Which age is the right one for tenanted properties?

We answer these and many other questions in our video blog episodes.

Here is the transcript of episode 18 to read through:

There is no single right age to buy a property. If you are very young, e.g. 20, 25, perhaps 30 years old, you have a unique opportunity. Then a low monthly repayment is enough for the bank loan and your tenant pays off the property for you over a longer period of time. Due to the low repayment, you yourself have minimal effort and that is the advantage of buying at a young age.

I myself bought my first buy-to-let properties at 21, 23, 24 years old, and then carried on. For over 30 years, perhaps 35 years, my tenants have paid off the properties for me. And if you do it that way too (and I also have many clients) for whom I've done that, many young clients, then you will have the opportunity that when you are already 55, 58, so 12, 13 years before you start your state pension, the tenant has paid off the property for you and that well before you retire, you generate passive income, perhaps even enabling you to stop working earlier as a result.

Because if you imagine, you might have three or four rented flats, each flat brings in €750 in rental income and is paid off by the age of 55, then you have €3,000 a month and, naturally, increasing over the years due to inflation. By the way, this doesn't mean that if you're older, it's too late. I regularly have clients who buy property even at over 70 and even over 80 years of age.

However, the prerequisite is different there. If you are perhaps 45, 50, 55 years old, you have a very high monthly income because you have built a career, but you may have major tax problems and tax challenges. Then it can be worthwhile to buy a property there. Often you can also invest a bit more equity, because you have already saved up a lot of money in your life and frequently realise that it is also sitting idly in the bank with poor interest.

So also an interesting target group. I myself am now 55 and still buy property regularly, anyway or precisely because I am now 55. And if you think of the retirees who buy from me: there the motive is a lot of liquid wealth in a world without interest rates and with high inflation, because that signifies the desire for investment, alternatives and security.

Of course the pensioner is contributing a very large amount of equity, but pensioners too frequently finance a portion of the property as well. And sometimes it's simply a matter of finding a secure investment for oneself in retirement, where perhaps you'll have something nice later for your children or grandchildren, where they inherit a physical asset or where you can transfer a physical asset to your children and grandchildren later on.

So you see, there is no simple answer to the question: "What is the right age?". And to come back to young people once again: I have often had clients who say: "My daughter or son is 5, 6 or 7 years old today. And as a parent, I want to buy a nice, rented flat for my child today and use part of the child benefit or the child benefit as the portion that we pay in ourselves."

Well, the tenant and the tax office pay the vast bulk of it. And if you imagine now that the tenant and the tax office pay off the property over 30 years, then the child is 35 and then has a completely paid-off flat and from then on £750 or £1,000 in rental income every month. And if you might be in your mid-thirties today, just imagine if your parents had bought a rented flat for you at your age of five.

And at 30 or 35 you realise the tenant has already paid it off. We certainly all dream of that. But if you're watching this video and have children yourself and say, I might want to buy a rented property for the children right now, then that could also be the right age.

So, to sum up: 5 can be the right age, the early twenties can be the right age, the mid-30s or 40s can be the right age, and depending on your motive, even 60, 70 or 80 years old. Buy-to-let property is an investment that pays off very well for many people. If you are interested in that, let's just have a chat.

Keywords:

property purchase, monthly repayment, investments, rental income, retirement age, equity, letting