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Am I throwing away my nest egg?


MikeTren

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4 minutes ago, Mike the Boilerman said:

 

This bit bothers me. The "frictional costs" of trading property nowadays are eyewatering. Successive chancellors have ratcheted up Stamp Duty Land Tax and lenders have figured out that punters are willing to shell out 'admin fees' in the order of £3k+, so that's what they charge. And then there are the professional and legal fees and disbursements which will add up to another four figure sum not beginning with a 1. 

You already have half a house so in your position I'd be highly tempted to keep it and rent it out. I second the advice to try to buy your sister's half rather than sell up and incur seller's frictional costs too. (Estate agent fees and more of those legal fees.) 

Where is it? Check out comparable houses for rentability. I can't help thinking you'd be better off keeping it and renting it out rather than selling it and buying another house you like, and renting that. 

Finally, bear in mind rental income is taxable, but if you raise a mortgage on it the mortgage interest is an allowable expense to offset the rental profit. so raise a morgtage as others have suggested, and use the cash to purchase your boat. 

But its not going to last https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords

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7 hours ago, MikeTren said:

It sounds like you're doing exactly what I want to do. I've noted I should have enough change to buy a 3 bedroom ex council house in Coventry which I could rent per room to students for a good return. I'm yet to do any serious research, apart from looking at housing prices on right move. But it sounds much better to live on a boat in a lovely old city and let someone else pay my living costs. As long as, if in the future, I do want to move back to land I cash both in for a decent deposit it sounds like a good bet. 

 

Bear in mind being a landlord is a 'people' business. As already noted, students can be very 'demanding' tenants and are best avoided if you want an easy life as a landlord. Same applies to ex-council houses. The easiest type of tenant to seek is the single your professional person in my opinion and experience. The young programmer just starting his/her career for example. They look after the house, have a responsible attitude to life so pay the rent reliably and don't wreck the place. They tend not to rent ex-council houses in Coventry, is my point :) 

 

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2 hours ago, zigspider said:

Sorry, there seems to be a lot of assumption by the 'invest in bricks and mortar' crew that house prices will always rise ( look back to the late 90's for that arrogance )

 

House prices do generally rise over long periods. A LOT.

A house I bought for £115k in the late 90s came with all the transfer deeds since it was built. It was first sold in 1898 for £351. (£351.00, not £351k.) Probably worth about £750k today. I can't see it falling in value below £351.00, ever. 

 

(Edit to get the numbers right!)

Edited by Mike the Boilerman
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6 minutes ago, Mike the Boilerman said:

 

House prices do generally rise over long periods. 

A house I bought for £115k in the late 90s came with all the transfer deeds since it was built. It was first sold in 1898 for £351. (£351.00, not £351k.) Probably worth about £750k today. I can't see it falling in value below £351.00, ever. 

 

(Edit to get the numbers right!)

Ah, but to be fair to Mr Spider our OP mentions a time scale of 5-10 years.  I recall buying a house in 1990 or thereabouts that we sold seven years later for about what we paid for it.  FWIW all the estate agents were predicting a long term decline in property values...

As I said earlier, anyone who thinks they can forecast what a given house or boat will sell for in 5-10 years, or even if either will rise or fall in value, is just guessing.

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9 minutes ago, Mike the Boilerman said:

 

House prices do generally rise over long periods. A LOT.

A house I bought for £115k in the late 90s came with all the transfer deeds since it was built. It was first sold in 1898 for £351. (£351.00, not £351k.) Probably worth about £750k today. I can't see it falling in value below £351.00, ever. 

 

(Edit to get the numbers right!)

I agree from a financial point of view that bricks and mortar are a good investment. It's a pity many of us slave away for the healthiest part of our lives to achieve that financial goal/security only to realise later that quality time is all we needed all along. 

Some of us are lucky and don't have to slave away for those goals. Others are also lucky that they achieve that goal by doing something they enjoy. I guess it's all down to the cards we are handed. 

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13 minutes ago, rowland al said:

I agree from a financial point of view that bricks and mortar are a good investment. It's a pity many of us slave away for the healthiest part of our lives to achieve that financial goal/security only to realise later that quality time is all we needed all along. 

Some of us are lucky and don't have to slave away for those goals. Others are also lucky that they achieve that goal by doing something they enjoy. I guess it's all down to the cards we are handed. 

 

Its not often you say stuff I agree with but this is all spot on. 

