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Investment Options?


Kopite

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Some of you may havevseen my thread about opening an independent opticians but im having cold feet. Ive been advised investing in property might be a better option so I thought I'd seek the opinion of you good people with a poll. The details are below:

 

1) open an independent opticians, costs to break even approximately £250k / year, start up cost £200k. High risk but high reward if successful, some turnover £600+ / year

 

2) invest in student housing. I have the capital to buy 2 typical terraces outright so no buy to lets mortgage needed. Im aware more universities are building their own private accommodation areas near to student halls so is this riskier than previous times?

 

Whatd you do?

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Those are both options at opposite end of the scale almost, I don’t know anything about opticians but that turnover seems decent but its more about the profit you would make rather than turnover?

 

If you have the capital to buy 2 houses outright, why not use that capital to buy 10 houses on buy to let mortgages, the capital gains and return once the mortgages are paid off will set you up for life (I’m not sure how much cash you have as that dictates how many buy to lets you could get based on the house prices)

 

all sounds interesting though mate :)

 

Also if Universities are anything like the one near me, they may be building lost more accommodation but they are also taking in many more students as well, so it could be fairly relative in that sense

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the student housing ro , once its all up and running , apart from maintainance , but if damage then bonds sort that out your income will be pretty solid as for the shop , costs are high and competition strong so earnings will fluctuate which is not what you want.

theres a new campus just opened where we used to live and all the houses have been bought up by property developers , any shops are now flats houses that were empty for years are now developed , as long as the prices are right your properties will be occupied all the time

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If you have the capital and the acumen to run a business then why not look for business for sale rather than starting from scratch (any business, not just opticians)? I'm not sure now is the best time to start a property portfolio, sure it should be an appreciating asset but it's not guaranteed.

 

Holiday lets can be good money, better than standard rent (maybe not better than students though).

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Those are both options at opposite end of the scale almost, I don’t know anything about opticians but that turnover seems decent but its more about the profit you would make rather than turnover?

 

If you have the capital to buy 2 houses outright, why not use that capital to buy 10 houses on buy to let mortgages, the capital gains and return once the mortgages are paid off will set you up for life (I’m not sure how much cash you have as that dictates how many buy to lets you could get based on the house prices)

 

all sounds interesting though mate :)

 

Also if Universities are anything like the one near me, they may be building lost more accommodation but they are also taking in many more students as well, so it could be fairly relative in that sense

 

Profit from that would be about 150k a year before corporation tax. The buy to let is an idea which could work, ive £300k i want to invest. Yeah the unis doing that is something im looking at, also thinking of looking at areas where unis are expanding etc but hard to know what their accommodation plans are.

How's it going Pete? Yeah i know what you mean which is why im hesitant about the shop now...

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If you have the capital and the acumen to run a business then why not look for business for sale rather than starting from scratch (any business, not just opticians)? I'm not sure now is the best time to start a property portfolio, sure it should be an appreciating asset but it's not guaranteed.

 

Holiday lets can be good money, better than standard rent (maybe not better than students though).

 

Thats the thing mate, i know about opticians and reckon i could run one but 80% fail. Ive no history in business etc so any other trade i'd be lost in

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Aren't some harsher tax rules coming in for buy to let soon?

 

Matt's idea is not without risk, leveraging is always a balance.....two outright is obviously very low risk, 5 would be some risk, 10 obviously more and so on. You need to research it (as I appreciate you are), factor in happiness versus stress and your goals, but at some point you have to trust your gut and go for it. I'm on the safer end of the scale and so would always look to protect myself against the worst case scenario, equally I'm very unlikely to make myself rich, but I'm comfortable with that.

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Student property 100%, or any form of multi let property.

 

If you have the money to get set up properly then go for it.

 

If you want to let me know your specific area I can find out very quickly what upcoming property developments there are for that area.

 

But regardless of student halls being built there will always be a demand for student houses too.

 

If I had the money to do something like that I'd be doing it tomorrow.

