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OzzMosiz

Second House For A Pension

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If someone is buying a second property as a 'pension' how do they expect to sell it in years to come?

There will be a flood of property pensions being sold (as well as normal homes). Surely this will cause

competition and thus a reduction (big or small in prices).

With the average couple now having 1.4 children, can we rely on low paid immigrants to buy in the future?

Thoughts?

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Your average person is not an actuary. When the good yrs come along, its unlikely this person will try and offset it against future trouble or leaner years. They will be lucky to get the house through 25 yrs without having to sell it for some reason or other. e.g. high IR's, loss of job..voids etc..

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Guest Alright Jack

If someone is buying a second property as a 'pension' how do they expect to sell it in years to come?

There will be a flood of property pensions being sold (as well as normal homes). Surely this will cause

competition and thus a reduction (big or small in prices).

With the average couple now having 1.4 children, can we rely on low paid immigrants to buy in the future?

Thoughts?

My high level view of this is that it can work under the piggy bank model. i.e through savings and rental income maintain the interest payments and BUILD equity. This is in stark contrast to the lottery windfall model that persists today. Money is better off invested in property at least than in bank deposits or financial schemes of blatant corporate and government confiscation such as pensions.

Do the sums, make sure you're not fooling yourself, then go ahead and best of luck.

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My high level view of this is that it can work under the piggy bank model. i.e through savings and rental income maintain the interest payments and BUILD equity. This is in stark contrast to the lottery windfall model that persists today. Money is better off invested in property at least than in bank deposits or financial schemes of blatant corporate and government confiscation such as pensions.

Do the sums, make sure you're not fooling yourself, then go ahead and best of luck.

The problem is that the price of the asset that you are buying is likely higher in 2005 than in 2030 - and by a large margin.

If you imagine that property value is a function of real wages, population growth, and desire for that property due to location/size etc then you have to worry about future value. Real wages are not growing, not even as fast as real inflation, and with years of competition against the Chinese and Indians is not likely to for some time. We also have a large boom population moving through at the moment, currently in their peak earning years - the pig moving through the snake. Houses are expensive because there is a big glut of people with money buying them. When they retire and downsize, the demand will be down, and supply will be up.

If as we think house prices drop significantly, houses become liabilities, not assets.

If you can get a better yield on your money in a property than in the bank/stock market then yes, it's an investment while prices are stagnant or rising. But most properties today yield only 3 or 4% if anything, many are negative cashflow even when it's an IO mortgage used (no equity built). Can you get 5% in savings account somewhere? Yes, though govts around the world just now don't want people to save, so incentive to do so is low.

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My boss let slip today that he is a landlord with a few properties. He considers them his pension I told him he is one of the enemy now.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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