There is more to it though. In my experience once people give up slaving away for those goals and start doing something they enjoy, the money tends to sort itself out anyway. Maybe one adjusts one's lifestyle to match the income, but more likely one is good at what one enjoys, so one gets better at it than most and the customers come in droves.

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5 minutes ago, Mike the Boilerman said:

 

Its not often you say stuff I agree with but this is all spot on. 

There is more to it though. In my experience once people give up slaving away for those goals and start doing something they enjoy, the money tends to sort itself out anyway. Maybe one adjusts one's lifestyle to match the income, but more likely one is good at what one enjoys, so one gets better at it than most and the customers come in droves.

Yes, sadly what usually stops others from finding their true selves and being able to utilise their gifts are people who use control in a bad way. My father was a bit like that but maybe that was his dads fault.

It's much better to share our individual and unique gifts nicely. 

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1 hour ago, rowland al said:

Ownership and money are no more than man made concepts/tools to control others. So in a sense you are correct so long as the landlord doesn't use that control in a bad way. 

Sometimes it's good to be grateful for  being born into wealthy family or/and having talent. Not everyone is poor because they have let themselves down. 

You seem to have a thing about control, and being controlled. I agree with your second paragraph, but not sure how it is relevant.

On money, ownership, and control:

Money was created as a go between to resolve the barter situation where you didn't actually need what was on offer from the other party who required your services. It was nothing to do with control. IMHO it is still used in the same way, a bit like a battery stores energy for later use, money stores buying power for a later date. I would agree that those who have lots of money tend to have an element of power and control, but the way they use it is a function of the person, rather than the money.

As for ownership, in the first instant when nobody owned anything, someone took ownership of something, (land probably), and others took ownership of other things, and it was probably first come first served, a bit like staking a claim in the gold rush. People probably fought over ownership and perhaps this is how things changed hands in days gone by, (and today in some situations). In current times, the thing has developed, precedents created and, again, those who own lots of things can have an element of power and control but, again, the way they use it is a function of the person, not necessarily the concept of ownership.

On the landlord thing - professional landlords want good tenants to take their properties, pay the rent, look after the place reasonably, and stay for a long time. In reality, once I hand over the keys to a flat, having signed a tenancy agreement, the tenant has a great degree of control over my asset, (a large chunk of which is still the banks asset), so control is a 2 way street in this situation, and depends on the people, rather than the situation. There are good and bad landlords, good and bad tenants, and good and bad anything you can think of.

With respect to the OP, he has an amazing opportunity, and actually uses the words "nest egg". He could go one way, have a great time for a while, (maybe even a long while), but, assuming that he lives longer than the short/medium term, he may run out of the money/opportunity to have that great time. Or he could go another way, and do something which might mean he can have less of a great time in the short/medium term, but will have something that provides some security that will help for the long term, or even for life.

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1 hour ago, Richard10002 said:

You seem to have a thing about control, and being controlled. I agree with your second paragraph, but not sure how it is relevant.

On money, ownership, and control:

Money was created as a go between to resolve the barter situation where you didn't actually need what was on offer from the other party who required your services. It was nothing to do with control. IMHO it is still used in the same way, a bit like a battery stores energy for later use, money stores buying power for a later date. I would agree that those who have lots of money tend to have an element of power and control, but the way they use it is a function of the person, rather than the money.

As for ownership, in the first instant when nobody owned anything, someone took ownership of something, (land probably), and others took ownership of other things, and it was probably first come first served, a bit like staking a claim in the gold rush. People probably fought over ownership and perhaps this is how things changed hands in days gone by, (and today in some situations). In current times, the thing has developed, precedents created and, again, those who own lots of things can have an element of power and control but, again, the way they use it is a function of the person, not necessarily the concept of ownership.

On the landlord thing - professional landlords want good tenants to take their properties, pay the rent, look after the place reasonably, and stay for a long time. In reality, once I hand over the keys to a flat, having signed a tenancy agreement, the tenant has a great degree of control over my asset, (a large chunk of which is still the banks asset), so control is a 2 way street in this situation, and depends on the people, rather than the situation. There are good and bad landlords, good and bad tenants, and good and bad anything you can think of.

With respect to the OP, he has an amazing opportunity, and actually uses the words "nest egg". He could go one way, have a great time for a while, (maybe even a long while), but, assuming that he lives longer than the short/medium term, he may run out of the money/opportunity to have that great time. Or he could go another way, and do something which might mean he can have less of a great time in the short/medium term, but will have something that provides some security that will help for the long term, or even for life.

