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Is Buy to Let Worth It?

Is Property Investing Really Worth it?

Enhanced Transcribe:

Hi, it’s Dr Ro here, addressing a subject that comes up a lot. 

If you’re watching this and it’s in the back of your mind, the question is, 

Is Buy To Let worth it? 

Is Buy To Let property really worth it? 

Should I get into it? 

Is it something that’s going to work for me? 

If I buy properties now, is it going to make a difference for me in the future?

I think the best thing to do is look at a timeline. Take a few minutes to read through this and hopefully this will make sense. 

Think about yourself right now, at whatever age you are at right now. According to the World Bank, most of us will live to around 82 years of age. At some point, you’re going to disappear off into a beautiful place. But in the meantime, you have things to do. For example, you might be working. You might be married or want to be married in the future. You may have kids. They’re going through their own education and you have to support them. 

But then eventually, at some point you will retire. Typically in the UK, retirement happens around 65 years of age. 

So wherever you are right now in your career. You’re earning money. Your salary may go up a little bit soon, and in the future a little bit more. When you have children, if you don’t already have them, hopefully it will go up another notch so you can support their education. 

At some point, you’re going to hit retirement. That’s when usually your level of earnings drops through the floor, depending on how much security you’ve put in place. Depending on whether you’ve got any other additional passive income or any other support behind you. And again, you need to seek independent financial advice if you’re going down the route of looking at pensions and pension funds, and those sorts of retirement plans. 

But in the meantime, you may be questioning what residual cash flow you have, or what it even means. It means that each single month, every single month, you have some spare money available. Now imagine if you were to just siphon that off each month, you put a little aside £100, £200, £1000, £2000. Unlikely for most people, but let’s say you put something aside. Over time that will slowly increase.

However, for most people, the amount they can put aside isn’t massive. Of course any residual that you might build up might be knocked back when you have kids, or other big life expenses come up. For the average person there’s only a small amount of money they actually put aside. These are your savings. And the big question is, how much savings do you have, and how much savings will you have? And is it going to be enough for you to enjoy a great retirement?

Disclaimer: This video or written publication does not offer investment or financial advice and nothing in them should be construed as investment or financial advice. Our publications provide information and education only. The information contained in our publications is not, and should not be seen as a recommendation to use any particular investment strategy. Always seek financial advice from an independent financial adviser around your own personal financial situation.

Making Your Savings or an Investors Money Work for You

Let’s take those savings. And let’s have a think about how those savings are typically used. What people do with it. For most people, they’re putting their money in the bank. That’s all they are doing, just stashing it away. And on average you’re making about 1% a year. Of course, that depends on what bank you have your account with. But for many people that money just sits there, and it doesn’t really grow. It certainly doesn’t exponentially grow, and inflation erodes it for many people because they’re working hard for all these years. T

These people don’t achieve financial freedom. They work for typically 40 years, if they’re working from 25 to 65. They put their money in savings, in the hope that some point in the future it’s going to work for them. But most of the time it doesn’t. They get frustrated. There’s certainly no security. 

So what is the solution? 

This is where the Buy To Let model comes in. Is Buy To Let worth it? Well, imagine that you take your savings. Or you might even be able to tap into some other investor’s money, or people could lend you money. Might be that you just saved the money up. You buy yourself your first Buy To Let property. It does not have to be an expensive one. 

You could head up into the North of England and pick up a Buy To Let property for about £80,000. You put your deposit money down, pay off its mortgage, pay off your operating costs, your management fees. And typically you’re going to make about £300 a month on a small Buy To Let. Well over 12 months, that’s £3600. Over 40 years, that’s £144,000. 

Imagine that you buy another property, and another one, and you start to develop a portfolio over several years. It could be as little as two or three years, and you generate 10 Buy To Let properties with the same monthly income, £300. Suddenly that’s £3000 a month over 40 years, So, £3000 times 12, times 40 years is £1,440,000. And that’s the revenue that you can create through the passive income that’s generated from a Buy To Let property.

So a couple of questions. What if you were to actually purchase more properties? What if you bought 20 of those? What if you bought higher income generating properties? What if you could replace your income with enough properties, so that you become completely financially free. 

I think that answers the question, is Buy To Let worth it? Absolutely, it’s worth it. Yes, in my view, if you can do it correctly. If you get the right education, you get the right support, and you do it safely. And you get the right financial guidance from your mortgage brokers, absolutely no reason why you can’t as somebody that’s working in a job, slowly or fast if you want to do it. 

Certainly my partner and I did it fast. But you can build yourself a property Buy To Let portfolio alongside whatever you’re doing, so at least it gives you choices. In this case somebody has bought 10, and these are small Buy To Lets. There’s nothing to stop you buying higher income generating properties that produce £500, £600, £1000 a month. And that means you need less of them. But just think about working for 40 years or having a Buy To Let portfolio work for you, for 40 years. 

So in my opinion, Buy to Let property investing is worth it. 

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