As the great British love affair with property continues I regularly have conversations with people who believe that owning a second property as an income stream is the best use of their surplus cash (or indeed to borrow more to buy one).
Often, when discussing the motives for owning a buy to let property it boils down to having a degree of control; they can touch a property, they understand it where they don’t the stock markets.
My reaction to this is always: “Property. Control. Really?”
Yes, you can physically touch it if that is important to you. But, you can’t control:
- The market,
- The price someone is prepared to pay or sell at,
- When you can get tenants and how they will behave,
- The cost of ongoing repairs you’ll need to do,
- Sales and lettings agents and their costs,
- The conveyancing process and how long it takes,
- The rate of Stamp Duty on purchases,
- The rate of income tax on rental income,
- The rate of CGT on a sale,
- When you may be required to sell it,
- How long it will take to sell a property when you need the capital,
- The long-term return,
- The interest rate charged on a mortgage.
It is absolutely true that stock markets can’t be controlled but as long as you can control your responses to the inevitable peaks and troughs inherit with the markets it is more likely (but not guaranteed) to provide greater control, less aggravation and more opportunity to grow your wealth than a property investment ever will.
As many things do, it usually comes down to having a bit more understanding.
If you would like to talk about making sure your capital is working appropriately for you, contact me for an initial, no obligation discussion.