Apart from private rental, there\u2019s always the possibility of social housing, or council housing. If we\u2019re eligible, this can prove much cheaper than private rental, and also gives security of tenure. On the other hand, we\u2019d have far less choice over where we live; we may well end up living in an area we consider undesirable.<\/p>\n
From a retirement planning perspective, owning our own home offers the most benefits. To have to pay rent during retirement could be a big drain on our resources. If we own our own home, we should have less outgoings. We also have the option of downsizing and releasing capital. Even if we never want to downsize, there\u2019s the possibility of equity release from our home, should that become necessary or useful.<\/p>\n
Property as a second home<\/h2>\n
![\"property-second-home\"](\"https:\/\/evolvemyretirement.com\/blog\/wp-content\/uploads\/property-second-home.jpg\")
<\/p>\n
If we\u2019re lucky enough, we may be able to afford a holiday home in addition to owning our own home. The pros and cons regarding owning a holiday home are different from our main home. We definitely need a main home, whether we buy or rent; we certainly don\u2019t need<\/em> a holiday home. The main attraction of one may be that we love holidaying in a particular area so much that we want to return to it time and again. Then it can be nice to have a home from home when we\u2019re on holiday.<\/p>\n Financially, we save on hotel or holiday rental costs. Of course we have to find the capital with which to buy the second home in the first place. Then there are ongoing maintenance costs. We may be able to offset these by renting out the property when we\u2019re not using it.<\/p>\n Finally, there\u2019s the investment value of the property itself. Maybe it will increase in value, so that we make a profit if we later decide to sell it. The tax treatment of capital gains on second homes tends to be less favourable than that on a main home.<\/p>\n Like owning a main home, owning a second home combines investment with our lifestyle choices.<\/p>\n If we buy a property with the sole purpose of generating income from rental, we\u2019re treating it as a pure investment. Actually, that may not be strictly true if we derive enjoyment from the involvement of being landlords. Rather than hand over a property to a managing agent, we can handle the bulk of responsibilities ourselves, thereby saving money and increasing profit; but that’s not for everyone.<\/p>\n It\u2019s important to remember that property is just one of a number of asset classes. Unlike stocks and bonds, selling a property takes time, sometimes a very long time. Although property prices have risen a lot historically, so have share prices, arguably more so. The attraction of rental income can be compared with that of share dividend income.<\/p>\n Remember that rent isn’t all profit. There will be considerable overheads and expenses. There are also tax considerations. For example, we can\u2019t put a buy-to-let property inside an ISA or a pension plan.<\/p>\n To put all of our nest-eggs in the property basket is risky. But as part of a diversified portfolio, it could be considered.<\/p>\n If we know what we\u2019re doing, buying a property and doing it up can be very profitable. However it means a lot of personal involvement, which means we have to factor in our own time. Some people enjoy getting involved in doing up properties, whereas others see it merely as a business opportunity.<\/p>\n If the purpose of doing up a property is simply to resell it at a profit, then we\u2019re less exposed to movements in property prices. The main financial risk would be if prices fell between the time we bought and the time we sold.<\/p>\n There are other risks too. While doing up a property, we may uncover problems that increase development costs, and\/or delay completion. Redevelopment should be viewed as a business rather than as an investment.<\/p>\n Directly investing in commercial property will be impractical for most private investors. For those with the funds to do so, it\u2019s important first to develop a detailed understanding of this market. Alternatively, there are specialist funds that invest in it. Another way of getting exposure is by investing in property companies, or in a fund that invests in them.<\/p>\n Exposure to the commercial property market may well have its place in a diversified portfolio.<\/p>\n It’s risky to view property investment as the silver bullet of retirement planning. It can however be an excellent way of diversifying our investment portfolios. Redevelopment or managing rental tenants can be lucrative side businesses; but they do require personal commitment.\u00a0Owning our own home, even a second home, can make a lot of sense.<\/p>\nBuy-to-let<\/h2>\n
Property redevelopment<\/h2>\n
![\"property-risk\"](\"https:\/\/evolvemyretirement.com\/blog\/wp-content\/uploads\/property-risk.jpg\")
Commercial property<\/h2>\n
Conclusion<\/h2>\n