Which Buy-to-Let Retirement Strategy is Right for You? [Landlord Advice]

Are you thinking about what your buy-to-let retirement strategy should look like – or even what one is? 

A buy-to-let retirement strategy is essentially just a way property can provide money in your retirement; either with a lump sum, or via monthly rental income (or a combination of the two). 

If you’re anything like a lot of people we talk to, you might be trying to plan a couple of decades ahead – or you may be about to retire and looking for an extra boost to your pension. 

Either way, you’re probably thinking about how to create income from streams other than employment – and maybe even retire early (rather than wait until you’re 67!). 

After all, confidence in pensions and savings has fallen recently, with property increasingly being seen as a retirement tool, according to Key’s Tackling the Care Question report (via PropertyWire). 

A buy-to-let (or investment property) can be a great way to aid you in your retirement, but there are a couple of different ways to go about it. 

In the end, it’s all about doing retirement your way. That could be anything from sunning yourself on a beach, and seeing the world, to downsizing, spending more time with your family, or moving to the retirement village of your dreams.

Retirement – and how a buy-to-let can help you achieve the kind of retirement you want – is something we’re quite used to advising on here at Portolio – which is why I wanted to write this blog, and address some of your main options.

Strategy 1: Selling to retire 

The first option involves having an exit plan in place, and selling your buy-to-let (or portfolio) when the time is right. It could be that you have (or plan to have) no mortgage on the property when you reach retirement age.

Especially if you no longer want the hassle of managing a property once you’re retired, or plan to move away, this is a good option. As long as you don’t mind giving up the rental income, you can have one lump sum to enjoy your retirement, your way. 

If you have a large portfolio of properties, you may want to consider selling one or two, and keeping some back so you can maintain a bit of rental income for that extra security – and there are other benefits to not selling your entire portfolio at once (as mentioned in this blog). 

Strategy 2: Buying to retire 

If retirement is a while off – or even if it isn’t – buying a property to help with retirement can also be a savvy choice, especially if you’re looking for that extra bit of security that rental income brings every month. 

It’s worth noting that buying an investment property isn’t usually something people do to entirely fund their retirement – but it does help towards it. 

And there are two main ways to invest. You may choose to invest in property that has a good yield, for immediate income. Or, you may be looking to invest in a property that will deliver a good capital gain 10, or 20 years from now – perhaps in an up-and-coming area. 

You may also aim for a combination of both – as they’re not always mutually exclusive. 

Whatever you decide to do, just make sure it’s the right choice for you, and get some outside advice if you can. 

Succession planning 

If you are looking to put together a buy-to-let retirement strategy, and are thinking about investing in property, it’d be remiss of us not to mention succession planning. 

Although it is something none of us like to think about, it’s still important to think about what’s going to happen once we’re gone. If you have an investment property – or multiple properties – to leave to your family, it might be a good idea to buy as a limited business.

This way, you can make your family members (as long as they’re over 16 years of age) directors of that limited business. This is an effective way of limiting the inheritance tax they’ll have to pay – but we strongly advise speaking to an accountant or mortgage broker about this first. 

Advice from the property pros 

Although I’ve mentioned two main strategies in this blog, I want to make it clear that one particular strategy is not better than the other. What I will say is that both strategies need to be thought out and carefully considered in advance. 

This is so you can make all of the necessary and timely movements and actions you’ll need to ensure that when you get to retirement age, you have all the right options in front of you. And we do regularly meet with clients who use both of these strategies to retire. 

One of our clients sold her tenanted property recently, as she wanted to retire and move down south to a retirement village. Another client was looking to buy property to help supplement her pension, when she got it. 

Will Hale, Chief Executive at Key, stated: “With the recent economic turmoil, confidence in savings and pension income has fallen while more people are looking to the value tied up in bricks and mortar to finance care.

“Getting good advice and understanding what resources you have to draw on is important – and making sure you factor these potential costs into your retirement planning is vital.” 

If you’re wondering which buy-to-let retirement strategy might be best for you, we’d recommend you seek some professional advice from a specialist estate agent or property professional. They should be happy to listen to your goals, and help you explore your options. 

It could be that they can point you in the right direction to help build your own property power team, so you can get all the right investment, mortgage and tax advice you need to move forward confidently into retirement. 

In summary… 

I hope you’ve found this blog to be helpful when considering a buy-to-let retirement strategy. Remember, in the end, it’s all about doing retirement your way – and what works for you, might not work for others. 

If you’re unsure, our advice is to speak to a property professional, or specialist estate agent (like us) who can advise you on how best to achieve your goals; whatever they may be. 

If you’re looking for free (and impartial) Scottish property investment advice, feel free to get in touch with us today.

We’re always here to help, and we’d love to hear from you!

Written by Ross MacDonald, Director of Sales & Co-founder of Portolio

Get in touch on 07388 361 564 or email to [email protected]