Friday, December 13, 2013

Investing in Property: An Alternative Pension Plan

Pensions have taken a lot of hits over the last few years. There are problems with people not saving enough and people not receiving the amount they believed they paid in. On top of this there have been government cut backs, banks facing various crises and a global recession. Naturally this means that people have been looking at alternative ways to invest their money – the most popular of these is investing in property, here’s why:

They’re not making any more land


Land itself is a very valuable commodity, and ownership of even a development plot will give you strong financial standing. If you have property on the land then the value of the area can drastically increase. When you’re looking to invest in land you need to plan for the future, working out areas that are going to be popular in years to come. There are a couple of things that you will want to think about:

  • Renting – this will provide you with a steady monthly income that you can put towards your cost of living. Make sure that you set the rent high enough to cover the cost of the mortgage as well as home insurance, and gives you a bit of cash to still play with. 
  • Development – one of the fastest ways to build up a strong pension fund would be investing and developing property, as this can give you tens of thousands of pounds profit. It’s also something that you can continue into retirement, using your free time to further increase your savings. 
  • Commercial property – you don’t have to be a business to obtain commercial mortgages, you can buy shops and rent them out to other companies. This tends to be a very profitable investment, as businesses will often pay over the odds to get a premium location.

Pay into your savings


If you’re looking at investing in property as an alternative to paying into a pension, then the main goal should be boosting your savings rather than generating an income. Make sure that you are putting the income from your property into a savings account to give you a greater sum to dip into when you’re older. One mistake people often make is that they don’t build up enough funds through investing, generally using the extra income instead of putting it aside.

Renting or selling


One of the best ways to use property investment for a pension fund is to buy and rent it out until the mortgage is paid off. After the mortgage is paid off almost all the rent you will receive will be profit – this can drastically boost your savings account. When you do plan on retiring, you may either wish to continue renting the property or you could put it up for sale. The main differences are:
  • Renting would provide you with a set amount of cash every month, however you will have to deal with any issues the tenants may have. If the building is in need of many repairs this could end up costing you a small fortune. 
  • Selling gives you a large sum of money to help make retired life more comfortable for you. You will need to budget around the amount of cash you received from the sale, although you don’t need to worry about any major costs of repair etc. 
If you’re thinking about setting up an investment property instead of taking out a pension then it’s worth finding out what residential and commercial mortgages are available to you. Now is the time to buy, as both house prices and interest rates are low – giving you the best chance to be in profit as quickly as possible.

Pure Commercial Finance are experts in commercial finance and they pride themselves on excellent customer service. They secure the best deals possible for their clients – whether they are looking for a commercial mortgage, bridging finance, development finance or invoice factoring.


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