If this is you, let me ask you a question –
have you actually worked out what your portfolio is
worth and whether it will deliver what you want eg
a pension? Or what tax your kids will pay to inherit
the portfolio you’ve left them? Have you ever
checked with an Independent Financial Advisor or Wealth
Manager whether your portfolio can be protected or
will deliver to you in your retirement?
not, then now is the time to do so – don’t
leave it for a few years, you never know what will
happen. Sorry to be ‘doom and gloom’ but
things happen that are out of their control, people
get sick, lose their job and then lose their home
or homes in the case of property investors. It’s
happening to people now and now is your chance to
make sure it doesn’t happen to you!
Five Tips to Ensure your Property Portfolio Delivers
what YOU Want!
Be clear about what you want from your portfolio.
Is capital growth more important than income or vice
versa? Are you maximising your property ‘box’?
2. Are you fed up with looking after tenants or managing
a build or renovation? Then see if you can employ
someone to do it for you. Want help finding someone
to manage your property project, then contact us.
What level of risk are you willing to take? Property
is typically a ‘medium’ financial risk,
you may want to take more risk the younger you are
and less the older you are.
4. What’s the value of your whole estate? For
example, how much are you worth if you died today
(sorry, not trying to depress you, but this is important
if you have a family!).
5. Track how well your property portfolio is doing
versus other investments. For example, general share
indices grew by 50% in the last 12 months while property
fell by nearly 10%.
Five Things that will STOP your Property Portfolio
Delivering what YOU Want
won’t always deliver what you want. Take people
that have invested since the peak in 2007 (and since
2006). Typically property values have fallen, they
are struggling to re-mortgage their portfolio and
are stuck on high interest rates. These high rates
mean that rental income isn’t necessarily covering
the costs of owning and running the property so their
portfolio is running at a loss.
you don’t want your property portfolio to fail,
then make sure you run a ‘portfolio health check’
to ensure yours is successful!
would happen if.........
Personal taxation increased? At the moment you are
taxed at either 20%; 40% or 50% of your income (and
50% is a new tax rate). What if taxes went up to 25%;
45% or 60% - would you still make any money?
2. Property taxes. Currently capital gains tax is
just a flat rate of 18%, what if the government brought
back the 40% tax rate for all capital growth on a
second home, what would this do to your portfolio
when you come to sell?
3. Inflation. Over the last 10 years, rents have only
really grown by around 10% (on average), while inflation
has ranged between 1.5% per year and 4% per year.
In other words it’s hardly kept up with costs
at all. What effect will inflation increases have
on the value of YOUR rental income in the future?
4. Property Price fluctuations. We’ve all seen
property values (in the main) fall from 20% of the
2007 peak. How much further do they need to fall for
the value of your property to be negative (ie less
than your mortgage), or falling less than the 25%
equity you typically need to have in the property
5. What Costs might go up? What’s your rental
income versus costs break even? If mortgage costs
go up by 10% or 20% will you still secure net income
from your property or have to put money in? What about
insurance costs, if they grow by 30% this year, will
this push your property into a loss making situation?
out what your top five costs are and what increases
you would need to see before you start losing money.
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Kate lives and breathes property both at work and
home and brings a refreshing change to the property
market by offering practical, down to earth advice
that really helps people carry out their property
project successfully. She writes daily on property
and helps people successfully carry out their own
property projects via her own website: www.designsonproperty.co.uk
and her blog: Facts Not Headlines.
Kate’s expertise comes
from a love of buying, renovating and selling property
and working as a business development consultant to
the property industry. Kate is particularly interested
in monitoring and understanding house prices both
at a national and local level. In her work, Kate has
helped companies introduce new products such as a
move planner and an area relocation guide; re-branded
and prepared for launch the National Self Build and
Renovation Centre, a dedicated 60,000 square foot
centre in Swindon and recently has worked with developers
to carry out part exchange services; renting and letting
and the property investment sector.
She has written six property
books including four for Which? (Buy, Sell, Move House;
Renting and Letting; Develop your Property and the
Property Investment Handbook) and articles for magazines
and newspapers as well as appearing on TV, and radio.
Kate has three degrees: Economics, Marketing and an
MBA and is also a the Education Liaison Officer for
Notts/Derby Institute of Directors which includes
judging the annual East Midlands Young Enterprise
Business Plan competition. She is also a member of
the Author’s Society and Chartered Institute