The good and bad bit is all that matters in the end. Unfortunately it gets masked by words.

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5 minutes ago, Victor Vectis said:

Wouldn't it be nice if people thought of bricks/mortar/flats/houses etc as homes instead of a way of making money?

:unsure:

You don't make money unless you get out of UK house ownership though. You merely keep pace with house inflation (which unlike RPI most people don't see as a bad thing). 

The conventional wisdom is to work hard at school, get good grades, get a good job, buy a house, pay into a pension scheme and enjoy retirement. That has worked well right up until my parents generation really. Then came the 80's Thatcher/Reagan, big bang in the city, red braces, VW GTI etc, etc. The new share owning democracy demanded an unrealistic return on money, so now we had to pay for University, couldn't afford final pay pension schemes, had to retire later, had to fund elderly care ourselves etc, etc. No matter how affluent the masses become the top 2% know how to stay the top 2% and it only includes most of us as a vehicle to keep them there. 

 

I am 60. Have owned and sold 5 houses, rented countless more and still own 1 narrowboat. I currently rent a house. I funded 2 kids through Uni, am having to work until I am 66 to fund retirement and don't have a single regret. The houses I have owned haven't really made me a penny. The houses that I have rented are a cost of living (like a gas bill). The cost of children is the responsibility of being a parent. The high cost of boat ownership is a discretionary spend that is giving me immense pleasure and a hobby. 

 

The O/P will have to make his own mind up but generally I would advise NO. Based on the fact that he has had to ask the question. He seems to be in the buying a house is a good thing to do camp (I have no views). Without doubt the cost of boat ownership (and depreciation) will nibble away at his inheritance. No one can forecast the future but the 2% vested interests do not see any advantage in allowing house prices to fall. 

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2 hours ago, keith. said:

You don't make money unless you get out of UK house ownership though. You merely keep pace with house inflation (which unlike RPI most people don't see as a bad thing).

I don't think 'generation rent' would agree with this.

ETA And buy to let landlords?

Edited by Victor Vectis
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14 hours ago, Mike the Boilerman said:

 

Its not often you say stuff I agree with but this is all spot on. 

There is more to it though. In my experience once people give up slaving away for those goals and start doing something they enjoy, the money tends to sort itself out anyway. Maybe one adjusts one's lifestyle to match the income, but more likely one is good at what one enjoys, so one gets better at it than most and the customers come in droves.

This is the very thing I keep telling my young friends when they can be bothered to listen.

I think a big factor is whenever you engage with a person who genuinely enthuses about something it's hard to resist.   

  

 

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On 15/10/2017 at 12:28, Neil2 said:

This is the very thing I keep telling my young friends when they can be bothered to listen.

I think a big factor is whenever you engage with a person who genuinely enthuses about something it's hard to resist.   

  

 

Curiously it has become very trendy amongst teachers, politicians, BBC presenters etc to regard being passionate about <whatever> as a Good Thing, mandatory even. So youngsters have learned to be passionate about pretty much everything these days, and it tends to be false learned behaviour. As you say, when you meet real passion for a subject as opposed to mild enthusiasm, it shines like a beacon. Quite rare though. 

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5 hours ago, Neil2 said:

This is the very thing I keep telling my young friends when they can be bothered to listen.

I think a big factor is whenever you engage with a person who genuinely enthuses about something it's hard to resist.   

  

 

Edited.

Couldn't be bothered. 

:D

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It was our third owned each sold to upgrade.....

my point was we lived on our boat(s) in an area where we couldn't afford to live and used our work income to get in to the housing market somewhere. Our first being a leasehold flat in hand sworth birmingham 7 weeks after the riots, bought as an unmortgagable property after it was repossessed. They even took the sink bath and hot water cylinder .

if that makes me a opportunist capitalist landlord so be it. It bought me a start and was financed by overtime night shifts in a job few people will do, and living on one salary between us. I had to get a personal loan to get possession and then work my behind off fixing it up.

now we have house( rented out) for when we cannot manage on our boat. That way we stayed in the housing Ponzi scheme and had the life we wanted. Also when the canal gets too overcrowded or we cannot manage our boat we can move in, not emburdening others by not making provision. Will I make money, no because no doubt it will end up sold to pay for end of life care for the last of us to die.

Sorry in an area we couldn't afford to buy a house

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