 

Just be cautious though as it won't always be plain sailing but certainly less risk than the other option.

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I think running any shop is going to be hard. Staff sickness, customer satisfaction!! I'd defo go the property route. You won't have to work as hard for the gains + less risky. As someone else said there will always be a demand for students accommodation . But there's no guarantee people will walk in the shop. My nan who was loaded always used to say 'bricks and mortar son, bricks and martar'

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Thats the thing mate, i know about opticians and reckon i could run one but 80% fail. Ive no history in business etc so any other trade i'd be lost in

 

Are you a qualified optometrist? If not, go with property.

If you open an opticians and you're not the optometrist, expect to pay £60,000+ in salary alone for one.

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ok ro thanks , glad things are looking up for you , plus the property will never go down in value if you have a change in mind later on

 

Property can, and does go down in value.

 

IMO there are too many variables now with property. Interest rates are overdue a rise, average earning families can barely afford a home in a lot of areas, and an upcoming EU referendum that will spook foreign investment in the near future.

 

It's been a long time since the last housing crash, some might see it as overdue. Yes, property prices usually rebound at some point, but that could leave you asset rich and cash poor for a long time, and that's IF the mortgage payments are still affordable.

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In a volatile market, I'd be putting money in to the property side.

 

With enough capital to buy two houses, versus the cost of starting a business in which 80% fail, I'd be happy to purchase a property knowing that short term, it could go down in value, albeit not much; but in a long term, strategic view then you're looking at a fairly odds on increase over a sustained period. Plus, it'd be full for 9-12 months of year, and if you can tie the students down on a 12 month lease, each. Then you're looking at a fairly secure stream, which is almost bonded against loss.

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In a volatile market, I'd be putting money in to the property side.

 

With enough capital to buy two houses, versus the cost of starting a business in which 80% fail, I'd be happy to purchase a property knowing that short term, it could go down in value, albeit not much; but in a long term, strategic view then you're looking at a fairly odds on increase over a sustained period. Plus, it'd be full for 9-12 months of year, and if you can tie the students down on a 12 month lease, each. Then you're looking at a fairly secure stream, which is almost bonded against loss.

 

Very good points :thumbs:

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Why not look at some foreign property that can be rented (holiday lets) and have some use out of it?

 

My personal preference is property, some growth and income, but nothing exceptional... business has a chance of that, but also has the chance of losing everything.

 

- - - Updated - - -

 

to the OP - The two options that you highlight - are these to supplement your regular income?

 

Good question

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The house I'm buying at the moment was bought by the current owner in 2005 for 20k more than I'm paying. I'd agree property usually appreciates but there are many factors to consider.

 

Also, if you are a higher rate tax payer and doing this for extra income you'll take a large hit.

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Look to buy investments that will give you an income long term for little effort yourself. Build up enough of these then you can retire on the income they generate.

 

The business sounds good if you can achieve £150k pre tax profits, but I'd imagine you're up to some stiff competition depending on the area. It will sap your time and potentially cause stress, plus you're entire income relies on it. You remain an employee until you sell it.

 

Property is sensible...the right property that is. Unless you know any good tradespeople I'd shy away from low end 'bargains' and maybe look at new property developments and rent to people that can't afford mortgages. At least everything is new and you have an NHBC warranty for 10 years.

 

I'm told by friends in this game it's increasingly difficult to find bargain property - so many investors are hanging around the courts for repossessions and these are often sold on through people in the know at the banks/building societies before anyone knows they're for sale.

 

Student income wouldn't be all year round, where as the full time renters would be. Also students will be prepared to pay a lot less for rent.

 

Holiday lettings suggested above - beware of hidden costs. Advertising, management, organising bookings and cleaning all adds up. Again - it's not full term rent but you can charge much more. Also variable who you get in and how they'll look after your property.

 

As for the tax implications - set up a property business and get a decent accountant.

