Have you ever given any thought to retirement planning? If so, how many investment properties
do you reckon you'd need to be comfortable?
Hi. My name's Tony Law from Your First Four Houses, and I teach people how to build a
small property portfolio that generates a great income so they can give up the day job
and become financially free.
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So, before we start, I'm not FCA approved, and so before you take any action on of this
stuff I'm sharing here, it's essential you seek the advice of an accountant, a tax adviser,
and then independent financial planner if you have one. These are just my personal views.
Now, I know that there are lots of ways that you could potentially fund retirement, and
I'm certainly not qualified to talk about most of them. But perhaps I can chip away
just a little bit at property because I guess it is a subject that I do know a little bit
about.
So, I switched from being a kitchen designer to investing in property back in 2012, and
I did this because at the time, I was genuinely worried about our financial future. Both in
terms of what if something happened to me, but also our retirement. Which hopefully I
still see as many, many, many years off into the future.
Because you see, I knew that I couldn't rely on any government backed schemes. Without
getting too heavy, I don't see life as being a rehearsal. I do think that time is slipping
away, and I'm pleased to say that we now have a pretty high level of financial security,
all thanks to the property portfolio that we now have. It's a fantastic feeling, and
it's one that I want you to have.
So, let's talk about retirement, and let's work out how many investment properties you
really need in order to live comfortably. To help us do this, to help us run through
this, I've actually put together a quick five step process that we're gonna follow.
So, step number one is to work out what you need as an annual basic income after tax at
retirement. Now, I know this is not going to initially be very easy because you're trying
to envisage what your future needs might be, and your future needs are probably gonna be
very different to your needs today. Of course, everybody is different.
But don't let this put you off. Have a go at this. You don't have to be exact. Just
give it your best guess. What income do you reckon you'd need at retirement? What net
income do you reckon you'd need at retirement?
Now, a good book to help you is actually Enough by Paul Armson, and I'll put a link to that
in the box below. You might want to check that out. It's a good book.
Step number two is to subtract any existing investment income from step number one. So,
here I mean any existing investments that will pay you a monthly income upon retirement.
So, these could be existing properties that you may have. They could be pensions. It could
be any investments or bonds, et cetera. Or, of course, you might not have any of those,
which is also absolutely fine. But you're looking for anything that will pay you without
you having to do any work in order to get that money.
Please don't factor in your own house here. That will be my suggestion.
Step number three, you now have your target net income. This is the net income that you
need to build in order to finance your retirement. By the way, this is another quick reminder,
just to speak to a financial planner or an IFA and seek their advice over mine here.
I hope you don't mind me reminding you of that.
Now, this should go, this number, should now go up on your wall somewhere in plain sight
because this is the target that you need to hit. Of course, the sooner you get started
on building your own portfolio, the sooner you can build that income and of course naturally
the sooner you can retire.
By the way, if your finance video helped I would love it if you could take a moment just
to click on that like button right there. It really helps me, if that's okay.
So, step number four is property education. Like any investment, honestly, you cannot
go in blindly. Trust me, I've made this mistake myself. You need to invest at least some time
and perhaps a little bit of money into educating yourself here. Now, you don't have to do any
of my training, I hasten to add. There's lot of good people out there. You could speak
to them instead, but you do have to do some. If you don't, can I respectfully ask the question,
how are you really ever going to recognise what is a good deal and what is a bad deal?
Assuming there's a little bit of complexity to the deal.
You need that education in order to make better decisions, I would respectfully suggest, because
can I be honest with you and say that in the property world, how can I put this, there
are a few sharks out there who are all too keen to grab your money. I don't want them
to do that. If you've got some basic education, well, you're gonna be less likely to be fooled
by some presentation of some what initially appears to be great deal. Does that make sense?
Honestly, property education really is the answer here. If you do want to check out my
online property master class, I'm gonna be a bit cheeky and put that in the description
box below. But don't feel that you have to do that. There's lots of other ways you can
build your own education.
Step number four, choose your strategy. Now, there are loads of different strategies out
there, and your property education will certainly help you to choose the right strategy for
you. By the way, when choosing a strategy, please don't factor in any house price increases
here. My suggestion is you should invest as if your property portfolio will never actually
go up in value. This is only about the cash flow that you're gonna receive from your properties
after all of your expenses.
Now, the strategy you choose will probably determine the average kind of cash flow that
you're gonna be able to get from each property. So, for example, if you're investing in, say,
I don't know two bedroom flats in Slough for a fairly random suggestion, selection, you
may look at a cash flow, say, 300 to 400 pounds a month. Let's say you choose, I don't know,
HMOs in Southampton. You may be looking at a cash flow of, say, 1000 pounds a month,
or whatever.
Obviously you need to do the research on your strategy in your area because it goes without
saying there are a million variables here. But do you see where I'm going with this?
Your strategy will determine your cash flow largely, which leads us onto the last step
in this process, and it's step number six. Divide your target annual income by the average
annual cashflow from each property. And very, very roughly that will tell you how many properties
you need.
For more tips and tricks like this, be sure to subscribe to our channel and also download
this 50 point checklist because it's gonna really help you when you need to buy that
next investment property.
My name's Tony Law from Your First Four Houses with online training that helps you build
your property portfolio.