Or you could own the equity of homeowners, for example Invitation Homes or American Homes 4 Rent. That should provide more direct exposure.
For property it depends on your country, where I live (Spain) there's a 7% sales tax when you buy a place (+ estate agent of 3% for the buyer). This means Global index fund very attractive - although there's no tax shelters here.
Recently bought some recommended stocks and now they are just penny stocks. There seems to be more negative portfolios in the last 3rd half of 2023 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?
Would investing into a property fund equate to a BTL but without the administration hassle?
I think the only addition for housing is how involved you would want to be if the property needed renovation that percentage could go up dramatically, if you ever watch homes under the hammer they are normally make around the 7% of the price of the property per year, but I've seen some that are 14%+ and when you think the person put in a 25% deposit and they are now gaining that much every two years from the property, which is just impossible with stocks in the long term the best investors in the stock market have ever have got close to that.
2:44 0.2% all in seems low to me. Yes it’s possible, but when comparing I’d probably use something a little closer to average, 0.3-0.5
I heard in one of your videos say that you use R for your graphs etc, I'm starting to learn but struggling, could I ask how you learned how to use the language and would you recommend any resources to learn to create plots graphs etc? I'm not looking to become an expert, just have decent understanding as I'm interested in data analysis. Thanks.
In my opinion the only sensible way to “invest” in housing is what I do, rent out rooms to lodgers. I have a couple of friends living with me, I charge them under market rent, I’d rather not live on my own anyway, but it means my 80k down payment on the house generates a yield of around 15% AFTER deducting the mortgage interest cost (the main actual cost of the investment)
I'm looking to do this this year
Dunno, the buy to let market is scarier because its less liquid, and at worst times might be incredibly illiquid.
Can you do a video about Return on Arse? I'm sure it would be very popular :)
🤣 that's how I kept hearing it too
rental properties can provide better margins, however they are a hassle and they can turn into money pits...
If I could by an ETF that just buys houses and let’s them out I might. I suspect after fees it wouldn’t be a great buy though and my REITs haven’t performed particularly well. But my global all caps boiler never breaks or locks it’s self out so I’ll stick with that.
Would the volatility of someones single house be the same as the property market that contains a variety of housing?
Bingo
Do the returns from the stock market in the report include compounded returns? if so the stock returns seem pretty low. Without the magic of compunding you're better off investing in properties in the long run; like you said less risk!
Are the returns for property net returns, taking costs into account, or are they gross returns? Because that probably makes a substantial difference.
Yes, I was wondering this too. In particular, are mortgage costs being taken into account when calculating the returns?
I have no pension, but have 2 btl properties both on interest only mortgages i use the £1000 per month income gained from the rent and invest that into a global etf. I’m getting capital appreciation on the properties and also Investing money into the markets which isn’t costing me anything? Is this a good strategy?🤷🏻
Sounds like you're missing out on the tax relief you would get paying into a pension
This analysis assumes you are buying the buy to let in cash. If you are buying with a mortgage you are getting geared returns which over the long run smashes stocks (assuming these stocks are not geared ofc)
So what are the options for people that find the volatility of stocks too stressful, but also owning property too much hassle... Bonds and money market funds? 🤔
Low stress / hassle > lower returns
This year is definitely going to be worse. Last year, I made terrible investing selections that cost me a large sum of money that I would not have lost if I hadn't been so concerned about my portfolio. I couldn't determine whether to start paying for a house or continue investing. I eventually sold my stocks, and the house turned out to be more of a fixer-upper than I had expected. I don't know how much longer I can do this.
Stocks is an investment, BTL is running a business - stocks wont call you when your busy at work/evenings/weekends/holidays. They are always with you, and you can just pack up and leave - its in your pocket - no need to worry about changing legislation, elections etc. Did BTL and just not for me - I want my investments to reduce the stress in my life, not to increase it. And managing an agent is as bad if nor worse than a tenant, as its not their money and they dont really care, and at the end of the day - everything is landlords resoonsibility (courts etc). Plus - a lot easier to pass it on, when you go, do dont leave a massive headache to your loved ones (ie to remortgage within 6-12months etc) - everything a lot easier. But I like the peace and sense of freedom most!
Yes! As a renter I've had to live under too many unreachable landlords that treated it as a 'passive' investment rather than running a business with responsibilities that provides a service.
@@Dan-cd6hm property is a people business, and all of the “fun” coming with it - there are paychos on both ends - I wouldnt call my landlord repeatedly at literally the middle of the night saying my boiler stopped working (apparently it just the pressure in the boiler dropped, costing me £75 call out fee…) - what can I do at 2am??? I prefer working with my spreadsheet more. Also, many comments on how amazing leveraging is - it could be - but it could be not - having millions in debt over your head, it could fall like the house of cards if a few circumstances would align - and given that you need to sign personal guarantee - could wipe you off in no time. When the tide goes, you will see who was swimming naked. If markets drop, you know they will come back, its all theoretical, you dont have a bank breathing to your neck :)
I’ve worked in the property industry for 10 years. How many BTL properties do I have? 0. They are not worth the hassle.