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If you have the capital to buy 2 houses outright, why not use that capital to buy 10 houses on buy to let mortgages, the capital gains and return once the mortgages are paid off will set you up for life (I’m not sure how much cash you have as that dictates how many buy to lets you could get based on the house prices)

 

That gets my vote; great advice.

 

Spread the cost, achieve capital gains, receive a good PCM rental yield, stay flexible, and avoid placing all of your eggs in one basket.

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Wild card.

Buy vw shares. I sold my royal mail shares as I couldn't see much more return apart from what they've already made.

Vw shares have dropped more than 40% since the scandal broke. Maybe more now petrol cars are affected.

 

The shares will go back up. Vw is too big to fail. Toyota perfect example. Shares dropped after the massive USA recall. They came back up. After a few years.

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Wild card.

Buy vw shares. I sold my royal mail shares as I couldn't see much more return apart from what they've already made.

Vw shares have dropped more than 40% since the scandal broke. Maybe more now petrol cars are affected.

 

The shares will go back up. Vw is too big to fail. Toyota perfect example. Shares dropped after the massive USA recall. They came back up. After a few years.

 

In principal, yes, but VW's Apple may have a considerable distance to fall from the tree yet before the recovery begins.

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Property.

Reasons:

1) Check the history they only grow in price and always will.

What it means: Your investment will grow by just being there, you don't have to do anything.

2) As you mentioned, student let's. Influx of students is massive and they all need to live somewhere, and Universities supply accommodation ONLY for first year!

What it means: regardless how many rooms they have, there is an equal amount or more required in private rental.

3) Even if you don't rent to student there is an option to rent to professionals and families which brings you a smaller yield but still secures your investment.

What it means: your money is safe and all you can have in worst case scenario is get a little bit more money then you invested!

 

Business? In worst case scenario, left with nothing! By the time you pay out redundancies and stuff. ( I am not sure how administration mechanism works, please explain if someone knows)

 

I would of done properties bud. :)

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to the OP - The two options that you highlight - are these to supplement your regular income?

 

It is yes mate, id be the optician in my own place though. The property is to supplement what i earn now

 

Why not look at some foreign property that can be rented (holiday lets) and have some use out of it?

 

My personal preference is property, some growth and income, but nothing exceptional... business has a chance of that, but also has the chance of losing everything.

 

- - - Updated - - -

 

 

 

Good question

 

The risk of losing everything is what's put me off yeah

 

Look to buy investments that will give you an income long term for little effort yourself. Build up enough of these then you can retire on the income they generate.

 

The business sounds good if you can achieve £150k pre tax profits, but I'd imagine you're up to some stiff competition depending on the area. It will sap your time and potentially cause stress, plus you're entire income relies on it. You remain an employee until you sell it.

 

Property is sensible...the right property that is. Unless you know any good tradespeople I'd shy away from low end 'bargains' and maybe look at new property developments and rent to people that can't afford mortgages. At least everything is new and you have an NHBC warranty for 10 years.

 

I'm told by friends in this game it's increasingly difficult to find bargain property - so many investors are hanging around the courts for repossessions and these are often sold on through people in the know at the banks/building societies before anyone knows they're for sale.

 

Student income wouldn't be all year round, where as the full time renters would be. Also students will be prepared to pay a lot less for rent.

 

Holiday lettings suggested above - beware of hidden costs. Advertising, management, organising bookings and cleaning all adds up. Again - it's not full term rent but you can charge much more. Also variable who you get in and how they'll look after your property.

 

As for the tax implications - set up a property business and get a decent accountant.

 

Excellent advice !

 

That gets my vote; great advice.

 

Spread the cost, achieve capital gains, receive a good PCM rental yield, stay flexible, and avoid placing all of your eggs in one basket.

 

It sounds interesting, ill look into this :thumbs:

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It is yes mate, id be the optician in my own place though. The property is to supplement what i earn now

 

 

 

Ah Ok - so you have another job. either of these "ventures" would be to supplement that income

 

In that case - with regards to property (ignoring any capital gains) - you are probably looking at a 4-5% net return.

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