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Retirement Planning?… How Many Investment Properties Should Be In Your Retirement Plan?


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. If this is your first item here, be sure to
subscribe to the channel and click that notification icon so you don’t miss out on any of the free
content that I give you each and every week. 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.

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