Here is a breakdown of questions most commonly asked about a property pension, this will help you decide if a property pension is the right course of action for you.
So, what is a property pension?
A property pension uses a property portfolio to provide for your future. Through planning you can build a property pension that will give you financial freedom.
How does a Property Pension work?
There are many strategies you can adopt but the basic principles revolve around investing for the long term. No matter what some people tell you, property investment isn’t get rich quick but it can be get rich slowly. We use the rule of ten when we start to put together a property pension strategy.
Rule of ten – historically property has doubled in value on average every 7-9 years. We like to be conservative when planning so we use a 10 year assumption.
Human nature, simple economics and past data helps us make this conservative assumption.
How big does my property portfolio need to be?
This really depends on the lifestyle you are aiming for, if you want financial freedom and security then your strategy will be completely different to someone who wants flash cars and dozens of holiday homes. Most people fall into the first category and regularly assess their property portfolio as they develop their property pension. When you speak to one of our Asset Managers they will help you put your strategy together so you can understand what is required to meet your financial goals.
What type of property should I invest in?
It doesn’t matter if you invest in flats, houses, studios, bungalows, what does matter is that you buy below market value and invest in areas with strong rental demand. Does the area have a good transport infrastructure, strong employment levels, shops, schools, amenities, etc?
We prefer going for property that is either new or nearly new as we don’t want maintenance issues. Most new builds come with a ten year guarantee that covers the structure, this affords peace of mind.
How much do I need to invest to create a property pension?
Some people tell you can invest in property for no money down; it just so happens that most of the time these people are charging you a fee to learn how. If property investment required no capital then they wouldn’t be wasting their time selling a course, they would be building a property empire. The fact is you do need capital to invest in a property that’s worth having.
Typically you will need upwards of £25,000 to start building a property pension but this doesn’t necessarily need to be cash in the bank. By working with our Asset Managers you may find you have other options open to you that you had not considered before.
Can I use a SIPP?
Although you can’t purchase residential buy to let properties through a SIPP (Self invested personal pension) you may be able to purchase commercial property investments, the options are wide and detailed. We can put you in touch with an IFA who understands the benefits of property investment to discuss the options available to you.
What if I have no experience in property investment can I still build a property pension?
Absolutely! Most of our investors had no property investment experience before speaking with us.
What’s important is that you are willing to take the time to build a strategy with us and be motivated to make a difference to your financial future. Creating a strategy with our Asset Managers is free, sign up below to receive our free newsletter to learn more about how we can help.