Property is generally overpriced so why would you buy it?
Impressive stuff, especially the return from the P2P lending market.
Glad you enjoyed it @simoneloizzo4178
I owned and managed BTL property in St. Louis Mo for 16 years.
Why bother, unless you like being a property manager, and do not mind spending time in court Re: Landlord vs tenant rent and damages suits.
Equities are far cleaner answer. Place 1 year annual fixed costs in money market account for down stock market year, so you don't have to sell at a bad time.
Most stock market downturns are not long lived.
My ETFs don’t need a new boiler, carpet, or have stamp duty tax and silly solicitor fees
in the stock market you dont have to deal with people
The returns data on housing reflects unlevered returns. Including leverage which is common for property, the returns are much more significant 😂
Property returns are leveraged with mortgages. Index funds generally aren't. A big difference
Where’s the comparison of BTL returns vs global equity index fund returns in an ISA or pension, after tax in the UK? Accounting for stamp duty, BTL interest rates and capital gains tax. Do the benefits of leverage and someone else paying the mortgage outweigh the tax benefits of ISAs and pensions? This video seems to be missing a lot of essential information
Leverage is the only reason for BTL. Oh and that your competition in the market are 90% owner occupiers who trade 2 or 3 times in your life so not price aware. Otherwise it's a right hassle, I know, I have 50 of the sods.
Yeh if you do property like that it’s an issue.
BTL definitely not worth getting into now unless you’re doing it as a business under LTD company and not over leveraged.
Never invest in something the government actively discourages through tax and other legislative measures.
BTL are surely reducing as the DB lump sums won’t be as common ? Housing is more of a political football these days and will be taxed, rent controls and standards etc will drive the small single property holders out.
2 questions
1) do you own your own home you are living in?
2) the adjusted returns on housing stats you showed, does it take into account the leverage used in buy to lets?
Property as an investment is dead for now. Too many people are living hand to mouth. A lot of people are going to stop paying rent. The recent changes in law mean that unless you are invested as a limited liability company, it is uneconomic to be a landlord.
I recently read a new study that looked at returns after inflation and I think it said property prices have basically stagnated over the last 20 years. Can anyone corroborate this?
Yep! I bought a house for 315k twenty years ago, have spent 150k of improvements on it and it's worth 550k today.
RPI was 194 in 2005 and it's 383 today. If my house had kept price with inflation then it would be worth 315*383/194 + 150 = 771 today.
So I'm about 200 grand down in today's money.
Efficient market theory. Property is very individual and there is a lot of scope for inefficient pricing which means more scope for gains for somebody who understands what they are doing. Most stocks are efficiently priced, except if you have inside knowledge which is illegal.
Your renter may miss a monthly rent, but your dividend will never miss. say no more.
Is your stock portfolio a...goer...eh? Know what I mean? Know what I mean? Nudge nudge. Nudge nudge. Know what I mean? Say no more...know what I mean?
In case of property, take mortgage and leverage.
Rate of return will be more than mortgage rate
do REITS capture the diversifying benefits of buy to let propert?
My best investments have been in property. First vanilla BTL about 10 years ago has been generating near 50% return YOY now.
What about a REIT? Are we not getting the best of both worlds with a REIT?
No, look at the price movement/volatility of them. They're just as volatile, and highly correlated with, stocks in general. They do not provide a diversification benefit.
REITs are more like buying dividend stocks, but with exposure to the real estate market, or basicly interest rate policies. Its not true diversification, its more like a premium... if at all.
One thing is increase in rent, if you are wealthy enough to buy a property out right and well have poor morals, you can increase the rent on the pretenses of prices rising or interest rate rises and just pocket the difference. For example in a very basic sense a student house that was 180,000 before the pandemic is now worth 225,000 in my old uni town you can put up the rent by 20% and every time that price changes you can keep on doing it, in fact in that market it seems just put the price up whatever. As I say it is immoral but that's a common thread in a lot of the ways people get ahead in this and untill that is solved these things are their to be exploited.
Property is a very poor investment vs equities. The only time you shouldn't buy a proerty is when your wife wants one.
Property, particularly housing should be a social resource. Small numbers of people owning large numbers of houses and charging rent for profit is one of the processes that has wrecked standards of living in this country.
In your view, is investing in food industry equally morally shadey?
I'm already invested in property: the one I live in. My conclusion is therefore diversification: If some unforeseen event causes all property to become worthless or unliveable, then at least I'd have alternatives (assuming the world didn't also end).
Also, homes are supposed to be homes, not investments. This country's obsession with eeking a return out of vital resources has to come to an end.
You’ve got no mortgage. Let me guess.
The house you live in isn't an investment
@@dlc2479 It can be. Draw down mortgages, and home reversion are examples.
@@Garcia061 Yes, I do. What's that got to do with anything?
@@dlc2479 What? Of course it is. I'm paying for a roof over my head, which provides me with the opportunity of a comfortable life. Not every investment requires a purely monetary return.